Tapping Global Cross-Border E-Commerce: Harnessing Hong Kong's Financial and Logistics Strengths
Interview with Stanley Lee, President of the E-Commerce Association of Hong Kong
The e-commerce market is maturing in Mainland China and consumers worldwide are becoming accustomed to shopping online. For many traders, developing their cross -border e-commerce retail business has become an important strategy for expanding into new markets. “Hong Kong companies should not limit their focus to the fiercely competitive mainland market; instead they should explore opportunities in overseas e -commerce markets to fully capitalise on e-commerce opportunities. In contrast to traditional export trade, companies need to handle logistics arrangements, fund management and other new challenges in cross -border e-commerce. By leveraging Hong Kong's strengths in finance and logistics, they can effectively seize the opportunities arising from the growth of cross -border e- commerce,” said Stanley Lee, President of the E Commerce Association of Hong Kong.
Optimise Strategies
In an interview with HKTDC Research, Lee pointed out that e -commerce markets do not develop at the same pace in different parts of the world, and so Hong Kong companies should keep abreast of development trends in various regions. “The mainland e- commerce market is growing rapidly and already has a huge consumer base complete with sound industrial ecosystems. It is undoubtedly an ideal destination for Hong Kong companies looking to develop cross- border e- commerce. While It is true that the mainland e -commerce market has matured and is large in size, consumer expectations for online shopping are also rising. They not only seek good value for money on online platforms but also desire the best online shopping experience, such as same day delivery and unconditional returns and refunds.
“Since the mainland e -commerce market is fiercely competitive, e -commerce companies must keep improving their business strategies to satisfy consumers’ needs. Facing mainland competitors with superb business skills, Hong Kong e -commerce companies must be able to tell good stories of their brands with special emphasis on their uniqueness when expanding into the mainland market. They should also stay current with mainland market trends, adopting appropriate sales methods to improve online content marketing and using competitive pricing and discount strategies to stimulate consumers’ desire to purchase. This is the only way for them to stand out in the highly competitive mainland market.”
He cited a number of famous Hong Kong jewelry companies as examples. These companies have successfully made a name for themselves with their high quality products through e commerce channels. The goldware and ornaments they sell are immensely popular on the mainland. These products are crafted with traditional techniques and are rich in auspicious elements and traditional Chinese cultural characteristics. Some of these have even become hot selling items in the market. These companies are also making flexible use of live streaming marketing by influencers and conducting publicity on social media such as Tik Tok, Xiaohongshu and WeChat. Thanks to the huge volume of network traffic, they have rapidly become leading businesses in online sales on the mainland. He gave Hong Kong companies this special reminder: “Without ‘marketing content’, you will find it hard to compete in the mainland market and will not be able to exploit the mainland's huge e commerce purchasing power.”
Leveraging Hong Kong's strengths
However, Hong Kong companies should not overlook the potential of other overseas e commerce markets. Lee said: “Many mainland companies have turned their eyes to overseas markets and are actively seeking opportunities to go out via e commerce. They can be easily found in Europe, America, the ASEAN nations, the Middle East and other overseas e commerce markets. Mainland and Hong Kong companies exploring e commerce in these overseas markets are still in their exploratory stage and need to gain a deeper understanding of the local e commerce culture, such as consumer preference for online shopping, popular marketing trends and suitable supply chain planning. Hong Kong companies or brands that have always been well known for product quality enjoy considerable advantage in overseas e commerce markets. Besides making continuous efforts to improve their competitiveness in Mainland China, they may consider taking their products to other e commerce markets, opening additional channels for developing crossborder e commerce.”
In the fast changing world of e commerce, Hong Kong companies should leverage the city's unique advantages to seize available opportunities. Lee said: “Compared to the mainland, Hong Kong has a relative shortage of experts skilled in e commerce retailing. Additionally, Hong Kong’s high operating costs also present challenges to developing cross- border e -commerce. However, these challenges are not insurmountable. Hong Kong's traditional strengths should give local companies a leg up in developing global e -commerce markets.
“Logistics handling capacity and international air freight networks are Hong Kong's major advantages, enabling businesses to dispatch goods quickly to global markets. For consumer electronics with a short life cycle and for high value products like fashion sports shoes and makeup, Hong Kong serves as a particularly important transit port.”
Hong Kong's logistics handling capacity and international air freight networks are strengths that companies in the city can leverage in developing cross -border e -commerce. These advantages allow them to deliver high value and short life cycle products quickly to global markets. Since Mainland China imposes many restrictions on the export by air of electronic products with accompanying batteries such as stringent rules on consolidation and packaging for transport safety considerations, many mainland companies prefer to ship electronic products to Hong Kong first and utilise Hong Kong's efficient aviation services, which meet the safety standards of international freight transport to have the goods delivered to global markets with minimum delay.
Hong Kong's mature financial ecosystem also supports cross border e- commerce companies. The availability of diversified financing channels provides a solid foundation for the global expansion of e commerce businesses. Lee said: “Fund flow management is one of the important challenges that cross border e commerce needs to address. Financial institutions in Hong Kong are increasingly recognising the opportunities for financial services brought about by e commerce. Through the formulation of financing plans tailored for e commerce business, these financial institutions can meet the great financing needs of e commerce companies by using e commerce data and big data analytics to assess their lending needs. Thus, Hong Kong's cross border e commerce companies can easily find suitable financing services locally based on their business development needs.
“In sum, notwithstanding higher operating costs, Hong Kong companies still have a good chance of tapping into business opportunities in the thriving global cross border e commerce market by effectively leveraging the city’s logistics and financial strengths.”
This article forms part of a joint study conducted by Hong Kong Export Credit Insurance Corporation and HKTDC: “Unleashing the Lucrative Potential of Cross-border E-commerce for Hong Kong Traders (Company survey and expert opinion)”
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