A few days ago I received an ecommerce delivery package. Inside were my new prescription varifocal glasses that I ordered online a few days earlier. They had come all the way from China where they had been manufactured and the online order fulfilled. The website said they would arrive in 10 days. They actually arrived after just three. In contrast, down in the village where my eyes had been tested there’s a notice in the opticians window that apologises to customers for not being able to trade. I can’t help but wonder how much of that highstreet will be left once this awful pandemic is over.
The glasses story is a miniscule example of a broad shift in the power of both manufacturing and the necessary ecommerce that increasingly, and very directly, connects the means of production with the means of consumption.
A month ago in Jiangxi Province, which borders Hubei Province, the centre of the coronavirus outbreak, power generators have returned to 93 per cent of last year’s capacity as factories increase production. Reuters has noted that while analysts had expected that China’s official Purchasing Managers’ Index (PMI) would be down at 45 for March, when the numbers came in, it had bounced back to over 50. The Reuters survey showed that the sub-index of manufacturing production picked up to 54.1 in March from February’s 27.8. New export orders received by Chinese manufacturers were getting back to normal in March at 46.4 from 28.7 in February.
In April 2020 China announced 46 new special trade (free) ports where all taxes (VAT and Consumption Taxes) are exempted. This is on top of the existing 59 ecommerce trade ports in China. Across all free ports, the Chinese Government is encouraging the sharing of warehousing space to help optimise productivity. This massive expansion of cross-border Chinese ecommerce exports is aligned with an equally massive series of PR activities by their richest individual & ecommerce pioneer, Jack Ma. His donations of PPE, face masks and ventilators to over 150 countries (excluding the 50 or so that recognise Taiwan) has received global coverage from thankful beleaguered Governments around the world.
Jack Ma’s Alibaba is China’s largest ecommerce company by far.Their B2C marketplace, Aliexpress, has been undercutting Amazon across European markets and has benefitted by a large increase in smaller brands using the platform. We can expect to see a major push over the next few months to recruit larger brands onto the platform for selling outside China. This contrasts with ecommerce imports to China where major western brands use platforms such as Tmall.
It’s clear that we can expect to see China playing an ever larger role in global online trade throughout the remainder of 2020. The only opposing pressure comes from Governments that, rightly or wrongly, see China as the cause of the pandemic and are actively seeking recompense for the damage caused to the world economy. Whether this manifests itself as an attempt at financial compensation (which would never escape the courtroom) or punitive restrictions on Chinese products remains unclear. What is clear is that Chinese manufacturing is now fully powered up and the ability of consumers in the rest of the world to vote by purchasing with a mouse click has increasingly become the norm.