How China’s e-commerce playbook can help emerging economies transform
- Emerging markets, like China’s, have the advantage of a sizeable young population that is highly adaptable, if not already at home in the mobile digital era. Better yet, by learning from US tech leaders, emerging markets will have the best of both worlds
Similarly, internet commercialisation has also been a linchpin of economic growth, with more than 40 per cent of the world’s e-commerce transactions taking place in China in 2017, up from only 1 per cent a decade ago. By 2022, China’s e-commerce market is forecast to reach US$1.8 trillion. The effect this will have cannot be understated.
At the most fundamental level, e-commerce hits right at the core of an economy, creating myriad opportunities for small- and medium-sized businesses and changing the face of retailing, logistics and supply chains. All of this catalyses the growth of the economy significantly.
But what makes China’s new-found superiority in e-commerce a model that other emerging nations can follow and draw inspiration from?
To begin with, the fact that China’s business infrastructure was initially not as developed as the West’s actually proved to be an asset. Because of this, technology and e-commerce firms have been able to leapfrog certain developments, to the dismay of their Western counterparts, creating an infrastructure that is more ready to embrace the future. Other emerging nations share this “direct to mobile digital” consumer characteristic, skipping over the desktop and laptop generations of internet connectivity.
Secondly, the new wave of digital – where everything is in the cloud and mobile – further plays to the strengths of emerging market players and their young populations. About 90 per cent of the world’s population who are under 30 live in an economy that is developing or “transitioning”. This represents a very high percentage of the economy that can adapt to technology a lot faster on average when compared to the West.
There are also some questions which remain unanswered, like whether the market power of the internet giants of China and America is so complete that it will entail every new potential competitor from emerging nations being either crushed or swallowed up by the existing players.
It’s an exciting time for emerging economies. The ripples resulting from the growth of e-commerce can be felt everywhere – from Latin America to Africa and the Asia-Pacific region – enabling companies to reach consumers that were previously inaccessible.
The opportunity is there for the taking. But whether emerging economies can successfully make the most of it will depend on how ready they are to jump into the future without first stripping away their past. As they walk the tightrope, those that manage to stay on course will be the ones best able to leverage the opportunities of the internet while also mitigating the risks involved.
Ben Crawford is the CEO of CentralNic, a global domain registry provider focused on emerging economies that is listed on the London Stock Exchange