Global ecommerce to hit $1 trillion by 2020, led by China

A joint research project by Alibaba and consultancy firm Accenture has predicted global cross-border ecommerce retail transactions are expected to hit US$994 billion by 2020, with China’s ecommerce market to grow ten-fold.

This growth is from a 2014 global base of $240 billion. The Asia Pacific region is expected to be contributing as much as 48 per cent of total value, thanks to the development of fixed internet networks and high adoption of smartphones.

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The study also predicts 10x growth in the Chinese ecommerce market by 2020, to a value of $250 billion. Over 64 per cent of that growth is expected to come from incremental market growth with an increase of demand for high-quality imported goods. China’s middle class today is equal in size to the entire U.S. population and is expected to reach 630 million by 2022, according to management consultancy McKinsey.

In the report, “Cross-border B2C E-commerce Market Trends,” researchers forecast that ecommerce will see compound annual growth of 27.4 per cent over the next five years, double the rate of worldwide B2C shopping as a whole. By 2020, more than 900 million people around the world will be international online shoppers, the report says, with their purchases accounting for nearly 30 per cent of all global B2C transactions.

China’s market growth is being encouraged by the government. Chinese Premier Li Keqiang is reported to have told a State Council executive meeting that domestic companies shall also better leverage cross-border ecommerce programs to sell to overseas markets to boost economy and to help create jobs.

That should mean China will optimise custom clearance processes, provide tax reductions and exemptions, all to encourage cross-border electronic payment to boost the development of cross-border ecommerce.

Government authorities have been encouraging the adoption of cross-border ecommerce and last year allowed seven cities including Shanghai, Guangzhou, Chongqing and Hangzhou to carry out a pilot cross-border ecommerce program where retailers can deliver their imported goods to consumers directly from bonded areas inside China for simplified customs clearance procedure.