Cross-border e-commerce (CBEC) has grown rapidly and likely to drive the next leg of e-commerce growth in the world.
Over the years we in India have watched China’s mesmerizing success in creating millions of low-end to high-end manufacturing jobs. We also observed the striking success of Indians in exporting knowledge services to the global economy.
India jumped from farming to services, without going through an industrial/manufacturing stage.
Seeing these phenomena some Indians insistently ask, are we going to skip the industrial revolution and jump from an agricultural to a services economy ?? The question, not surprisingly, frightens people because the rest of the world has evolved from agriculture to industry to services, and India appears to have missed the middle step.
As Sanjeev Sanyal writes in The Indian Renaissance-India’s Rise After a Thousand Years of Decline: ” India appears to have shifted from farming to services without having gone through an industrial stage. This not only goes against conventional wisdom but also the experience of other fast-growing Asian economies particularly China & Japan.”
China and other Asian countries (Japan, Taiwan, South Korea and the countries of South East Asia) essentially followed an export-oriented manufacturing strategy to create economic growth. With time, they all moved up the value chain as wages rose and their workforce became more skilled. Exports shifted to high-end products like electronics and automobiles,” writes Sanyal. The services sector becomes a driver of economic growth only later.
In the Indian case, nothing like that has happened. After the 1991 economic reforms, India moved on to exporting complex automobile parts and pharmaceuticals. It also exported information technology and became a global hub of the business process outsourcing industry. India also saw a huge expansion in banking, hotels, airlines, cable television, telecom and so on. None of this was low-end, like was the case of Asian countries as well as China. Hence, India jumped from farming to services, without going through an industrial/manufacturing stage.
The Fourth Industrial Revolution is upon us, and India has a great opportunity to make up for the lost years and leapfrog the development bandwagon !!!!
And this jump from farming to services, without going through an industrial stage, is counter-intuitive. In fact, common wisdom states India should have latched on to a low-end export-oriented manufacturing strategy much before the 1991 reforms. But that did not happen either.
The unequivocal winners of free trade were nations that invested in education, embraced technology, reduced red tape, and thus ramped up their productivity and competitiveness. India has been a latecomer to the Free trade & commerce system with its highly controlled “mixed economy” model, hence it missed out on high growth opportunities for nearly half a century after independence.
So while India has been catching up for the past quarter century by gradually opening up the economy, and now with a surge in infrastructure and a substantive administrative structural rejig, the Goods and Services Tax (GST) etc but the fact is its still held back by several legacy domestic hurdles posing barriers to economic growth..
But until India dismantles those legacy domestic hurdles, it will continue to struggle with freer trade ecosystem regime implementations, because of compulsions to be protectionist due to lack of competitiveness. To be competitive, we need to drastically reform our anti-investment and anti-employment labor laws; speed up the judicial process; further, slash bureaucratic red tape; reform agriculture and education. That would propel us into the top 50 of the World Bank’s Ease of Doing Business index from the current 100.
Against this backdrop, the Fourth Industrial Revolution is upon us, and India has a great opportunity to create a Manufacturing industrial revolution and make up for the lost years and leapfrog the development bandwagon !!!!
The role of E-commerce in the Fourth Industrial Revolution continues to act as an upsetting force throughout the industrial world, prompting rapid advances in technology and the way business is conducted throughout the World.
If India buys Online, Indians must Sell Online and invariably, these will be the goods made in India as well as Goods sourced globally.
According to the Boston Consulting Group, large sections of the human population will shop either directly on foreign sites or through third parties in 2020, up from 15% in 2016.
Higher prices of luxury goods, rising standards of living and greater exposure to foreign products will all help drive the trend. For India’s Make in India policy initiative, the rise of Global CBEC represents a huge opportunity to reach the largest consumer base around the world.
CBEC will drive the next leg of e-commerce growth as Global e-commerce companies and international retailers and manufacturers launch globalized versions of their own portals. By selling through CBEC, international Sellers can reach Global shoppers regardless of whether the Sellers have a physical presence in the country buying their products.
India’s Online Traders, Exporters & B2B Manufacturers are all now advised to have a strategic plan of entry, whether they choose to enter the CBEC global markets on their own or selling wholesale to an e-commerce direct sales distributor or to set up sites on online marketplace, most of which are affiliated with leading Chinese & American dominated global e-commerce players. When creating a CBEC strategy, Selling companies need to consider factors such as clientele, region, the scope of services and costs, and they should ensure they have a solid understanding of evolving Buying Country’s consumer preferences and regulations.
Cross-border commerce is the next big thing in retail and branding and is the natural evolution of Commerce in a Globalization to the world, where technology, e-commerce, supply chains and Global Trade powers like USA & China are forcing companies across the Globe to rethink and reset their make it, sell-it-move-it strategies.
E-commerce is India’s big opportunity to use its vast domestic consumption markets to boost employment in the country. As e-commerce facilitates Marketplaces with their Traffic management technology, Logistics & payment solutions, the collective employment generated can be huge. If India buys Online, Indians must Sell Online and invariably, these will be the goods made in India as well as Goods sourced globally. Eventually, its perfect competition in the Economic sense as Consumers, producers, traders, factories and even our traditional Artisans from every part of India will all benefit from this e-commerce driven free market growth.
To be continued. . . .
1. Text in Blue points to additional data on the topic.
2. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.