Navigating Cross-Border Transactions in Asia's E-Commerce Industry

Just this September, international courier and delivery service DHL Express announced that it had expanded its airfreight and gross payload capacity by 30% to accommodate the demand brought about by increased cross-border e-commerce activity within the Asia-Pacific (APAC) region.  

Regionally, Singaporean e-commerce giant Shopee has continually invested in cross-border e-commerce as evidenced by their recent expansion and success in Brazil. As reported by Reuters, the platform managed to become Brazil’s most downloaded shopping application within only two years of domestic introduction. 

As private businesses in the space of consumer goods and retail continue to jockey for better e-commerce solutions and positions amidst COVID-19, the current state of cross-border e-commerce in Asia presents several key opportunities and challenges. Nevertheless, the bustling activity is a promising sign for the future of the e-commerce industry and cross-border trade.  

Cross-Border E-Commerce Challenges 

Given that cross-border e-commerce goods and services are currently sold digitally, governments are unable to implement value-added taxes, or VAT, to related transactions. While this is beneficial to parties directly involved in business-to-consumer (B2C), business-to-business (B2B), or consumer-to-consumer (C2C) sales, many countries are eyeing the possibility of taxing these transactions as it could provide a potentially large boost to a country’s economy. 

Furthermore, as reported by the International Monetary Fund, several countries are looking to enter an agreement that would implement digital services taxes. Essentially, the agreement would require multinational e-commerce firms with profits above approximately 23 billion USD to proportionately allocate a certain amount of their earnings subject to factors such as local sales and local law. 

Opportunities for Growth 

Considering that the above statistics show that e-commerce will only continue to grow within Asia, the potential benefits for the industry and the businesses involved are endless. Beyond this, the impact that cross-border e-commerce brings to other industries should also be examined. 

For example, in the YCP Solidiance white paper “Transforming Saudi Arabia into the Middle East's Logistics Powerhouse,” data revealed that cross-border e-commerce transactions with Asian countries like China, Japan, and South Korea were one of the key factors to the success of Saudi Arabia’s thriving logistics industry. In the context of supply chain and logistical processes, demand generated by cross-border e-commerce transactions positively impacted these industries because it helped drive activity. Further, because of countries frequently interacting with each other, cross-border e-commerce also presents an opportunity to establish better international relations among involved nations.  

Overall, despite potential difficulties like taxation of international transactions, there is still a large upside within the future of cross-border e-commerce. Moving forward, beneficial ripple effects like the ones previously detailed are wholly possible.  

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