Posts

After speaking with a variety of industry professionals operating ecommerce businesses in China, Thailand, the Philippines and Vietnam, trust makes its way into each conversation. Customers don’t trust merchants, business owners are weary of government power, citizens don’t trust banks, so on and so forth.  

eIQ spoke with Joseph Yuen, the Board Chairman of The Hong Kong Federation of Ecommerce (HKFEC), at Last Mile Fulfillment Asia to understand his ambitions to standardize ecommerce regulations.

The federation composes of members from Lazada, UnionPay, PwC, Shopline, etc. and exists to bridge the ecommerce associations between Europe, Russia, Dubai, and Thailand to create a stable foundation for future ecommerce businesses to land on.

“Governments didn’t have any laws in place that could govern new technology such as Uber,” says Joseph. “This shows that governments need to work with organizations like ours to fill in  gaps between booming industries and out of date regulations.”

Creating trust in a trustless Asia

It’s not surprising to learn that Southeast Asians have doubts about product reliability and safety of payment methods when news about counterfeits and financial fraud hang in daily headlines.

Reasons why consumers in Hong Kong do not shop online. Source: Consumer Council 2015

One of the initiatives HKFEC is moving towards is the creation of a “Hong Kong Trust Mark”. Much like food labels in the US – USDA Organic, Non-GMO Project Verified, etc. – ecommerce sites would have to be vetted before being granted a badge that certifies them as trustable for customers to shop.

Companies that meet all criteria agree to work with HKFEC to provide customers with a safe and reliable shopping experience.

If a sold product doesn’t meet guidelines, the idea is that the customer has the right to an investigation and refund – even if that means going to court.

“There’s been a lot of talk but no action,” comments Joseph. “We want to assume that every one is a good player so HKFEC will act as the middleman to clear this black hole and make ecommerce transparent.”

Ecommerce requires standardization

Joseph believes that there are four major areas that need to be addressed in order for ecommerce to grow healthily in Hong Kong and China.

  1. Trust – Chinese citizens fear that all online goods are counterfeit items
  2. Payments – simplified, cashless payments open up opportunities for hackers
  3. Privacy – smart data versus big data, how can businesses use their data to grow?
  4. Cross border – tax policies differ across markets, how can we align the cross-border policies?

Hong Kong, a country of over 7 million people, is an important transit point between vendors and Chinese consumers as a free port. The French Chamber in Hong Kong quotes it as “suitable for low-volume B2C ecommerce, goods for personal consumption with low cargo value and low tax rate items”.

The Trust Mark sounds good in theory, an online business gains the badge after a thorough investigation by HKFEC, customers identify badge on site and are more willing to shop knowing they will be protected. The main question then becomes, how long will this take?

Ecommerce companies in all parts of the world, especially Asia, are already moving quickly to grab market share. Consumers aren’t familiar with any badges or certifications that aim to protect them so education would also add time to the process.

“Our committee has legislative influence to give us a line to the government,” says Joseph. “The one thing that will get them acting is social pressure from our friendly alliances. We will act as the judge.”

“Guandong Electronic Commerce Association, Russia, India, Europe and the UAE are all invested in making the Trust Mark a reality.”

The effects of the Trust Mark

Joseph believes luxury brands are weary of selling online in Asian markets because customers, especially the Chinese, prefer to fly abroad to purchase goods they know are real. The goal is to keep the business within the country.

“The government should facilitate access to financing sources and terms in order to enhance competitiveness of local ecommerce operators,” said Pawoot Pongvitayapanu, president of the Thai Ecommerce Association and ASEAN Market Advisor of HKFEC.

If the badge were to come into effect, HKFEC hopes to see an increase in cross-border trade and growth in the brand.com trend. For example, companies would be less concerned about damaging their brands and sell on platforms like Tmall to reach Chinese customers if it was certified. Or they would open their own webstores to sell directly to customers.

“In every single fast moving industry, regulations and government cannot catch up,” says Joseph. “Someone has to stand in front of the court as an alliance and agree on a set of rules before standardization can happen.”

By: Cynthia Luo

Here’s what you should know today.

1. The Singapore and Abu Dhabi governments are working together to promote fintech

Details about the arrangement are sparse at this point, but it’s clear that the focus will be to improve the regulatory environment for budding startups.

Both government bodies will explore “joint innovation projects” in the fields of digital and mobile payments, blockchain, big data, and other technologies of the future.

The local market and ecosystem in the United Arab Emirates is small – similar to Singapore – but the expectation is for startups to use the business-friendly policies as a launching pad to the rest of the wider Middle East.

Read the rest of the story here.

 

2. KFit buys Groupon Singapore

Subscription gym startup KFit has continued to morph into Groupon after it acquired the third country business from the group-buying giant in Southeast Asia. KFit acquired Groupon Indonesia and Groupon Malaysia last year as part of a pivot to move from a business that sells fitness-based membership services to ecommerce.

The irony at play here is that Groupon itself long gave up on Asia, shuttering its presence in a number of markets last year as the promise failed to deliver. Whether the startup has a know-how into Asia that Groupon didn’t, is yet to be seen.

Read the rest of the story here.

 

3. Jack Ma wants to throw counterfeiters in prison

Ma’s appeal seeks harsher laws to fight fake goods, and comes as China’s annual parliamentary meetings take place in Beijing.

“If the penalty for even one fake product manufactured or sold was a seven-day prison sentence, the world would look very different both in terms of intellectual property enforcement and food and drug safety, as well as our ability to foster innovation,” wrote Ma in a statement to China’s parliamentary delegates.

Ma’s recent comments have deflected responsibility, he said Alibaba was “itself a victim of counterfeiting.” Ma has now gone further to stress that China’s laws are far too lax. Ma has said that there has been a lot of bark surrounding counterfeiters, but no bite.

Read the rest of the story here.

 

Welcome to the first of March, read on to see what you need to know this morning.

1. New tax on ecommerce in Thailand to be introduced in April

The Revenue Department says it will enforce a new law to tax cross-border ecommerce transactions by April, a move that could hinder the growth of the sector.

The development by the tax collection agency is intended to increase tax collection efficiency, particularly for fast-growing cross-border ecommerce transactions.

The Revenue department will apply e-tax invoicing via email for companies with annual revenue of less than $85,7600 (30 million baht) to facilitate small ecommerce merchants in processing VAT issues. It plans to launch a full tax invoicing system for large enterprises in the near future.

Read the rest of the story here.

 

2. Alibaba calls out China to be harder on counterfeiters 

At a press conference, Alibaba representatives said that China’s current anti-counterfeiting laws are too ambiguous, “letting products sip through the cracks along the manufacturing chain.”

Last year, while the company fought and ultimately lost the battle to stay a part of the International Anti-Counterfeiting Coalition, its team came across almost 4,500 counterfeiting leads, but had just 469 cases and ultimately just 33 convictions because of loopholes in the laws.

The latest developments in Alibaba’s anti-counterfeiting saga may indicate that, down the line, there will be further support from outside parties to legitimize the products sold on its platform.

Read the rest of the story here.

 

3. Recommended Reading: The future of shopping is more discrimination

This new stage of retailing—a stage that harks back to 18th-century strategies of price and product discrimination—is only beginning.

Merchants, left to their own interests and in response to hypercompetition, will create a world where what individuals experience when they shop will be based on data-driven profiling.

At present, shoppers have little or no insight into the profiles and how they are used

Read the rest of the article from the Atlantic here

 

4. Community Chatter: Uber CEO Travis Kalanick filmed during a heated argument with Uber driver

The video shows Kalanick getting angry at the driver, Fawzi Kamel, who complained about the company decreasing prices for its UberBlack service. Kalanick claimed that wasn’t true.

Upon the release of the video, Kalanick issued an email apology to his staff at Uber.

It’s clear this video is a reflection of me—and the criticism we’ve received is a stark reminder that I must fundamentally change as a leader and grow up. This is the first time I’ve been willing to admit that I need leadership help and I intend to get it.

It has been a rough couple of weeks for Uber, following sexual harassment claims.

Read the rest of the story here.

Here’s what you should know for Tuesday morning.

1. Alibaba unites with Louis Vuitton and Samsung to clean up its reputation

Alongside partners including Louis Vuitton, Samsung and Mars, the company announced the Alibaba Big Data Anti-Counterfeiting Alliance on Monday. The Alliance will use machine learning and other technologies to identify and remove counterfeit goods from its platforms.

By working with high-profile names like Samsung and Louis Vuitton, they’ve found significant allies in a bid to go global and attract reputable brands.

Why are they doing this? This is a good PR move to salvage the reputation that was earned last year, especially following Taobao’s re-entry into the US’s notorious markets list.

 

2. StorePower helps groceries deliver without giving away the keys to the store

A startup called StorePower wants to take a bite out of the grocery delivery business by giving supermarkets an alternative to working with courier marketplaces like Instacart, Postmates, Amazon Fresh or Google Express.

How? Chicago based StorePower’s technology helps grocery stores of any size take orders from customers and arrange for in-store pickup or delivery. Customers can order by text message.

Read the rest of the story here.

 

3. Cambodia pushes for ecommerce initiative

As a coordinator of a group of least developed countries (LDCs), Cambodia has plans to encourage countries within the group to implement elements of their own “ecommerce” initiative to further their advancement.

Commerce minister Pan sarosak says: “In trade, we are also doing very well, so we try to help those countries benefit as much as they can in terms of trade with Cambodia as chairman and coordinator.”

Read the rest of the story here.

 

Industry Chatter

Wrapping up for the day? Kick back and enjoy today’s latest ecommerce headlines.

 

1. Tencent doubles down on Southeast Asia

Tencent, maker of WeChat and China’s most valuable tech company, is doubling down on its push into Thailand and the Southeast Asian region.

The Chinese giant has formed a joint venture with Ookbee, the firms announced today, investing US$19 million to turn the venture into a “content ecosystem” for digital media. Prior to this, Tencent also announced that it was investing in Thailand’s Sanook Online, a contents portal.

It seems that Thailand will be the place for Chinese giants to flex their power muscles.

Read the rest of the story here.

 

2. China’s BitSE’s blockchain technology used in fashion to fight counterfeits

In the same way that bitcoin’s blockchain is an immutable ledger of peer-to-peer transactions, VeChain creates a record and digital trace of physical items. Each item is given a unique ID, which is paired with either a NFC chip or a QR code, depending on the client’s requirements. That binds the item’s digital identity to real-world transactions.

Read the rest of the story here.

 

3. Vietnam retail ecommerce to reach $10 billion by 2020

Nguyen Thanh Hung, chairman of Vietnam E-commerce Association (VECOM), agreed that the development of mobile phones and applications had contributed to promoting purchasing activities.

Hung said the country’s e-commerce had been developing at a growth rate of 30% a year. “Businesses have quickly shifted from offline to online retail. Several are even totally doing business online,” he said.

Read the rest of the story here.

In midst of major ecommerce counterfeit issues in the last few months, Amazon has increased efforts to openly court Chinese manufacturers, resulting in a string of bizarre emails being sent to sellers, reports CNBC.

In 2015, Amazon’s ecommerce revenue topped $100 billion – the marketplace being a big driver, with sales from Chinese merchants more than doubling last year. Buyers love the cheap goodsand if a customer has problems with a product, they can simply contact customer service and get a refund.

Although counterfeit products have become a big problem, Amazon is benefiting from having Chinese merchants on board, with US sellers getting the bad end of the deal. 

Within the last week, Amazon sent emails in Chinese to a number of non-Chinese US sellers, whose accounts were suspended for one reason or another, telling them they can resume business. When put into Google translate, the email simply read: Your account information you provided was reviewed and we decided to allow you to re-sell on Amazon.com.

That was followed by a line telling the merchant where to find a list of seller best practices.

The growth of Chinese sellers on the marketplace has caused many problems with US merchants, who see counterfeits and manipulative tactics creeping into their listings.

A seller of mobile phone accessories forwarded the email Amazon sent to him on August 18 to CNBC.com on the condition that he and his company not be named. His account was suspended in late July after a few buyers of phone chargers complained the products were defective.

Amazon, which now counts on outside sellers for almost half of its retail volume, routinely shuts accounts after mounting customer complaints without giving sellers a chance to fight the claims. To get reinstated, merchants have to take measures that can take weeks.

This leads to sellers spreading out their products on different marketplaces, such as eBay. Suspensions can be tied to slow delivery times, alleged rights infringements or selling potentially unsafe products or expired items.

But the Chinese email is a first for Amazon and the problem was compounded when the sellers were again shut down after being reinstated. Making all the sellers re-appeal and go through this all again is a nightmare for them. 

A version of this appeared in CNBC on August 26. Read the full version here