PayPal expects more cross-border e-commerce from China despite geopolitical uncertainties
As PayPal expands in China, the American digital payments platform expects local merchants selling abroad to see cross-border e-commerce continue to grow despite mounting geopolitical and regulatory challenges.
"We are seeing meaningful interest from [Chinese] merchants as they are seeking to expand to go both to Europe as well as the US, and we feel that will persist," Michelle Gill, head of PayPal's Small Business and Financial Services Group, said in an interview in Shenzhen on September 25. "There's both demand locally in the US as well as a desire to expand from China."
The number of Chinese merchants selling overseas has grown rapidly in the last few years amid a slowing economy at home and as market entrants such as PDD Holdings' Temu open new opportunities. This has created friction in the US and Europe, where governments are looking at levying tariffs on Chinese imports.
Earlier this month, Washington announced new measures - aimed largely at Chinese e-commerce platforms like Temu and Shein - to reduce the range of low-value imports eligible for duty and tax exemptions.
While it is too early to determine the impact of the change, Gill said growth opportunities will exist for companies that are creative about serving consumers. "Demand ultimately will either buoy prices to the point that it won't matter, or people will bundle things together to facilitate that access," she said.
Chinese merchants have been adjusting their global strategies to mitigate uncertainties in the current geopolitical landscape, including increasing their exposure to markets beyond the US and setting up local entities to comply with regulatory changes, according to PayPal's China CEO Hannah Qiu.
Chinese merchants have also been working on building their own brands to offer more high-quality goods and escape the price competition of generic products, she said.
"With that brand image, they probably would generate a higher margin, so can cover a little bit on the cost. And some of them ... are building a very unique value proposition, so that also helps them to be more resilient [while] facing different challenges," Qiu said. "Chinese merchants have faced this kind of challenge so many times for so long."
The California-based tech firm has stepped up efforts to woo Chinese merchants to its platform with the launch of PayPal Complete Payments in the country last week, expanding global payment options.
While PayPal has long supported cross-border payments, the new service is meant to broaden support for a variety of newer platforms such as Apple Pay and Google Pay, along with providing additional services such as risk management. PayPal Complete Payments is currently available in more than 30 markets, including the US and multiple European countries, and the company said it will add more solutions to the platform for Chinese merchants as it continues to localise it for the market.
In the post-pandemic era, small and medium-sized businesses around the world are facing new challenges with international sales, according to Gill. These include higher costs for advertising, acquiring new customers and shipments.
"The competition for small businesses has become much harder because only the larger enterprises can afford all these increased costs, and they have such a data and architecture advantage," Gill said. "So we're hoping to be the provider of choice to these small businesses that can help them compete with some of the larger enterprises."
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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