Shopee, DHL Steer Chinese E-Tailers to Thailand as US Looks to Hike Post Prices
Wang Hai
/SOURCE : Yicai
Shopee, DHL Steer Chinese E-Tailers to Thailand as US Looks to Hike Post Prices

(Yicai Global) Oct. 22 -- Singaporean e-commerce platform Shopee has partnered DHL Group to help Chinese sellers expand their business in Thailand as Washington looks to hike the postage prices for imported goods.

With DHL's help, Shopee will be able to shorten the time it takes to send Chinese goods to Thailand to just 3.5 days on average, Liu Jianghong, Shopee's general manager of cross border business, told Yicai Global. The platform already has seven of its own logistics sites across Southeast Asia and Taiwan, and can ship goods at 20 percent to 30 percent less than market rates.

Southeast Asia is a growing market for e-commerce, and the sector is forecast to expand at a compound annual growth rate of 32 percent from 2017 through 2025, according to data from Singaporean sovereign wealth fund Temasek. It pegs e-commerce in Southeast Asia to reach USD88 billion at the end of that period, while Statista believes Thailand will be the second-biggest market in the region by 2022, with revenue from e-commerce tallying USD5.8 billion.

China may be about to kickstart that growth if the United States follows through on a threat to start setting its own terminal dues, or the money collected for domestic postage costs when a parcel arrives from a foreign country.

Washington said last week that it plans to withdraw from the Universal Postal Union -- a United Nation's agency aimed at facilitating low-cost postal services for international mail -- as the rates Chinese merchants pay to ship goods in the United States is unfair.

The rates are based on where goods are shipped to and from, with countries ranked in three different tiers. As a developing nation, China is ranked in third tier, meaning it can send goods inexpensively to higher-tiered nations like the US. The subsidies, which were reduced to make such deliveries 13 percent more expensive at the start of 2018, cost the States USD300 million a year, several foreign media outlets cited a senior White House official as saying on a conference call on Oct. 17.

The UPU withdrawal process lasts a year, and "during this period, the Department of State will seek to negotiate bilateral and multilateral agreements," a White House statement published the same day said. "If negotiations are successful, the administration is prepared to rescind the notice of withdrawal and remain in the UPU."

The White House aims to adopt self-declared rates for terminal dues by no later than Jan. 1, 2020, regardless of the outcome of negotiations, the statement added. These are usually set by the organization's 192 members at meetings held every four years, which each nation having an equal say.

Smooth Sailing

Shopee is optimistic about the potential of Chinese sellers, Liu said, adding that some of the country's best-known electronics brands, like Xiaomi, Gree and Huawei, are active on its marketplace.

Shopee, whose parent Sea Group is listed in New York, mostly conducts its business in Southeast Asia so will be largely unaffected by Washington's plans, Liu said. Many sellers may look to divert their trade away from the States and this could prove an opportunity for Shopee and the 160 million people who have downloaded its mobile app.

Cross-border e-commerce has been fuelling China's foreign trade since 2008, becoming an engine for economic development and providing a window for it to continue to open up to the rest of the world. The sector has maintained a compound growth rate of more than 30 percent since 2012, more than 3 percentage points higher than traditional imports, according to data from the China E-Business Research Center.

The country's cross-border online retail transactions totaled CNY8.2 trillion (USD1.2 trillion) last year, up more than 22 percent from a year earlier.

Editor: James Boynton

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Keywords: US , Shopee , UPU , DHL , Southeast Asia , E-COMMERCE