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Why China's e-commerce logistics lead the world

By Barry He | China Daily Global | Updated: 2020-09-15 09:46

Workers load the cross-border e-commerce packages, at Huanghua International Airport in Changsha, Hunan province, on May 28, 2020. [Photo/Xinhua]

A large slice of China's economic prosperity is based on its enormously successful e-commerce sector.

The envy of economies around the world, this vast expanse of remote retail is only made possible by a uniquely Chinese form of logistics.

Nowhere else on the earth is delivery of an order within 24 hours considered standard practice. United States companies, including Amazon with its Prime delivery options, are comparable, but the Chinese attitude toward logistics means that companies such as Alibaba and JD handle volume that dwarfs any foreign e-commerce logistical operation.

China's middle class has grown exponentially in the last decade, with the China Internet Network Information Center estimating it is around 400 million strong, or around one third of the nation's population. However, numerous cities in China have progressed so fast, they have not gone through a widespread commercial brick and mortar phase, with stores, warehouses, and infrastructure for physical shopping. Instead, this phase was skipped, much like the chip and pin credit card technology that was widespread in Western countries before contactless payments became prevalent around the world.

Chinese consumers have opted for online retailers that provide a vast spectrum of options, creating a huge driving force behind China's e-commerce logistical marvel. Peak shopping seasons are astronomical in nature, with a record 1.3 billion orders being processed within a 24-hour period by Alibaba's Cainiao Network.

The technology behind China's ability to process these numbers relies on large companies such as Alibaba and JD investing in their own delivery solutions. This is in contrast to the situation in European countries where companies outsource deliveries. In China, companies tend not to rely on third-parties.

Data platforms that link warehouse operators, contractors, and distribution centers are common, unifying data to prevent mistakes in transit or any single part of a system being overwhelmed.

Smart warehouses contain hundreds of automated guided vehicles that aid in processing loading orders. 5G communication is also utilized to automate many processes and carry them out at speed. Increases in 5G signal quality and strength also speed up reliable human-to-human communication.

The boost in local delivery e-commerce infrastructure has led to China's logistical prowess spreading to other countries. Cainiao has said it will add around 30,000 new community post stations in more than 100 countries. Popular in large neighborhoods as well as student campuses and factory complexes, these easy-to-locate pick-up stations for both deliverers and collections account for up to 10 percent of China's e-commerce traffic.

Innovative pick-up and inhouse delivery systems and unified communications, coupled with a strong emphasis on technology such as 5G and AVG vehicles, all say a lot about what industry leaders around the world should be doing.

The expanding international nature of trade ties in well with China's enhanced futuristic logistics systems, meaning that the country will have a more significant role to play in global trade in the coming years. Out of all the BRICS nations, (acronym of emerging economies Brazil, Russia, India, China, and South Africa) according to the World Bank, only China has demonstrated such a surge in logistics performance in the last decade. Supply chain industry influencers should be looking toward what is happening in the East, to see how far a sector deemed mature for many years can be turbocharged to new levels of capacity.

Barry He is a London-based columnist for China Daily.

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