Applying E-commerce to International Trade
11.2 Applying E-commerce to International Trade
Here we stress in the aspects in which we can use e-commerce to reduce the work load and trading costs, and achieve a higher trade efficiency and service quality, and therefore enhance the overall competitiveness of the enterprises and the ability to make profits, bring about the substantial increase in the export of our country and more rapid growth of the national economy, and at the same time set the exact direction of the application of e-commerce in the enterprises.
Introduction to E-commerce
11.2.1 Using E-commerce Technology to Obtain Commercial
Information
Applications in information obtaining: In e-commerce, trading personnel will be free from the heavy work of preparing goods, arranging shipping, paperwork, and other work, and can focus on collecting, analyzing, making use of relative information and negotiating. Therefore, the international trade staffs are mainly concerned with the question of how to use e-commerce to collect relative international trade information. e-commerce can be used in following way to obtain relative international trade information:
Firstly, if one knows where the information is, he/she can directly type the domain name (Web address) or IP address in the address bar of an Internet browser such as Netscape or Internet Explorer to get the related information.
Secondly, if one does not know where the information is, he/she can fill a key word of the information in the search box of any search engine such as Yahoo, Google, BAIDU, SOHU etc, and then just click the search button to search the relevant information.
Thirdly, one can also join relevant USENET or mail list to obtain some information.
One can also use the data mining module of e-commerce system to get relevant information, and use the intelligent problem processing module to filter, process, and refine information from obtained information to assistant his/her decision making.
Applications in negotiation: Negotiation is a very complicated, challenging and creative process involving a variety of factors. E-commerce system cannot play a great role in this part, but mainly provides useful information helping negotiation.
For example, a company engaged in garment export trade receives from a client an inquiry of 100,000 shirts at price of CIF OSAKA USD5.25/PC, with detailed style, size, fabric specification, color, packing, and shipment date. Assume that all the necessary information of this example can be found in the database of the e-commerce system. Then the e-commerce system will query the database to get the historic transaction price with this client that comes from contract database, the price of fabric that comes from commercial resource database, and the price of accessories such as button, lining, thread, paper card, inner box, carton, freight etc that also comes from commercial resource database, and then call the intelligent problem processing module to calculate a reasonable price of the shirt for the reference of businessman. If the majority of these data are not available, then e-commerce systems will provide related correlative information for reference. At the same time, they can use the security mechanism provided by the e-commerce system to negotiate through the Internet. The confidentiality of negotiating information can be guaranteed, communication costs can be reduced and the efficiency of trade negotiations be improved.
11 E-commerce and International Trade
11.2.2 Using E-commerce in the Business Negotiation
1. Applications in preparing goods
An example will be taken to show how to use e-commerce to help business. Taking a company engaged in garment export as an example, if the businessman in an import and export corporation, through repeated negotiation with customer, signed following contract (only the main terms are listed, general terms and conditions are omitted):
COTTON SHIRT: 50,000 PCS (fabric specification 21×21ˋ69×61) SIZE ASSORTMENT: S/M/L/XL=2/4/4/2 PRICE: CIF NY USD7.00/PC TOTAL AMOUNT USD350, 000.00 PACKING: 1PC (WITH PAPER CARD) /POLYBAG AND INNERBOX, 12 INNRBOX /CARTON SHIPMENT DATE: MAR.2002 INSURANCE: TO BE COVERED BY SELLER FOR ALL RISKS
If these export shirts are produced in the international trading company, e-commerce system will calculate the amount of fabric and accessories (buttons, lining, thread, bottom plate for packing, inner box, cartons) needed to execute the contract and corresponding shipment date, find out in the database the suppliers of these fabrics and accessories, and place orders (containing quantity, price, quality, packaging, delivery date) with the suppliers in time by means of the Supply Chain Management System. The e-commerce system will make special arrangements for delivery of the fabrics and accessories ordered so that it will not affect the normal production on one hand and the goods will not be delivered too early to avoid the occupation of capital and storage space and therefore the costs are reduced. Production can be arranged through the ERP system, so that the productive resources can be most reasonably and effectively used.
If the export goods are bought from suppliers, the e-commerce system will chose, according to the quality, cost, shipment date, credit of suppliers, one or two suppliers to place orders (including detailed instructions on the product, quantity, specifications, packaging, shipment date, Sales packing, shipping marks, inspection organization and its certificate of inspection).
2. Applications in inspection
The main applications in inspection include making certificate of inspection, quality inspection reports, automatic data interchange with inspection institutes such as Inspection and Quarantine Bureau for imported and exported commodities, Inspection companies, or foreign commodity inspection agencies to fix the time for inspection or quarantine. If the contract stipulates the commodity should be inspected by the importer (or the inspection agency appointed by him), the e-commerce system will notify the importer to inspect or authorize an inspection agency to inspect the commodity in factory at fixed time.
Introduction to E-commerce
3. Applications in the delivery
E-commerce system can provide cargo name, quantity, volume, weight, packing size of each piece of cargos and shipping notice to the shipping companies in time, in order to charter a vessel or book space and arrange the domestic transport so that the shipping capacity can be effectively utilized, various transportation tools can be timely linked up, and costs be lower.
4. Applications in the covering insurance and customs declaration
E-commerce system is able to, according to the production of goods, the vessel chartered and space booked and the coverage stipulated in the contract, arrange insurance in advance or on time and automatically produce an electronic form of insurance policy online. Also, it can automatically connect the customs declaration system in order for the Customs to accept automatically export declarations. After the goods are loaded on board the vessel, it will send the customer a shipping advice automatically.
5. Applications in obtaining export licenses
E-commerce system is able to provide the information to foreign trade management institution and apply the export quotas and export licenses in the electronic form in accordance with administrative policies for commodity exports. In 1998, former Ministry of Foreign Trade and Economic Cooperation declared that since 2000 it will no longer accepts the traditional quota applying and the quota tendering. It only accepts application for quota and tender online, which greatly pushes forward the development of e-commerce in international trading enterprises and improves the efficiency of the application and issuance of licenses. Meanwhile, the international trade enterprises can exchange data and share information with the international trade administrative organization through e-commerce and keep informed of the use of quotas and issuance of a license.
6. Applications in export rebates
Tax bureau can directly inquiry the actual amount of exports through e-commerce systems, and enterprises can apply for export tax rebates timely instead of waiting for a long period of time rush about between tax bureau and themselves, thereby capital invested and business costs are reduced.
7. Applications in export paperwork
E-commerce system can produce all the documents in written or electronic form according to contracts and letters of credit and automatically make settlement with the bank. This is the most significant role of the e-commerce system.
The automatic realization of the above aspects frees people from rushing among the insurance companies, Customs, commodity inspection and quarantine
11 E-commerce and International Trade
departments and foreign trade administrative departments, and reduces errors and costs, improves efficiency and saves a lot of labor and financial resources.
These applications must be advanced step by step. The successful use of e-commerce can save 70% of the time of business man and more than 50% of its operating costs, and improve trade efficiency by 200%. A Company can expand its trade several times by using e-commerce.
11.2.3 Application in the Technology and Service Trade
1. Applications in the international technology trade
Technology is the systematic knowledge that is used to manufacture products and provide services. Technology can take the tangible form of words, language, forms, data, formula or ingredient, and it can also take the intangible form of practical experience, personal skills or ideas in people’s mind. Technology can be taught, and can be used to bring about certain economic benefits. Technology cannot be restrained by the physiological characteristics of individuals. As the object of technology transferred (including text, language, forms, data and formula etc.) is very suitable for e-commerce transactions over the Internet, the international technology transfer will be the first field in international trade to enter the era of e-commerce. Particularly because of the development of multimedia technology and virtual reality technology, without going abroad, the two sides in the transaction will be able to carry out the “overseas” investigation, trade negotiations, technology submission and technical training. The whole process of the international technology trade can be fulfilled online. E-commerce can greatly save transaction costs and improve the efficiency of technical trade. This will promote more rapid development of the international technology trade.
2. Application in the international service trade
E-commerce makes many formerly impossible services possible; this is mainly reflected in the services provided by the service enterprises. For example, the international information service (including international technology and management consulting services-such as engineering consultation, law consultation and financial service etc.), the international expert services (such as those in education, health care, financial expert service) can all be “delivered” through the information network. People will provide services to audiences around the world by staying at home. On the contrary, fundamental changes have taken place in the means of accepting services. Instead of accepting services face- to-face or through the traditional postal system and telephone system, people can now obtain the services they need through multimedia technology or they can also take the initiative to ask for services. They may click the mouse to log on the home page of the service provider to download and share the software and
Introduction to E-commerce
information needed. It is one form of the service trade since all the services are obtained as long as the consumers pay in advance. Owing to the communications and information technology improvements, a number of technical consulting firms in the United States have achieved a tremendous amount of trade surplus. In this way, real-time service can be obtained without traveling a long-distance, paying expensive cost and waiting for long.
3. Applications in international financial trade
Internet bank has been possible and it has changed the mode of operation and competition among banks radically. Internet bank breaks through the business mode of business halls and branches, made of reinforced concrete, that are limited by space and time. Customers can now log into the Internet bank through any Internet access and enjoy the “24 u 7 service” (i.e., nonstop service of 24 hours a day and 7 days a week,). The content and quality of service, innovation will determine competitive position of Internet bank instead of the size in the past.
Internet bank makes low-cost, high-efficiency possible, and provides new tools for bank to improve traditional bank’s competitive ability and profit ability. The Internet banks do not need huge physical buildings or many workers; all its business activities are carried out through computers and the Internet. Paperless operation will greatly reduce the operating cost of banks (It is estimated that the operating costs of telephone banking transaction is 10% of the costs of the traditional means of transactions, and that of the online banking is only 10% of the telephone transactions.). Since the Internet is featured by its connecting all corners of the world with fast transmission of information. Funds to be transmitted en route can be reduced to almost zero. Internet bank can improve the economic efficiency of the social system. On the other hand, making full use of the unique advantage of the Internet, Internet banks can collect as much information as possible, improve risk management and enhance decision-making efficiency, thereby enhancing their competitive edge.
Internet banks can establish a “seamless” customer contact environment. The development of IT and popularization of Internet has made it possible for the IT enterprises and not-banking financial institutions to gradually enter into the banking industry and seize the market shares of the banks. Under such circumstances, traditional banks are faced with tremendous pressure and increasingly severe challenges. But the emergence of Internet bank also provides the traditional banks with a powerful weapon to win this battle. The convenient and flexible means of service provided by the Internet bank strongly attract the attention of the customers — especially those high-level, high-salary prosperous young customers. This kind of attention will be the focus for the 21st century businesses and the source of their profits. Meanwhile there is a bright future for the diversified and personalized new bank services such as corporate banking, intermediate business (such as securities trading, charging online etc.), online payment functions and diversified means of electronic payment and banking services like call centers.
11 E-commerce and International Trade
This means a good prospect for development of Internet banks and makes “seamless” contact possible between banks and their customers so as to realize the so-called “zero distance” communication.
The applications of e-commerce in the financial field make online shopping, online foreign exchange market, mobile banking, non-bank financial services, electronic capital transfer and other new financial operations possible. Online bank enables the banking industry to improve service quality, enhance competitiveness and increase profitability. Internet banking provides enough room for planning a bigger step of development in this field.
4. Applications in international tourism
Tourism is one of the most appropriate forms of electronic business products and adapts well to the development of a network. The application of e-commerce in tourism industry makes personalized travel possible. Tourists can communicate online with the Internet website of tourism enterprise and the enterprise may arrange the tour according to the requirements for transport and accommodation put forward by the tourists. During the entire trip, instead of being accompanied by the traditional tourist guides, the tourists will keep in touch with the websites through the Internet and enjoy personalized services at any time and place. This makes it unnecessary to join a tourist group organized by a tourist agent and avoids the problems of hastily rushing for scanning the sights and spending too much money. This can also help arranging eating, accommodation and trans- portation in self-served tourism and lowering traveling costs. The conventional forms of tourism will be surpassed, which has the disadvantage of costing the whole tourism team too much time waiting for someone or being guided shopping in the tourist attractions.
The amount of tourism customers can be expanded in that customers can also help marketing a tourist product by self-promoting and inter-recommending. Suppose one customer hopes to continue his trip to the famous scenic spots and plan in advance the adventure tour in Yunnan and Tibet. Meanwhile, another tourist books the adventure tour to Xingjian and Tibet. With the function of cooperation and information filtering, the e-commerce system can recommend the adventure tour to Xingjian to the first customer and the adventure tour to Yunnan to the second customer. Through the system, you can let the customers who share the same interest make recommendation to each other.