BEIJING, Sept.7 (Xinhua) -- A Memorandum of Understanding (MOU) on e-commerce cooperation between Ministry of Commerce of the People's Republic of China and the Ministry of Industry, Foreign Trade, and Services of the Federative Republic of Brazil was signed on September 1.
Under the MOU, the two sides will jointly establish a mechanism for e-commerce cooperation, create an environment that fosters mutually beneficial development, and promote cooperation in enterprise exchange, professional training, best practice sharing, and other e-commerce fields.
Brazil’s e-commerce market will be developed with great potential, due to gradual rise in Internet penetration rates, an increase in potential consumers, and the complementarity of China-Brazil trade structure. Nevertheless, Brazil is facing a lot of restrictions for cross-border e-commerce development. Following the BRICS Summit 2017, China and Brazil are expected to establish a cooperation mechanism in e-commerce sector, which will help break trade barriers and drive Chinese enterprises to accelerate the development of the Brazilian e-commerce market.
Brazilian E-commerce Market Soars Against the Odds
Brazilians' consumption capacity have plunged sharply in recent years due to increasing unemployment rate and inflation rate in Brazil caused by political and economic crises. However, the e-commerce industry in Brazil achieved great development with trade value at 12.8 billion U.S. dollars in 2016, up 17.6 percent year on year.
"Brazilian people prefer purchasing Chinese-produced goods like electronic products and clothes. Shopping online is an convenience and cheap way for them," said Wu Baiyi, Director of the Institute of Latin American Studies at the Chinese Academy of Sciences.
Huge market potential is attracting Chinese e-commerce enterprises and financial institutions to Brazil. Alibaba's international retail business AliExpress has rapidly developed into one of the most popular cross-border shopping sites in Brazil.
Challenges Restrict Brazil's Foreign E-commerce Trade
Brazil is facing a lot of restrictions for cross-border e-commerce development despite huge potential. Logistical costs, and trade and investment costs have become major factors that hinder Brazil's foreign trade e-commerce development.
Due to backward infrastructures, Brazil's logistics costs stay high, accounting for 18 percent of the total cost, said Wu. Meanwhile, the heavy taxation, high labor costs, and low administrative efficiency in Brazil are also problems that cross-border e-commerce enterprises have to take into account. They have hiked up corporate operating costs and reduced corporate profits, thereby dampening enterprises' enthusiasm about developing the Brazilian cross-border e-commerce market.
Besides,Brazil has tightened the control of cross-border online shopping that uses credit cards to support local e-commerce development. Without local payment modes, cross-border e-commerce sites have a much more limited pool of Brazilian clients. To better develop the South American market, Chinese enterprises need to make great efforts on localization, including the establishment of Portuguese or Spanish sites, more use of local payment modes, and logistical chain linking.
Policies Support Chinese Enterprises in Developing the Brazilian E-commerce Market
Addressing the problems in China-Brazil cross-border e-commerce development, government departments in both countries have worked tirelessly to strengthen communication and exchanges, established a cooperation mechanism, and undertaken practical measures to open markets wider to each other and reach the huge potential of bilateral trade.
"Through intergovernmental coordination, Brazil is expected to simplify its customs clearance process and tax system, as well as improve its administrative efficiency, thus promoting the rapid development of China-Brazil e-commerce," Wu added.
Brazilian government would simplify tax policies for foreign investors in Brazil, improve Brazil's investment and business environment, and further simplify the formalities of investment and business examination and approval, said Michel Temer, President of the Federative Republic of Brazil, at the opening ceremony of BRICS Business Forum 2017 on September 3. (Edited by Ma Xin, maxin11@xinhua.org)
A single purchase
