COVID-19 pushes forward Jack Ma’s plans for a World Trade Revolution
Jack Ma, founder of China’s e-commerce giant Alibaba, has a goal to ‘flatten’ world trade: away from control by multinationals and instead to have millions of goods-trading mum and pop entrepreneurs supercharge a new era of inclusive world trade. His e-commerce platform eWTP, electronic world trade platform, and its Hangzhou secretariat are key to that revolution.
COVID19 has pushed the agenda forward: 1) by mainstreaming digital commerce globally; 2) by giving e-WTP a major test run via the distributive role play by eWTP inaugural ‘e-hubs’ in Belgium, Ethiopia, Malaysia and Rwanda. Amid these advances and general uncertainty, as the WTO considers nominations for position of Director General, it might best ask what they know of the potential of digital trade and their view on what it could mean for the global trade governance.
What is eWTP in principle?
In January 2019 in Davos Jack Ma compelled his listeners to continue to believe in globalisation. He expressed his view around the issue therein: “But many don’t believe in it because it is not inclusive. How can we improve it? In the last 20 years, globalization was controlled by 60,000 companies worldwide, imagine if we could expand that to 60 million businesses.”
Ma’s platform for “globalisation 4.0” is the eWTP. In Davos he explained it as a platform enabling the four T’s: Training, Trade, Technology and Tourism. According to the stated aims on its website (ewtp.org), these could be noted as a private sector-led and multi-stakeholder initiative, for public-private cooperation to incubate eTrade rules and foster a more effective and efficient policy and business environment for cross border electronic trade (including both B2B and B2C) development. In other words, trade and trade rules – for an entirely digitized trade logistics chain comprised of an intended 60 million small-and-medium (SME)-sized businesses in place of 60,000 multinational enterprises (MNE)-businesses.
Panellists, in the “E-commerce 2030: enabling an inclusive future for e-commerce”, included Ma, alongside WTO Director-General Roberto Azevêdo; World Economic Forum President Borge Brende and UNCTAD Secretary-General Mukhisa Kituyi. Amid shared calls for inclusive trade Ma went as far to call for “an upgrade of the existing trade rules, not the creation of new ones, and for open debate on this matter beyond governments.”
What is eWTP in Practice?
The eWTP secretariat is based in Hangzhou, Zhejiang province, China, the same city as Alibaba’s own worldwide headquarters. eWTP also has several digital trade hubs, “e-hubs”, outside of China. The first such hub – inaugurated as the world’s first digital free-trade zone – in Malaysia, in March 2017. Partners in the Malaysia hub, itself located proximate to Kuala Lumpur International Airport include state-run Malaysia Digital Economy Corporation, Malaysia Airports Holding Berhad (MAHB) and two of Malaysia’s largest banks, CIMB and Maybank.
Hubs have also since been launched in Rwanda, in October 2018 ; Belgium, in December 2018 ; and Ethiopia, in December 2019. This week’s China-Africa Digital Trade Week may yet have produced the groundwork for another African hub. Each such hub comprises a smart logistics base that is typically proximate to an airport that hence facilitates trade. With a primary aim of enabling SMEs to newly participate in global trade, overall, eWTP e-hubs serve the following roles:
- Digital trade hub: A well-located logistics hub that functions as a centralized customs clearance, warehousing and fulfilment facility for the host country and region, and delivering faster clearance for imports and exports;
- E-service platform: Connected to Alibaba’s OneTouch platform, and linking the host country directly to the e-commerce pilot area in Hangzhou to enable SMEs and businesses to trade conveniently and efficiently between the two countries;
- Digital payment and financing: Relevant parties from both sides explore e-payment and financing opportunities with a focus on facilitating B2B trade for host country SMEs;
- Digital skills development: training programs that help incubate start-ups and develop skillsets in individuals in support of host country digital economy development.
To that end, and as Ma put it: “The problem with many free trade zones is that they are designed only for big companies…We think there should be free trade zones for small companies: 24-hour customs clearing, if you are below US$1 million exporting to other countries it should be tariff free.”
Meantime, during the broader global trade shutdown around COVID19, trade on the platform went on. Not only was it used to deliver commercial and donated PPE supplies, but it was also used for regular trade, prominently with respect to sale of Rwandan coffee to China. Rwanda’s Ambassador to China noted: “Thanks to the elimination of intermediaries between Rwandan farmers and Chinese consumers, our farmers can now earn an extra $4 for each package sold,” This followed the sale by a Rwandan coffee vendor of 1.5 tons of coffee soon after placing it on Alibaba’s e-commerce platform.
Is there a Bigger Vision?
In a famous online video from 1999 Jack Ma expresses his vision for a Chinese e-commerce company to his then small team. Twenty years later Ma had vastly exceeded those expressed aspirations.
In the same vein, Ma made early public reference to eWTP at the St Petersburg International Economic Forum of June 2016. He is reported to have noted that “In most countries SMEs contribute more than 50 percent of GDP and an even higher percentage of employment.” And yet, he noted, SMEs are effectively shut out of global markets by obstacles, including complex regulations and market-entry regimes that only large companies can navigate, as well as a lack of access to financing. Ma promised that eWTP and its future e-hubs would make trade more inclusive, and in the process also support young entrepreneurs. He promised to establish digital free trade zones – for SMEs – and that these ecommerce hubs would link up markets around the world. In doing so, eWTP would also help to write the rules for digital world trade.
COVID19 has pushed forward the eWTP digital trade revolution
During the COVID19 shutdown of 2020, e-commerce became far more important as a result of traditional shopping being largely reduced to no-contact deliveries. Concurrently, the world woke up to a realisation that PPE manufacturing capacity, including of medical gloves and gowns, was centred in China. Jack Ma quickly took on the role of entrepreneur and philanthropist in seeing that these were delivered to those in need, initially in Asia, Africa and Europe especially – via eWTP.
Rwanda and Ethiopia played a critical role in the distribution of donated PPE during COVID19 in Africa. Those PPE supplies were delivered first to Ethiopia and Rwanda, from where they were delivered to other countries in Africa. Such was Ethiopia Air’s fundamental role therein, that Alibaba and Ethiopia Air have since signed a partnership agreement to deepen the equivalent ecommerce logistics partnership into the future.
The title of the earlier mentioned WTO Open Forum panel, “E-commerce 2030: enabling an inclusive future for e-commerce” may indicate Ma’s timeframe. That is, by 2030 global trade may have been revolutionised to comprise something closer to a global matrix of artificial-intelligence-driven, digital-currency-supported, and SME-sales dominated trade. The importance of e-hubs will perhaps depend how the aims of these have been normalised beyond the e-hubs and into the broader economy, and their relative efficiency and logistics role therein.
The more abstract rules that govern the underlying digital trade ecosystem will, implicitly, be shaped between times. Whether in Hangzhou or Geneva, or elsewhere again, will in part depend on whom is selected as the incoming next Director General of the WTO, and this person’s ability to garner member state willingness to collaborate effectively, and efficiently advance the existing global trade architecture for the digital commerce era.
2020 China-Africa Digital Trade Week starts virtually.
The views expressed on this blog are those of the author(s) and are not necessarily those of the SOAS China Institute.
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