18COVER STORY COVER STORY 19A Reshaping Global Trade How Countries Can Combat The Growing Power Of Internet Giants Internet platforms that facilitate financial interactions,Digitalizing Trade And Logisticsoperates or is building logistic hubs in Malaysia, Rwanda, cation of regulations and customs processes, evolution of capture data and physically help move goods are playingEthiopia and Belgium. consumer protection, lowering of tariffs, harmonization of an increasingly larger role in global trade, directly impac-E-commerce marketplaces have already enabled signifi-taxation, development of internet and logistics infrastruc- ting and even competing with countries. So much so thatcant cross-border flows by aggregating huge selectionsAccording to a survey conducted by the World Trade Or-ture, facilitation of flow of goods, finance and data. Sangeet Paul Choudary, a member of the World Economic and making pricing and comparisons more transparent.ganization and the Organization for Economic CooperationEWTP said it “will identify and share best practices, for ins- Forum’s Digital Platforms & Ecosystems group, calls plat-says a new McKinsey Institute report entitled Globalizationand Development (OECD) on SMEs’ access to cross border tance around the development of efficient infrastructures form- led trade “one of the defining shifts of our time.”in Transition: The Future of Trade and Value Chains.trade, the major challenges they face include access to such as cross-border eTrade hubs and experiment zones, As platforms such as Alibaba and Ant Financial create an It cites Alibaba’s AliResearch projects that cross-borderinformation about export opportunities, access to trade smart logistics, credit payment, and technical assistance electronic silk road and benefit from winner-takes-all B2C e-commerce sales will reach approximately $1 trillionfinance and logistics costs. Cross border eTrade is proving for emerging markets, with a view to influencing policy scenarios, governments risk losing control over global by 2020. B2B e-commerce could be five or six times asto be a game changer for SMEs to participate in global making and promoting inclusive eTrade.” trade. “Platforms like Alibaba can drive the growth of small large. While many of those transactions may substitute forvalue chains. It creates direct access to international and medium-sized businesses and financial inclusion for a traditional offline trade flows, e-commerce could still spurcustomers and highly efficient digitalized flows of pro-A Shift In The Balance Of Power third-party country and have direct bearing on its develop-some $1.3 trillion to $2.1 trillion in incremental trade byducts, data and money. Many institutions which previously ment,” says Choudary. “This gives these platforms2030, boosting trade in manufactured goods by 6% to 10%.focused on global trade are working to facilitate eTrade.While digitalizing trade will improve efficiency and help incredible negotiating power. It also raises geopolitical Alibaba is positioning itself to grab a big percentage ofBut there is no forum to bring together these disparate SMEs it is also giving the Chinese Internet giant unprece- concerns, especially when the platforms are closely moni-that trade by operating as a vehicle for public-private coo-efforts around eTrade, nor to bring the perspectives ofdented power over global trade. “In Africa or in countries tored by the home-country government.”peration that can incubate eTrade rules and foster a morethe diverse sets of private and public constituencies, e.g. like the Philippines or Pakistan they don’t have infrastruc- Governments in India, Singapore and elsewhere are busy effective and efficient policy and business environment forSMEs, regulatory entities, vendors, consumer associations, ture to facilitate SMEs and plug into the global economy, devising plans to combat the growing power of suchcross border B2B and B2C electronic trade. The Chineseindustry associations, business intermediary organizations, Alibaba offers infrastructure -in-a-box to help them exploit platforms by either banding together to use public goodscompany’s Electronic World Trade Platform (eWTP), whichand enable these parties to assess existing regulations and their potential,” says Choudary. While Alibaba is digitali- to create a common financial services infrastructure or by was conceived by Albaba founder Jack Ma and launchedbest practices, and incubate and advocate rules to foster zing trade and logistics at cost or even for free, Ant Finan- developing separate government-as-a-platform strategies,in 2016, aims to help small and medium sized enterpriseseTrade.cial, which got its start powering Alibaba’s e-commerce says Choudary, a platform business model expert and the (SMEs) participate in global trade without investing inAt a 2016 meeting of the G20 eWTP offered to step into platform and was later spun-out as a separate business, author of an upcoming Forum white paper on the topic.their own supply chains by easing “global purchase, globalthe breach and incubate rules for the development of is taking much bolder steps to dominate payment wallets sales, global payment and global logistics.” It alreadyeTrade in terms of industry standards and rules, simplifi-in almost every major country in Asia, Latin America and