Chinese E-Commerce Giants Poised for Growth Following New Government Policy Support

Shares in China's leading e-commerce businesses are set for a lift following the announcement of new government policy measures aimed at boosting the industry's exporting capabilities and overseas warehousing infrastructure.

During a session led by Premier Li Qiang, The State Council passed a policy document last Friday that seeks to expand export growth through the growing sector of international e-commerce. The meeting focused primarily on developing e-commerce platforms and overseas warehouses. It emphasized the need to actively cultivate international e-commerce business entities and to provide domestic companies a better access to these platforms. Additionally, the meeting called for increased financial support and the strengthening of the construction of related infrastructure and logistics systems.

As a term mentioned firstly in a state-level meeting, warehouses stand out as a new opportunity for investors.

Zhejiang Securities has noted that overseas warehouses, functioning as "forward-deployed storage," localize exporting e-commerce logistics services such as shipping and returns, enhancing transport efficiency and ensuring the stability of the customer experience. Additionally, these warehouses serve as critical overseas hubs for cross-border e-commerce, representing a new type of foreign trade infrastructure and an important platform for driving foreign trade growth and achieving high-quality development.

China's e-commerce industry has bucked the trend, demonstrating impressive growth amid global economic headwinds. The General Administration of Customs reports that the sector’s import and export volume reached 2.38 trillion yuan ($328.57 billion) in 2023, marking a year-on-year increase of 15.6 percent, with exports climbing by 19.6 percent.

The policy comes as cross-border e-commerce transactions have risen to represent 42 percent of China’s total goods trade in 2023, up from just 16 percent in 2014. Market analysts at iResearch project that by 2025, the market size will exceed 10 trillion yuan, following a compound annual growth rate of 25.1 percent from 2017 to 2022.

China's leading e-commerce platforms, including Alibaba's AliExpress, fashion brand SHEIN, Pinduoduo's TEMU, and ByteDance's TikTok Shop, have been aggressively expanding internationally. TEMU has rapidly increased its market presence in the U.S., focusing on a complete managed model that naturally filters for factory-type sellers, leading to swift growth in downloads and GMV. TikTok Shop made its debut in the U.S. in September 2023 and has quickly amassed over 30,000 stores, capitalizing on its short video platform to foster a community of interest-based buyers.

After a 78% rise in 2023, PDD's market value has hit $193 billion last year, snatching the crown from Alibaba. Though PDD's revenue last quarter was still less than a third of Alibaba's, it's growing much faster.

Investors are eyeing these categories for potential gains as China's e-commerce players prepare to capitalize on the favorable policy environment, further integrating the country's vast manufacturing output with global consumer markets.