As the “troika” driving China’s economy, exports, investment, and consumption each play an important role. As China builds a dual circulation economic pattern, positive changes have emerged in China’s foreign trade exports as the year-end approaches.

On November 28, 2023, CoGoLinks, a domestic cross-border payment institution, announced the launch of a customized payment and collection solution for the used car export industry, becoming the first cross-border payment company to announce the launch of customized services in this vertical field. It is worth noting that on the same day, the company revealed that since the launch of B2B foreign trade collection services in November 2022, the transaction volume of this product service has grown exponentially, with an average monthly growth rate of over 43% in the past year, and domestic used car exports have become the biggest highlight.

In recent years, with the upgrading of various industrial chains, China’s foreign trade pattern has gradually shifted from extensive traditional models to digital and intelligent ones. New energy, energy storage, and electric vehicles, represented by the “new three items” of foreign trade, have entered a period of rapid development. In particular, the emerging industry of used car exports has injected strong momentum into China’s foreign trade and captured the globalization dividend of cross-border e-commerce.

In fact, not only cross-border payment institutions but also the rapid growth of China’s auto and motorcycle parts exports associated with used car exports have brought hundreds of millions of dollars in revenue to cross-border e-commerce. Recently, eBay, a global e-commerce giant, released data on the “2024 Auto and Motorcycle Parts Export Strategy Categories” showing that as one of the world’s largest online trading markets for whole vehicles and auto and motorcycle parts, eBay Motors has an annual transaction value of over $10 billion, and Chinese sellers are the most active trading group.

The surge in exports of used cars and auto parts

In the past three years, China’s used car export industry has seen a “one step per year” pattern. It is expected that by 2025, China’s used car export volume is expected to reach a scale of 400,000 units.

Although China’s used car export industry started later than Japan, Europe, and the United States, it has obvious advantages and has rapidly moved from the embryonic stage to the growth stage, ushering in a period of growth dividends.

It is worth mentioning that according to the latest data released by the General Administration of Customs, from January to October 2023, China’s import and export value reached 34.32 trillion yuan, with high-tech products such as automobiles, energy storage, and photovoltaics maintaining high-speed growth. In addition, from January to October this year, China’s automobile exports reached 3.922 million units, an increase of 59.7% year-on-year. Among them, new energy vehicle exports reached 0.995 million units, an increase of 99.1%; China’s customs statistics show that in the first half of 2023, China’s battery and its components exports reached $33.87 billion, an increase of 50.5%.

As a new model of foreign trade export, new formats represented by B2B, B2C, and independent stations are also contributing new momentum to foreign trade. In the first half of this year, China’s B2C cross-border e-commerce continued to release its advantages and potential in “buying globally and selling globally,” with an import and export scale of 1.1 trillion yuan, an increase of 16%; data from the China International Economic Exchange Center also predicts that from 2021 to 2025, China’s cross-border e-commerce B2B market will grow at a compound annual growth rate of 25%, reaching a market size of 13.9 trillion yuan, with nearly 80% of global B2B transactions shifting online.

According to its introduction, at present, China’s used car export destination countries are mainly concentrated in Central Asia, the Middle East, Russia, Africa, etc. However, under the rapid development of used car exports, this emerging field also faces many infrastructure problems, such as facing various legal systems, consumption habits, community cultures, etc. in overseas markets. China’s used car exporters also face problems such as unstable overseas orders, long payment periods, and high pressure on capital outlay, and the need to find solutions.

Currently, many service providers focusing on foreign trade scenarios are also providing customized industry solutions for the used car export industry, enabling Chinese used car dealers to go global. For example, in response to the difficulties in collecting payments for used car exports, such as difficulty in collecting payments, high costs, and high pressure on capital turnover, CoGoLinks, relying on its mature cross-border full-chain payment and exchange capabilities and domestic and foreign dual-licensed qualifications, has created a customized payment solution for used car exports based on digital technology and scenario insights, providing a safe, compliant, efficient, and low-cost one-stop solution for the used car export industry.

On cross-border e-commerce platforms, more and more leading institutions are leveraging platform big data to circulate Chinese auto parts globally.

eBay has shared the latest export trends with Chinese auto parts sellers and manufacturers. In the wave of online sales of auto parts worldwide, Chinese auto parts products with a complete range and high cost-performance ratio have become the most dazzling dark horse.

According to the "2024 eBay Auto Parts Strategy Categories", in the global market, online demand in European markets such as Italy and France is growing. In the past 12 months, Chinese sellers on eBay Italy have seen nearly 100% growth in sales of spoilers and tailwings, and over 900% growth in sales of bumpers on eBay France. In addition, benefiting from China's strong manufacturing strength in the automotive aftermarket and a mature cross-border e-commerce ecosystem, Chinese sellers still maintain a huge advantage in the advantageous export categories such as tire and wheel systems, braking systems, suspension and steering systems, engine and transmission systems, bumpers and headlight assemblies, with broad market opportunities. In the past 12 months, Chinese sellers on eBay US have seen over 100% growth in sales of brake discs, ECUs, and vehicle computers, and over 60% growth in sales of automatic transmission parts on eBay Australia.

How to Avoid Risks in High Growth

The used car export industry is currently in a rough development stage, lacking professional talents, and the whole transaction system has not yet been fully formed. With the continuous expansion of new energy vehicle export scenarios and the further regulation of China's used car export business, the demand and opportunities for China's used car exports are emerging, with broad long-term development prospects. CoGoLinks will focus on the payment and collection scenarios of used car exports, help used car export traders manage funds, and strive to help related enterprises in the used car export industry release unlimited potential and seek global development opportunities.

Specifically, in the past, due to the lack of specialized payment channels for used car transactions overseas, used car export traders had to negotiate with buyers for a long time on payment methods, leading to low transaction efficiency. At the same time, due to the fact that the payment period for used car exports often lasts for more than two months, traders often need to provide capital advance, resulting in significant pressure on capital turnover.

In response to this, used car export traders can use the payment and collection solutions provided by CoGoLinks, relying on CoGoLinks' extensive global payment network. Used car export traders can choose to open global collection accounts to manage the payment and receipt of funds from multiple countries in one place; they can also choose to open local collection accounts to avoid intermediate bank handling fees and exchange losses. Through cooperation with relevant licensed institutions, CoGoLinks can also provide high-limit instant online financing credit application services to reduce the capital pressure on traders.

On November 30, 2023, another cross-border payment institution, Airwallex, in collaboration with Edgar Dunn, a globally renowned payment consulting company, released an industry white paper titled "Embedded Finance - New Opportunities for Global SaaS Platforms and Online Trading Platforms". The white paper shows that with the growth of cross-border trade settlement, small and medium-sized enterprises (SMEs) face pain points in financial services due to cross-currency, cross-regional, and cross-channel issues in global trade, and the surge in demand for embedded financial services.

At present, most small and medium-sized enterprises (SMEs) manage global fund flows through multiple financial service providers, including global banks, local banks, and financial technology service providers. SMEs face many pain points in overseas receipts, which reduce their work efficiency. The main pain points include lengthy processing and settlement times (affecting 45% of surveyed enterprises), with Singapore and Australian enterprises being particularly affected (52% of local surveyed enterprises); high transaction fees caused by multiple currency exchanges are the second most mentioned problem (affecting 41% of surveyed enterprises), with British SMEs being the most affected (45% of local surveyed enterprises). More than 80% of SMEs surveyed stated that they would consider switching to alternative financial solutions provided by their SaaS platforms or online trading platforms if they could.

The white paper survey shows that Chinese SMEs (93%) and American SMEs (88%) have the strongest desire to obtain financial services through existing software providers. 76% of surveyed enterprises expressed that they are willing to pay more for a one-stop solution provided by a single supplier, with Chinese SMEs having the highest willingness (91%).

Seamless cross-border payments are necessary for digitally-focused SMEs, but research shows that these enterprises do not believe that banks provide suitable solutions to help them achieve their global development goals. SaaS platforms and online trading platforms can fill this gap well because they have a closer relationship with customers and better understand the particularity of the industry. For example, if an e-commerce platform intends to provide loans to sellers, the visibility of the payment process is very important for pre-approval and risk assessment of funds.

Compared to the B2C export model relying on platform payment and receipt, B2B foreign trade has many characteristics such as diverse trade forms, complicated export models, and decentralized industrial chains. At the same time, the demand for fund management in different vertical fields is also quite different. Therefore, traditional B2C payment products cannot be directly applied to the B2B foreign trade field, and customized payment and receipt solutions will comprehensively solve the problem of inconsistent demands from foreign trade merchants, which may become the mainstream form of future industry service models.