Guangdong Province’s “15th Five-Year Plan” was officially released, and cross-border e-commerce and cross-border financial services appeared in the planning and deployment at the same time.
The “Outline of the 15th Five-Year Plan for National Economic and Social Development of Guangdong Province” proposes to create new advantages of an open economy and serve as a gateway hub for high-level opening up to the outside world.
In terms of cultivating new drivers of foreign trade, the “Planning Outline” proposes to vigorously develop cross-border e-commerce, promote the “cross-border e-commerce + industrial belt” model, and cultivate local comprehensive and vertical cross-border e-commerce platforms.
The relevant chapters of Financial Power Province propose to promote the internationalization of RMB, improve the use of RMB in cross-border trade and investment, and promote settlement facilitation.
Guangdong’s foreign trade collection and payment services are facing two types of changes.
One type comes from the integration of cross-border e-commerce and industrial belts, and the other type comes from the facilitation of cross-border use and settlement of RMB.
The participants in cross-border e-commerce extend from platform sellers to industrial belt companies, brand overseas companies, supply chain companies and local cross-border e-commerce platforms.
Collection, payment, settlement, currency exchange, reconciliation and compliance management, entering more complex business scenarios.
Guangdong is a major manufacturing and foreign trade province, and the Pearl River Delta has gathered a large number of export-oriented industrial belts such as electronic information, home appliances, clothing, furniture, auto parts, beauty, and smart hardware.
After cross-border e-commerce is integrated with the industrial belt, the foreign trade collection and payment service targets are closer to the source factories and supply chain enterprises.
In the past, many cross-border payment products focused on serving the overseas collection accounts, foreign exchange settlement and cash withdrawal needs of platform sellers; as industry leaders have become more involved in cross-border e-commerce, their needs for account period management, supplier payment, platform fee payment, overseas marketing fee payment, return and refund processing, and exchange rate risk management have increased simultaneously.
“Cross-border e-commerce + industrial belt” allows more factories, brands and supply chain companies to directly enter the cross-border transaction process.
When factory-type sellers and brand companies directly face overseas consumers, overseas channel providers and platform rules, they need comprehensive services such as multi-currency accounts, order reconciliation, financial collection, compliance declaration, logistics cost settlement, after-sales refunds and dispute handling.
If cross-border payment institutions only compete around “receipt to account”, it will be difficult to cover the complete business processes of enterprises in industrial belts.
The “Planning Outline” proposes to cultivate local comprehensive and vertical cross-border e-commerce platforms, which has changed the demand structure for cross-border payment services.
Comprehensive platforms rely more on multi-currency collection and payment, platform merchant management, fund collection, separate settlement and risk control review; vertical platforms require more industry-based solutions.
Different categories have different order cycles, return ratios, overseas warehouse usage methods, supplier account periods and fee structures. Payment services need to be embedded in platform rules, transaction processes and merchant management systems.
Cross-border payments under the platform ecosystem extend from seller payment to platform settlement, merchant account sharing, supplier payment, logistics and warehousing fees, overseas advertising and software service procurement.
Fund flows are more diversified, account systems are more complex, and risk control requirements are higher.
Guangdong proposes to cultivate a local cross-border e-commerce platform. Foreign trade collection and payment services will be developed around the platform ecosystem, and collaboration between payment institutions, banks, foreign exchange service institutions and enterprise service platforms will be closer.
The “Planning Outline” also proposes to improve offshore trade support policies, explore new types of international trade such as offshore resale and global procurement, and attract multinational companies to set up regional settlement centers.
This pushes cross-border payment services to the corporate fund management stage.
Offshore trade, global procurement and regional settlement centers involve multi-entity, multi-market, multi-currency and multi-account arrangements, which put forward higher requirements for trade authenticity review, fund collection, foreign exchange compliance, payment paths and financial system docking.
The regional settlement center involves domestic and overseas fund management, purchase payment, sales collection, internal settlement and exchange rate risk management.
Faced with such demands, cross-border payment service providers need to have stronger capabilities in account systems, compliance materials, transaction monitoring, payment capabilities and system docking.
Related services go beyond the scope of payment collection by ordinary sellers and are closer to the cross-border capital operation and management of enterprises.
Qianhai, Hengqin, Nansha and other platforms are also named in the plan.
The “Planning Outline” proposes to support Hengqin, Qianhai, Nansha, and Hetao to explore and deepen financial institutional opening with Hong Kong and Macao, and promote the interconnection of financial market rules and institutional interoperability between Guangdong, Hong Kong, and Macao.
The Qianhai section also mentioned that pilot projects will be carried out in the cross-border use of RMB, cross-border legal services, new international trade development, and business environment reform.
Qianhai, Hengqin, Nansha and other platforms undertake cross-border trade, financial opening and rule connection functions.
Cross-border e-commerce and foreign trade receipts and payments rely on online platforms, ports, shipping, logistics, taxation, legal, foreign exchange and financial services.
The open functions of Qianhai, Hengqin and Nansha are actually connected with Guangdong’s industrial development overseas, the construction of cross-border e-commerce platforms and the facilitation of RMB cross-border settlement.
The cross-border use of RMB is another main line of payment planned.
The “Planning Outline” proposes to improve the use of RMB in cross-border trade and investment, promote settlement facilitation, and promote a virtuous cycle of RMB onshore and offshore markets.
As relevant arrangements advance, enterprises will have more service needs in terms of collection currencies, payment currencies, exchange costs, capital turnover and financial management.
Currently, cross-border e-commerce companies generally face multi-platform, multi-currency, multi-account, and multi-market operations.
Receipts, settlements, cash withdrawals, payments, refunds, reconciliations, tax materials and compliance audits are often scattered in different systems.
Guangdong promotes the integration of cross-border e-commerce and industrial belts, and also proposes the facilitation of cross-border use and settlement of RMB, and foreign trade collection and payment services need to be reorganized around corporate business processes.
Whether banks, payment institutions and platform service providers can integrate collection, payment, exchange, reconciliation, risk control and compliance material management will directly affect the efficiency of industrial enterprises going overseas.
Trade facilitation and overseas warehouse layout will increase the density of cross-border payment scenarios.
The “Planning Outline” proposes to improve the trade support system, promote the reform of cross-border trade facilitation, promote new customs clearance models, and support various entities to orderly deploy overseas warehouses and other circulation infrastructure.
The capital flow of cross-border e-commerce is highly bound to logistics, customs clearance, overseas warehouses, after-sales, platform fees and supply chain services.
The more complex the order fulfillment is, the more refined management is required for fund settlement and fee payment.
The cross-border e-commerce deployment in Guangdong’s “15th Five-Year Plan” points to changes in the way foreign trade companies operate.
As industrial enterprises move from OEM and supply to brand overseas and platform operations, payment services will have to change with the transaction structure.
Cross-border collection accounts are still important, but foreign trade companies need comprehensive services covering orders, accounts, settlement, payment, exchange, reconciliation and risk management.
In the next five years, the competition in Guangdong’s cross-border payment services will be closer to the industrial belt and real trade processes.
Cross-border e-commerce + industrial belt, local platform cultivation, regional settlement center, cross-border use of RMB and settlement facilitation are jointly promoted, and foreign trade collection and payment services will cover more cross-border business links.
Factory-type sellers, platform-type enterprises, brand overseas enterprises and regional fund management scenarios will become important directions for cross-border payment service competition in Guangdong.
