The First Anniversary of "Charity Payment": From "Buying and Selling Globally" to "Paying Globally"
Source | BohuFN
Author | Dream
In the past few years, the spring breeze of cross-border trade has become more and more widespread. Selling "goods" overseas is increasingly becoming the consensus of the majority of merchants. This is even more evident in Yiwu, an important node in China's connection to the world economy.
According to the data of Yiwu Municipal Government, recently, the number of Yiwu market operators exceeded 1 million. In Xiaohongshu, Yiwu-related content exceeded 111+w posts, "Yiwu is full of gold" and "Yiwu, the paradise of consumerism" and other topics once aroused heated discussions, and many young people even used Yiwu as a business school.
But "selling goods overseas" is far more difficult than it sounds. The simplest such as the problem of payment collection, some merchants have said, "it is easy to make mistakes if you are not a professional." This is because cross-border payment is not only a simple consumption, it involves a variety of complex businesses such as currency, exchange rate, settlement, import and export tax rebates, and restoration declarations.
In the report of the 20th National Congress of the Communist Party of China, General Secretary Xi Jinping put forward the requirements of "improving the quality and level of international circulation" and "orderly promoting the internationalization of the RMB". The good news is that the infrastructure for cross-border transactions is improving with various policies in place.
Last year, Commodity City acquired and was approved to hold 100% of the shares of Express Pay and upgraded its brand to Yi Pay. On September 29, it was approved to complete the qualification filing of cross-border RMB business, and today it is about the first anniversary. Today, Yipay has reached cooperation with more than 400 banks around the world, covering more than 130 countries and regions, and 20 mainstream international payment currencies.
This also means that in Yiwu, a bridgehead of China's foreign trade with a population of only 1.85 million but 15,000 foreigners (with visas of June and above) from more than 100 countries and regions, the small commodity city is revealing its own new story.
01 What is the reason for the double increase in profit?
On August 18, Zhejiang China Commodity City Group (hereinafter referred to as "Commodity City") disclosed its financial report for the first half of 2023.
According to the financial report, the company achieved a total operating income of 5.161 billion yuan in the first half of the year, a year-on-year increase of 22.68%; The net profit attributable to the parent was 1.998 billion yuan, a year-on-year increase of 63.50%. Revenue and profit have achieved double growth, why is the growth of small commodity city so strong?
As a platform around Yiwu's small commodity industry, Commodity City covers four major businesses: rental shops, commodity sales, hotel services and exhibition advertising, and it is also the actual operator of the largest professional market small commodity city. According to statistics, from January to July this year, the total value of import and export transactions in Yiwu reached 321.10 billion yuan, an increase of 19.7% over the same period last year; Among them, exports were 283.72 billion yuan, a year-on-year increase of 16.1%; Imports were 37.38 billion yuan, a year-on-year increase of 57.4%.
In the first half of 2023, the average daily passenger flow of the Small Commodity City International Trade City exceeded 200,000 person-times, and the average daily admission of overseas buyers exceeded 2,000, and a number of market prosperity indicators exceeded the level of the same period in 2019.
However, to support the revenue of 5.161 billion, the "innovative" business of the small commodity city is also worth paying attention to.
In 2019, Commodity City put forward the strategy of "taking the market as the main business, taking digital as the link, and taking the platform as the support to build an international trade integrated service provider", and its digital platform continues to empower it.
As of June 30, 2023, 305,000 new registered buyers have been added to the Chinagoods platform, with a cumulative total of 3.605 million, of which the total merchandise transaction volume of the Chinagoods platform in the first half of this year was 32 billion yuan, a year-on-year increase of 210.83%. Another self-owned payment brand of Commodity City, "Yiwu Pay", is particularly eye-catching.
As of June 9, 2023, Yiwu Pay's local collection account has been launched, and the global payment currency has officially expanded to 20. On the same day, Yiwu Pay's cross-border payment reached a maximum one-day foreign exchange settlement of 37.55 million RMB, and the cumulative transaction volume exceeded 300 million RMB. Commodity City said that the cross-border RMB business goal is to reach more than US$10 billion in GMV within 3-5 years, and Yiwu Pay will become a payment brand with greater influence in the world.
The market also gave its own expectations, before the emergence of Yi Pay, the stock price of small commodity city hovered almost 4-5 yuan / share for several years, after the emergence of Yi Pay, it rose steadily to 8-10 yuan / share within a few months, why can it achieve double growth, where is Yiwu Pay's imagination?
02 How big is the market for cross-border payments?
Cross-border payments are a fast-growing track. On the one hand, with the deepening of economic globalization and the increase in demand for tourism, shopping, education, investment, etc., the cross-border payment market demand is increasingly strong and the market share is expanding. On the other hand, the state has successively introduced a series of policies to encourage and support the development of cross-border payment business and innovative pilot policies, which have promoted the development of the cross-border payment industry.
In fact, as early as 2012, the small commodity city set its sights on this track and created "Yi Pay". By now, this is already a trillion-level track. According to Xie Wenwu, professor of Zhejiang City University and director of the Soft Science Digital Finance Research Base of the Provincial Department of Science and Technology, this year, third-party cross-border payments in the mainland are expected to usher in a relatively large recovery growth, and the market size may reach 1.687572 billion yuan.
In the face of such a big "cake", more and more players squeezed in, not only overseas international giants participated, China's best Internet companies have also entered the game, Yiwu Pay has found a different way, chose a subdivision track, with the small commodity city professional market as the entrance.
One is that the prospects are promising. According to Yiwu municipal government data, in 2022, there will be 176 countries and regions with cross-border RMB settlement with Yiwu, with a cumulative settlement amount of 56.539 billion yuan, a year-on-year increase of 56.23%, which to a certain extent shows that this market is large enough.
The other is that small commodity city merchants need a reliable third-party payment tool.
Take Huang Jiexin as an example, as the person in charge of Xindaxing tableware, he has encountered trouble before. "I finally waited for the customer to make a payment, but it was "frozen" because the remittance channel was unknown and suspected of fraud. Huang Jiexin said, especially in the past two years, telecom fraud has been serious, and many foreign trade companies have innocently "laid guns".
According to Caijing, the remittance received during foreign trade transactions is foreign currency, and foreign traders need to go to the bank to settle foreign exchange, but the foreign exchange settlement procedures are complicated, and most foreign trade operators do not have their relevant professional knowledge, so that there are problems such as Huang Jiexin's poor receipt and payment.
Another situation is that many cross-border e-commerce or small and medium-sized foreign trade enterprises deliver goods through non-self-operated customs declaration methods such as customs declaration, express delivery, and parcel mail, and cannot comply with the law to domestic banks for foreign exchange settlement, and most people will choose foreign trade agency processing or other ways to settle foreign exchange.
But this has two huge drawbacks. One is that the payment collection is slow, even up to one month, resulting in a lot of cash flow pressure on merchants; The other is risky. For example, many traders' bank accounts have been frozen due to suspicion, and business operations have been in trouble.
Commodity City has long had insight into the "troubles" of small businesses, and founded "Yi Pay" company in 2012 to carry out domestic related business through cooperation with banks and other institutions, but it was not until 2022 that Commodity City was approved for 100% equity of Haier's third-party payment platform "Express Payment" through acquisition, obtained an Internet payment license, and entered the field of cross-border payment.
Admittedly, license compliance is an important step for cross-border payments, but it's not easy.
After 2015, in order to rectify the market environment, the central bank stopped issuing payment licenses, ushering in a long and strict supervision. At the same time, the list of payment licenses cancelled is constantly increasing. According to data disclosed by the central bank, since the issuance of the first batch of third-party payment licenses in 2011, a total of 85 payment licenses have been cancelled, and only 186 payment institutions have been licensed. This year alone, a total of 15 payment licenses have been cancelled, which has set a very high threshold for this track, Zhang Wenjing, deputy general manager of Yipay, once said: "We have worked hard for more than 10 years." ”
Fortunately, the infrastructure of the small commodity city is good enough, and the payment is growing fast enough. At present, it has served 470,000 merchants in total, with a cumulative number of transactions of 200 million, covering 20+ industries, and the amount of capital settlement has reached 1.3 trillion yuan.
03 What is the competitiveness of cross-border payments?
At present, third-party payment tools mainly focus on the competitiveness of whether the payment is more convenient, whether the channel is compliant, and whether its handling fee and timeliness are superior.
The parent company, Commodity City, serves the world's largest small commodity distribution center, which means that Yipay has exclusive cross-border payment channels, which will help more than 900,000 market entities in Yiwu and 2.1 million small and medium-sized enterprises upstream and downstream to pay smoothly. This also lays a customer base for Yi Pay to a certain extent.
Thanks to the parent company's understanding of Yiwu small merchants, if the materials are complete, Yipay can complete the review within 2 hours, and basically achieve the same day. Taking Huang Jiexin as an example, after experiencing the "frozen card" turmoil, he chose to pay righteously. In his view, righteous payment can ensure that money comes in from formal channels and solves the security of capital; In addition, the arrival time of Yi Pay will be faster than that of foreign trade companies.
The Yi Payment platform has greatly improved payment efficiency for merchants like Huang Jiexin, and at present, the cumulative transaction volume of Yiwu Pay has exceeded 300 million yuan. Especially for some logistics companies and foreign trade agency companies, it is of great significance. According to the person in charge of Yite Logistics, the company has a business of helping operators advance loans to factories, which actually has certain challenges to the company's financial costs and cash flow pressure, but Yipay can achieve efficient debt collection, and the company's annual advance funds can be reduced by more than two-thirds.
More importantly, small and medium-sized merchants in Yiwu, which currently mainly serve Yipay, are more sensitive to their pain points and needs, and can provide more localized services and improve service efficiency.
For example, the aforementioned "frozen card storm", there have also been cases where merchants have received more than 100,000 loans, resulting in tens of millions of yuan of funds on the card being frozen. According to statistics, about ninety percent of Yiwu International Trade City operators have been frozen cards, and the application for unfreezing takes as short as a few days to as long as several years. In order to solve the pain points of the majority of merchants, Yipay has made 2 changes:
On the one hand, according to the deputy manager of Yipay, Yipay has strengthened the restoration of declaration, carried out "due diligence", that is, asked both parties to provide trade-related documents, and used measures such as "field + management investigation" to investigate the authenticity of trade and other situations to ensure the security of the collection account.
On the other hand, on February 20 this year, "Yi Pay" officially released and launched the "Frozen Card Worry-free" plan. If the operator performs the contract through the Chinagoods platform and collects the payment with "righteous payment", if the "frozen card" situation occurs, the small commodity city will advance the trade funds in advance and provide full support and assistance.
Yang Dong, a professor at Chinese Minmin University's Law School, believes that regional self-introduction of payment systems can bring multiple benefits, such as strengthening local financial control, improving business efficiency and service quality, and increasing local fiscal revenue.
Although there are many third-party payment tools entering the market now, it is clear that the regional self-launched payment system has great advantages. What is more noteworthy is that not only small merchants in Yiwu, but also small merchants such as Zhejiang Haining Leather City, Shaoxing China Textile City, Wuhan Hankou North International Commodity Exchange Center, and even global merchants such as Africa and Saudi Arabia need more efficient payment and settlement methods that require more localized services.
In particular, with the favorable release of market procurement trade policies, RMB internationalization, free trade zones, the Belt and Road Initiative and other policies, and small and medium-sized enterprises have gradually become the main body of foreign trade transactions, professional and diversified Yiwu Pay is worth looking forward to.
Reference source:
1. Chao News Zhejiang Daily: "Zhejiang Daily front page丨Yiwu launched the "Yi Pay" payment platform from "buying and selling the world" to "paying the world"
2. Finance and Economics: "Yiwu Explores New Cross-border Trade Channels"
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