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Accelerated Deliveries Mark Importance of Sino-Russian E-Commerce

New deal cuts China-to-Russia post from four weeks to seven days as bilateral e-commerce set to hit US$36 billion.

Photo: New deal: Accelerated parcel deliveries from China to Russia.
New deal: Accelerated parcel deliveries from China to Russia.
Photo: New deal: Accelerated parcel deliveries from China to Russia.
New deal: Accelerated parcel deliveries from China to Russia.

Despite the widespread economic slowdown throughout Russia, this has not been reflected in the e-commerce and postal logistics sectors. Recent figures from the Russian Post shows that parcel volume has grown by 50% year-on-year in the first six months of 2015. Even more tellingly, the share of international parcels originating from China grew by 80% over the same period.

In line with this, many industry experts expect bilateral e-commerce between Russia and China to be worth some US$36 billion this year. The sector is also predicted to enjoy 30% per annum growth for the foreseeable future.

The significance of the sector was marked by the signing of a new agreement between the official Russian and Chinese postal organisations earlier this year. This will see delivery times between the two countries slashed from three to four weeks to just seven days. The improved delivery times will result from the increased use of fast rail links, rather than the previous reliance on a combination of road and air transportation.

Under the new system, parcels from the mainland's leading online vendors will be consolidated at designated hubs in China and then forwarded to a dedicated logistics centre in Russia. One of the most important of these centres will be in Yekaterinburg, the capital of the Ural Federal District and one of Russia's largest cities.

The city acts as an interchange for the Trans-Siberian and the Turkestan-Siberian railways, representing a key nexus for the Central Asian and Far East transit corridors. With the centre due to be fully operational by the end of 2015, the Harbin City Centre for e-Commerce has been announced as its first tenant. AliExpress, Taobao and JD.com are also expected to establish presences in the new facility.

An additional hub will be created in Russia's Far East, following an initiative by the Heilongjiang Province authorities. This will be in addition to the current facilities in Yekaterinburg, Blagoveshchensk, Moscow and Novosibirsk. Vladivostok and the seaports to its south, including Kinevichi, were accorded freeport status in September. All of these facilities have now initiated duty-free customs clearance protocols, while also introducing streamlined multi-modal logistics facilities.

As well as the establishment of processing and access facilities, a number of the major players in China's e-commerce sector have also placed considerable emphasis on the development of their customised payment systems in Russia. AliPay, for instance, has already looked to establish mutually beneficial partnerships with several Russian banks, while also seeking to work in tandem with a number of local payment systems, such as Qiwi and Yandex.Money.

Yandex – often referred to as "Russia's Google" – has been wooed by a number of Chinese operators. Understandably, many have been drawn by its facility to offer not only payment solutions, but also search and online promotion opportunities. It is already seen as having a major impact on purchase decisions in a number of sectors, including garments and footwear, fashion accessories, children's products, mobile phones and tablets, gadgets, perfumes and cosmetics, car parts and components, and travel services.

As well as sales from China into Russia, there are also signs that traffic may also be moving in the opposite direction. A number of China's leading e-commerce companies, most notably JD.com, have been actively promoting the sale of Russian goods across the mainland. Among the most popular items to date have been binoculars, food, vodka, chocolate, amber, jewellery and seafood.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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