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On the afternoon of October 14, Deloitte, in collaboration with Ant International's subsidiary WorldFirst, released the 2024 Digital Trade New Landscape Report.

The report indicates that cross-border trade in the Asia-Pacific region continues to develop with high prosperity. In 2023, the import and export trade of goods in the Asia-Pacific accounted for about 40% of global trade, with a scale of nearly $18 trillion. By 2024, this figure is expected to grow to $18.5 trillion, achieving a 5.1% increase, which is higher than the World Trade Organization's prediction of a 2.6% increase in global goods trade.

Overall, the report focuses on global digital trade, providing a detailed analysis of the growth momentum in the Asia-Pacific region and the different development potentials of various regions, while also paying attention to the emerging Asia-Pacific "micro multinationals" and exploring the key factors for their development in digital trade.

Among them, some development trends are worth noting: cross-border payment players are expanding from basic payments to comprehensive cross-border financial services; generative artificial intelligence and Software as a Service (SaaS) are playing the greatest role; and the "localization" of cross-border e-commerce will further broaden.

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Malaysia is expected to become a Southeast Asian data center hub.

At present, e-commerce, mobile payments, digital import and export, and cross-border e-commerce are the main aspects of current digital trade development in the Asia-Pacific region.

Xie Sijun, the managing partner of Deloitte China's technology industry, stated that in the future, digital trade in the Asia-Pacific will continue to maintain rapid growth and continue to unleash tremendous potential. However, countries in the Asia-Pacific region differ in terms of economic development stages and levels of digitalization.

From the digital trade overseas potential index of major countries in the Asia-Pacific region formulated in the report, Malaysia, Indonesia, Thailand, Vietnam, and the Philippines are high-potential markets, with Malaysia scoring the highest and expected to become a Southeast Asian data center hub.

Reporters learned that cloud service providers such as Microsoft, Amazon, and Alibaba all plan to expand their investments in Malaysia, and digital infrastructure giants such as Equinix, AirTrunk, and Global Data are also building data centers in Malaysia.

According to Research and Markets, from 2022 to 2028, the size of Malaysia's data center market will grow from $1.313 billion to $2.252 billion, with a compound annual growth rate of about 9.4%.Deloitte's TMT Senior Director, Zhong Yuntai, told reporters that the indicators are comprehensive, including e-commerce penetration rate, FDI, digital penetration rate, etc. It may seem that Vietnam has a high income, but in fact, the growth rate is not as high as that of Malaysia and Thailand, so the comprehensive evaluation will be relatively low.

WLH CEO Shi Wenyi also emphasized to reporters that although Malaysia and Vietnam are both manufacturing centers in Southeast Asia, their market positioning is different.

Big data analysis is the most widely used by companies

"Digital trade companies are using advanced digital technologies such as big data analysis, artificial intelligence, the Internet of Things, and cloud computing to build new business models and value chains," said Xie Sijun.

On the one hand, the rapid development and application of digital technology provide more market entities with the opportunity to participate in the global value chain. On the other hand, digital technology has driven the innovation of corporate R&D, production, and marketing models.

The report shows that big data analysis (75%) is the most concerned and widely used technology at present, followed by artificial intelligence (47%) in second place, because they are directly related to business optimization and customer experience improvement. Next are the Internet of Things (25%) and cloud computing services (18%), which are the company's investment in logistics and warehousing and IT infrastructure.

For cross-border e-commerce companies, the priority and strategy selection in technology application are highly related to the actual business and application scenario needs.

The report shows that the high application proportion of data analysis (76%) and personalized marketing (51%) reflects the company's emphasis on customer insights and precise marketing. The application of logistics (36%) and supply chain management (35%) technology shows the company's focus on efficient operation and cost control.

In addition, the application of customer service (34%) and digital marketing (32%) technology shows that companies are committed to improving customer experience and brand awareness. Payment and settlement (20%) and risk management (18%) show the company's emphasis on security and stability.

In the future, using digital technology to achieve intelligence and efficiency in important links will become the focus of layout. From the perspective of technology fields, generative artificial intelligence and software as a service are playing the greatest role.Additionally, the maturity of digital technology has further expanded the connotations of cross-border payment services, covering the needs of cross-border merchants to the greatest extent. Shi Wenyi told reporters that in emerging markets, how to make efficient payments and control exchange rate fluctuations are the two main pain points.

In the early stages, the application of blockchain combined with payment broke through the limitations of the traditional cross-border payment model. This includes eliminating the need for intermediary institutions, reducing the costs of cross-border transactions, and enhancing the credibility of the entire transaction process. This has built a safer, more transparent, and efficient payment environment for cross-border trade.

The report emphasizes that one-stop cross-border payment financial service providers have become the main development trend for the industry's future. With the optimization of the payment environment, the current cross-border e-commerce business scenarios and needs have become diverse, such as multi-business lines, multi-platform operations, and multiple accounts. Cross-border sellers are no longer simply seeking single services.

"Localization" mode becomes the preferred development strategy.

While cross-border e-commerce platforms empower global sellers, "cross-border little giants" players also realize that the current industry dividends are gradually receding, and competition is shifting from incremental to stock. Therefore, brand power, channel power, and operational power have become important opportunities to break the competitive pattern.

In the report's research, one-fourth of the respondents said that product branding and refinement are the main drivers of future growth. Catering to the market and consumers to achieve localized development can further penetrate the market quickly, which has become a key point of competition, especially in emerging e-commerce market regions.

In addition, more than 70% of the respondents said they are currently or planning to operate locally overseas. The top three localization focuses are: product localization, team localization, and marketing localization.

The report shows that 95% of the surveyed companies have a stable and relatively optimistic attitude towards overseas localized operations, maintaining the status quo or increasing investment in this area to varying degrees. This indicates that companies are not only satisfied with short-term market expansion but also hope to establish long-term stable market share and brand loyalty through in-depth localized operations.

The main reason why companies focus on localized operations is that it can bring more sales (79%), while being conducive to channel expansion (50%), enhancing customer loyalty (45%), improving brand awareness (45%), and optimizing logistics and supply chains (41%).

Among them, the compliance issues of national policies and regulations are the most significant problems companies encounter in the localization process. Therefore, the compliance requirements of local policies and regulations (48%) have become the main reason for increasing investment.Xie Sijun stated that in the future, the "localization" of cross-border e-commerce will further expand, permeating the entire supply chain from front-end operations (such as channels, marketing, etc.) to back-end supply chain (such as raw material procurement, production manufacturing, logistics warehousing, etc.) and enterprise management (such as teams, legal affairs, tax, etc.).