PROMOTING CROSSBORDER ECOMMERCE: CURRENT SITUATION AND SOLUTIONS FOR VIETNAM

Crossborder ecommerce is a more complicated form of business than traditional businesses, Vietnam also faces some difficulties such as financial capacity, and qualifications. If Vietnam has no appropriate policies, this will be a great challenge to approach the international markets. Recognizing that perspective, I decided to choose Promoting crossborder ecommerce: current situation and solutions for Vietnam as the research topic with the desire to find out the opportunities and challenges of Vietnam. Besides, this research will provide solutions to help Vietnam improve the quality of its ecommerce industry and compete in the international market.

BANKING ACADEMY INTERNATIONAL BUSINESS FACULTY BACHELOR’S THESIS PROMOTING CROSS-BORDER E-COMMERCE: CURRENT SITUATION AND SOLUTIONS FOR VIETNAM Student’s name : Hoang Thi Thao Class : K20KDQTD Course : 2017-2021 Student’s ID : 20A4050322 Supervisor : M.A Ngo Duong Minh Hanoi, May 2021 BANKING ACADEMY INTERNATIONAL BUSINESS FACULTY BACHELOR’S THESIS PROMOTING CROSS-BORDER E-COMMERCE: CURRENT SITUATION AND SOLUTIONS FOR VIETNAM Student’s name : Hoang Thi Thao Class : K20KDQTD Course : 2017-2021 Student’s ID : 20A4050322 Supervisor : M.A Ngo Duong Minh Hanoi, May 2021 ACKNOWLEDGEMENT I would like to thank teachers in Banking Academy, especially lecturers of Faculty of International Business for their devoted guidance throughout the course of my study process Thanks to the teachers' support, I have gained more useful and relevant knowledge to complete this research topic I want to give my sincerely thank to M.A Ngo Duong Minh - who has always devoted and supported me to complete my thesis During the research process, I tried to implement this topic completely However, due to the limitation of knowledge and reality experience, this research cannot avoid the shortcomings I look forward to receiving the comments from teachers in the Faculty of International Business to help improve the quality of my thesis i DECLERATION I assure that my graduation thesis with the topic "Promoting cross-border ecommerce: current situation and solutions for Vietnam” is my personal research with the guidance of M.A Ngo Duong Minh - Lecturer of the Faculty of International Business at Banking Academy Data sources and information used during the study are derived and cited in accordance with regulations These findings have not been published in any other studies before at the time of this thesis’s completion I take all responsibility for my thesis Student’s signature Hoang Thi Thao ii CONTENTS ACKNOWLEDGEMENT .i DECLERATION ii TABLE OF ABBREVIATIONS vi LIST OF FIGURES vii LIST OF TABLES vii INTRODUCTION .1 The research motivation Research subject and scope Research question Research objectives Research method Literature review Structure of the topic CHAPTER 1: OVERVIEW OF PROMOTING CROSS-BORDER E- COMMERCE 10 1.1 OVERVIEW OF E-COMMERCE 10 1.1.1 Background of e-commerce 10 1.1.2 Cross-border e-commerce 13 1.2 PROMOTION OF CROSS-BORDER E-COMMERCE 18 1.2.1 Concept of cross-border e-commerce promotion 18 1.2.2 Criteria for assessing cross-border e-commerce promotion 19 1.3 INTERNATIONAL EXPERIENCE IN PROMOTING CROSS-BORDER ECOMMERCE 22 iii 1.3.1 Experience from Singapore 23 1.3.2 Experience from Malaysia 25 1.3.3 Lessons for Vietnam in promoting cross-border e-commerce 26 CHAPTER 2: SITUATION OF CROSS-BORDER E-COMMERCE PROMOTION IN VIETNAM 28 2.1 CURRENT SITUATION OF CROSS-BORDER E-COMMERCE PROMOTION IN VIETNAM 28 2.1.1 The legal framework 28 2.1.2 The infrastructure 30 2.1.3 The human resources 36 2.1.4 Popular e-commerce model in Vietnam 37 2.1.5 The results of cross-border e-commerce promotion in Vietnam 40 2.2 EVALUATE THE CROSS-BORDER E-COMMERCE PROMTION IN VIETNAM 43 2.2.1 Strength 43 2.2.2 Weakness 44 2.2.3 Opportunity 45 2.2.4 Challenge 47 CHAPTER 3: ORIENTATIONS, SOLUTIONS, AND RECOMMENDATIONS IN PROMOTING CROSS-BORDER E-COMMERCE IN VIETNAM 49 3.1 THE DEVELOPMENT ORIENTATION OF CROSS-BORDER ECOMMERCE IN VIETNAM 49 3.2 SOLUTIONS TO PROMOTE CROSS-BORDER E-COMMERCE IN VIETNAM 50 iv 3.2.1 Solutions to improve information technology infrastructure to take advantage of the international cooperation 51 3.2.2 Solutions to improve the quality of human resources to take advantage of the FTAs 52 3.3.3 Solutions to develop the quality of the Vietnamese products under the impact of the Covid-19 pandemic 53 3.3.4 Solutions to improve the infrastructure to restrict challenges 54 3.3 RECOMMENDATIONS TO THE GOVERNMENT FOR THE PROMOTION OF CROSS-BORDER E-COMMERCE IN VIETNAM 54 CONCLUSION 56 REFERENCE v TABLE OF ABBREVIATIONS AGS Amazon Global Selling APEC Asia-Pacific Economic Cooperation ASEAN Association of Southeast Asian Nations B2B Business to Business B2C Business to Customer C2C Customer to Customer EDI Electronic Data Interchange EFT Electronic Fund Transfer EU European Union EVFTA European-Vietnam Free Trade Agreement GDP Gross Domestic Product IMF International Monetary Fund IT Information Technology JIT Just In Time SMEs Small and Medium Enterprises VECOM Vietnam E-commerce Association WTO World Trade Organization vi LIST OF FIGURES Figure Page Figure 1.1: Malaysia E-commerce value (MYRbn) period 2016-2020 25 Figure 2.1: The rate of businesses having website 34 Figure 2.2: The frequency of updating information on the website of businesses Figure 2.3: Skills relate to e-commerce are difficult to recruit Figure 2.4: Revenue of B2C e-commerce in Vietnam 2015-2019 (billion USD) 34 37 38 LIST OF TABLES Table Page Table 1.1: The types of e-commerce by the parties involved 13 Table 1.2: Singapore’s Leading e-commerce players (2020) 24 Table 3.1: Proposed solutions based on Vietnam's strengths, weaknesses, opportunities, and challenges vii 51 INTRODUCTION The research motivation In recent years, the economy is growing day by day and Vietnam has shown a stable development through numerous trade and finance figures According to the International Monetary Fund (IMF), Vietnam's GDP per capita will increase from 3,416 USD (2019) to nearly 3,500 USD (2020) That figure shows that the size of Vietnam's economy tends to exceed Singapore ($337 billion) and Malaysia ($336 billion) In particular, thanks to the application of the internet and science and technology, Vietnam's e-commerce industry also contributes significant profit to the overall economy of the country Cross-border e-commerce, in particular, has great support in promoting trade, import and export, and at the same time strengthening the cooperative relationship between Vietnam and many countries around the world Vietnam is considered as a country with great potential to promote cross-border e-commerce Firstly, the demand for e-commerce of consumers is increasing With the advent of the internet and the development of science and technology, people gradually turned towards convenience not only at work but also in daily living habits Instead of just shopping by traditional methods, consumers can easily access international products and services using technology equipment connected to the network That is also a driving force for businesses to seize opportunities and promptly bring their products to international customers Statistics from VECOM (2018) show that in the period 2014 2020, the e-commerce growth rate of Vietnam averaged over 30% per year It is expected that this market size will reach 33 billion USD by 2025, ranking third in Southeast Asia after Indonesia and Thailand Secondly, Vietnam is actively expanding cooperative relations with many countries around the world by signing free trade agreements and participating in economic forums In 2020, according to WTO Center Report, Vietnam signed a Free According to a survey conducted by the Department of E-Commerce and Digital Economy, most information on the e-commerce management portal is related to businesses that not carry out administrative procedures (registration procedures, operation notification), accounting for approximately 78% of respondents There has been no negative impact on the economy from enterprises that not register their ecommerce websites Thus, it can be considered that administrative procedures in the ecommerce field not have management benefits, even becoming a barrier for traders when doing trade promotion activities Secondly, the impact of the Covid-19 pandemic Although the Covid-19 epidemic has been controlled in Vietnam, many countries and major partners of Vietnam such as the EU, the United States, Japan, South Korea, the epidemic is still evolving That has greatly affected the trade of goods and import-export turnover Currently, several countries have reopened their borders but still restrict economic activities, import-export activities in particular Therefore, many Vietnamese enterprises not have new orders In addition, the progress of customs clearance is slow due to increased inspection and disease control at both the import and export ends, which has increased time and business costs During the epidemic, exporting goods across the border took a long time, and increased logistics costs affecting the profits of businesses SUMMARY OF CHAPTER In chapter 2, the research focuses on analyzing the current situation of ecommerce in Vietnam The author gave the points related to the current situation such as the promotion activities of businesses, the direction of the Government From the above analysis, the author assesses the strength, weakness, opportunity and challenges of Vietnam, building a premise for the recommendations and solutions in chapter 48 CHAPTER 3: ORIENTATIONS, SOLUTIONS, AND RECOMMENDATIONS IN PROMOTING CROSS-BORDER E-COMMERCE IN VIETNAM 3.1 THE DEVELOPMENT ORIENTATION OF CROSS-BORDER E- COMMERCE IN VIETNAM Cross-border e-commerce is considered to be a profitable sector Almost all countries around the world are gradually focusing on this industry Vietnam is one of the countries with high e-commerce development indexes worldwide, especially for crossborder e-commerce Based on analyzing the current situation, providing opportunities and challenges for cross-border e-commerce promotion from the above chapters, in this section, the author will set out the goals that the Government, the ministry, industries, businesses, and individuals need to be achieved in the future Decision 645/QD-TTG of the Prime Minister outlines the National E-commerce Development Plan for the period 2021-2025, specifically with the following provisions: First, support and promote the application of e-commerce in businesses and communities; Second, narrow the gaps between big cities and localities at the e-commerce development level; Third, build a healthy, competitive, and sustainable e-commerce market; Fourth, expand consumption market for Vietnamese goods at home country and abroad through e-commerce application; promote cross-border transactions and ecommerce; Last, become a country with a developed e-commerce market in the group of three leading countries in Southeast Asia In addition, in 2020, the Hanoi People's Committee issues an e-commerce development plan for the period of 2021-2025 with specific objectives: 49 First, regarding sales, the target of achieving e-commerce sales (including online consumer goods and services) accounts for 10% of the total retail sales of consumer goods and services in the locality Second, regarding the payment system, focus on developing and using the noncash payment system in e-commerce at 50%; 70% of all purchases on e-commerce websites have e-invoices Third, achieve 80% of e-commerce websites having online ordering function; 50% of SMEs conduct business on e-commerce platforms; Fourth, raise awareness and professional knowledge of labor resources in ecommerce, regularly organize meetings and seminars to update trends and knowledge Coordinate with the Ministry of Industry and Trade (Department of E-commerce and Digital Economy) to annually organize Vietnam Online Shopping Day and other events to promote e-commerce development in the city Last, upgrade the website system of the business; develop e-logistics to support e-commerce activities, improve the capacity of the transportation service network, logistics infrastructure 3.2 SOLUTIONS TO PROMOTE CROSS-BORDER E-COMMERCE IN VIETNAM Based on the assessment of Vietnam's cross-border e-commerce promotion in Chapter 2, the authors will propose solutions related to Vietnam's strengths, weaknesses, opportunities, and challenges in this sub-chapter 50 Table 3.1: Proposed solutions based on Vietnam's strengths, weaknesses, opportunities, and challenges Oportunity Solutions Strength to develop Threat the IT Solutions to develop the quality of infrastructure to take advantage of the Vietnamese products under the international cooperation (3.2.1) impact of Covid-19 pandemic (3.2.3) Solutions to improve the quality of Solutions to improve the Weakness human resources to take advantages infrastructure to restrict challenges of FTAs (3.2.2) (3.2.4) Source: Summarized by the author 3.2.1 Solutions to improve information technology infrastructure to take advantage of the international cooperation Firstly, improve the technology infrastructure Enterprises need to install electronic devices to serve sales activities such as computers, mobile phones, desk phones, and network equipment In addition, businesses need to provide enough electricity for the above devices to operate stably, avoid interruptions during the working process Businesses should have a team of technical staff to repair and maintenance of internet systems and equipment for businesses Besides, applying Big Data for ecommerce management is necessary, which improves customer relationship and manage high-quality data sources Secondly, for the use of cross-border e-commerce promotion platforms, businesses need to focus on building websites That is a marketing channel that helps customers have better access to products Building a website can be difficult, but businesses can outsource this website building activity from the third parties or use international e-commerce platforms such as Amazon, Alibaba, eBay, Etsy 51 Thirdly, one of the reasons that customers are afraid to participate in cross-border e-commerce is customer information security They feel risky when providing information to a foreign seller's system Hence, the technology infrastructure in the enterprise needs to be focused on improving the network security system to help to protect data, avoid disclosing business information and customer information, causing loss and affect to businesses, customers, and relevant individuals 3.2.2 Solutions to improve the quality of human resources to take advantage of the FTAs For existing human resources, enterprises should conduct training and retraining by sending people to study abroad Enterprises regularly meetings to evaluate the performance of employees, remove difficulties, and set future strategies In addition, businesses need to have worthy remuneration policies for professional and technical staff so they can contribute more To recruit new human resources, Vietnamese enterprises need to recruit workers with professional qualifications (knowledge of e-commerce, information technology), fluent in foreign languages, knowledge of international law, and different cultures For human resources in the future, Vietnam enterprises coordinate with universities to organize internship programs to attract students, thereby increasing the chances of recruiting good human resources Businesses should associate with universities to participate in the training and fostering process, thereby selecting the best students, promoting e-commerce training to create high-quality human resources meeting the demands of the industry In addition, it is necessary to continue promoting the role of medium and short-term training programs conducted by training institutes, centers, associations, and companies for practical training 52 3.3.3 Solutions to develop the quality of the Vietnamese products under the impact of the Covid-19 pandemic Vietnam is highly appreciated in the export sector, especially in commodities like rice, coffee, electronic components, furniture, etc In the context of epidemic and some other challenges, however, Vietnamese enterprises need solutions to improve the quality of the products and limit the impact of the epidemic Firstly, focus on meeting customer needs Customers in cross-border e-commerce are mainly foreigners so the product requirements are also different Vietnamese businesses need to conduct customer surveys in the international market through direct surveys, online questionnaires, or receive feedback after orders Another method is to use data from the market research companies, reports, and statistics from the Government Understanding market needs helps businesses assess the size and customer satisfaction, thereby changing and improving product quality Especially, the Covid-19 impact users' activities when they have to quarantine or work or study at home For example, coffee will be favored in the Covid-19 period because coffee and beverage stores have to close, people have to work from home Secondly, information technology is applied to the production process The development of information technology has greatly contributed to the trade of goods Hence, to improve the quality of Vietnamese products, businesses need to pay attention to the application of technology in checking the input and output of products, manufactured products, and packaging processes Thirdly, building Vietnamese product brands should be focused on Vietnamese businesses need to invest in marketing activities targeting many foreign markets Products transacted through cross-border e-commerce need to meet customer requirements, and Vietnamese enterprises have to build a brand with the slogan "highquality Vietnamese products" for customers 53 3.3.4 Solutions to improve the infrastructure to restrict challenges Cross-border e-commerce has a strong development But for many Vietnamese businesses, this is still a new economic sector and causes many difficulties in the operation Businesses are lack skills and experience in completing the payments process and logistics delivering goods to customers Therefore, the combination between Vietnamese enterprises and other service providers is essential Regarding payment activities, in addition to supporting customers to pay through the company's website system, businesses can cooperate with third-party payment service providers such as Paypal, Paydollar to help customers international easier to make payments It is necessary to coordinate with domestic and international banks to ensure an effective payment process through the interbank Regarding operational logistics, Vietnamese businesses also face many difficulties in delivering goods to customers in other countries Currently, there are many businesses in the market that provide logistics services They ensure the customs clearance procedures, arrange goods and deliver goods to the address of foreign customers Outsourcing these services helps businesses shorten transaction time, and minimize the risk of lack of professional skills 3.3 RECOMMENDATIONS TO THE GOVERNMENT FOR THE PROMOTION OF CROSS-BORDER E-COMMERCE IN VIETNAM Firstly, Customs authorities and relevant agencies should coordinate to simplify administrative procedures of import and export, specialized inspection procedures It is necessary to shorten the clearance time, reduce costs, and facilitate the flow of importexport goods of domestic enterprises; Apply modern technologies to the implementation of customs procedures; Research and application of Blockchain to the Customs industry to control the chain of goods in specialized inspection and clearance; Encourage businesses to cooperate and contribute opinions related to customs procedures Agencies analyze the actual situation, propose amendments, supplements or annul preposterous regulations and processes 54 Secondly, develop or amend legal documents on e-commerce and cross-border ecommerce that are updated with the domestic development situation, in harmony with international laws; Organize seminars, e-commerce classes for state management officials and enterprises to improve e-commerce management capacity, supplement indepth knowledge in this field; Evaluate the efficiency of the B2C business model, which is a potential field for economic development, requiring a large concentration of investment in both infrastructure, regulation, and financial capacity Lastly, organize the implementation of propaganda and counseling programs for students oriented towards e-commerce; Coordinate with universities to make ecommerce become one of the spearhead industries, increase the number of students majoring in e-commerce in universities to meet the human resource needs of the industry; Cooperate with foreign universities to send students and lecturers to study abroad in the field of e-commerce; Focus on training to strengthen the contingent of experts being knowledgeable about e-commerce serving the country's economy; Assist in building a curriculum on e-commerce and information technology for universities; Organize contests about e-commerce to find qualified human resources having capable of contributing to the field of e-commerce and the national economy SUMMARY OF CHAPTER From the actual analysis in chapter 2, the author has an assessment of the actual situation of Vietnam Thereby, Chapter will provide orientations, recommendations and solutions for the Government and related stakeholders The strategies are aimed at achieving in the period 2021-2025, making Vietnam a developed country in the field of cross-border e-commerce 55 CONCLUSION SUMMARY The study assesses the current situation of cross-border e-commerce promotion in Vietnam From there, the author proposes solutions for businesses and the Government Cross-border e-commerce has strong development In some developed countries like Singapore and Malaysia, cross-border e-commerce is the industry that contributes significantly to the national economy These are the two countries considered to have the most developed e-commerce industry worldwide Therefore, through analyzing the advantages of Singapore and Malaysia, the author has drawn lessons for Vietnam in e-commerce promotion For Vietnamese cross-border e-commerce, the author has pointed out some strengths as developed information technology infrastructure, promotion activities supported by the Government On the other hand, Vietnam has potential challenges in promoting cross-border e-commerce as unqualified human resources, unclear legal system, time-consuming international payment and logistics process These strengths and weaknesses need solutions to improve The author has proposed solutions about the infrastructure such as cooperation with third-party service providers, human resource training, and some other recommendations to the Government LIMITATIONS The study has some limitations as follows that future studies can overcome Firstly, the author uses qualitative research methods, the information is secondary data Therefore, the reliability of the statements made is not high Secondly, the scope of the study is 2015-2020, all data is only concentrated in that period without much orientation for the future 56 Finally, the author only studies based on data from reports and statistics, has not analyzed the case studies in the practice of promoting cross-border e-commerce in Vietnam FUTURE RESEARCH To overcome the above limitations, future studies need to deeply understand businesses promoting cross-border sales via e-commerce platforms Firstly, an effective research method is quantitative research, surveying businesses, and customers to see in detail the current status of e-commerce promotion Secondly, the development of science and technology support greatly to ecommerce activities such as re-commerce market, AI application in e-commerce Therefore, the future research author can study the level of adoption and application of these trends in Vietnam or propose methods that help businesses increase awareness and adapt to these new trends 57 REFERENCE A ENGLISH van Heel, B., Vladimir, L and Erwin, L "Cross-border e-commerce makes the world flatter" The Boston Consulting Group: Boston, MA, USA (2014) Feng, J H., & Juliana Kucht, D (2018) The Development Of Cross Border ECommerce Tongji Univeristy, Shanghai.(Chinese) Ma, S., Chai, Y., & Zhang, H (2018) Rise of Cross‐border E‐commerce Exports in China 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report” (2020), Ministry of Industry and Trade report, Vietnam “Vietnam e-commerce index report” (2021), Ministry of Industry and Trade report, Vietnam Vietnam E-commerce Report (2018) (VECOM) Ministry of Industry and Trade report, Vietnam Vietnam E-commerce Report (2019) (VECOM) Ministry of Industry and Trade report, Vietnam Vietnam E-commerce Report (2020) (VECOM) Ministry of Industry and Trade report, Vietnam Tran Thi Thu Hien (2009) “Thực trạng giải pháp dành cho thương mại điện tử Việt Nam” bachelor’s thesis, Foreign Trade University Tran Ngoc Thap (2018), ‘Áp dụng Thương mại điện tử ngành bán lẻ Việt Nam: Thực trạng giải pháp’, bachelor’s thesis, Faculty of International Business, Banking Academy C WEBSITE Vietnam Trade Promotion Agency: https://www.moit.gov.vn/web/guest Vietnam E-commerce and Digital Economy Aceny (iDEA): http://www.idea.gov.vn/ Vietnam Logistics Website from http://www.logistics.gov.vn / Vietnam E-business Index: http://www.ebi.vecom.vn/ 59 “Strengthening State management of e-commerce” (April 2021) from https://baothanhhoa.vn/kinh-te/tang-cuong-quan-ly-nha-nuoc-ve-thuong-mai-dientu/134801.htm General Department of Customs magazine (2019), from https://haiquanonline.com.vn/quan-ly-hai-quan-doi-voi-hoat-dong-thuong-mai-dien-tu111087.html The economic magazine online (2019), “The legal framework for cross-border ecommerce” from https://www.thesaigontimes.vn/297280/hang-lang-phap-ly-cho- thuong-mai-dien-tu-xuyen-bien-gioi.html “Malaysia e-commerce report 2020” from iPrice Group (2020) 60 Promoting cross-border e-commerce: Current situation and solutions for Vietnam BÁO CÁO ĐỘC SÁNG 12 % CHỈ SỐ TƯƠNG ĐỒNG 6% NGUỒN INTERNET 7% ẤN PHẨM XUẤT BẢN 8% BÀI CỦA HỌC SINH NGUỒN CHÍNH Submitted to Banking Academy 3% Submitted to National Economics University 2% www.emerald.com 2% download.atlantis-press.com 1% "Simulation Tools and Techniques", Springer Science and Business Media LLC, 2021 1% onlinelibrary.wiley.com 1% Bài Học sinh Bài Học sinh Nguồn Internet Nguồn Internet Xuất Nguồn Internet Qiyuan Peng "A Study on the Influence of Internet Cross-border E-Commerce on China's Import and Export Trade and Development Strategy", 2021 2nd International Conference on E-Commerce and Internet Technology (ECIT), 2021