Dissertation > Economic > Trade and Economic > China's domestic trade and economic > Circulation of commodities > E-commerce,online trading

An Analysis of the Prospect of Alipay as the New Method of International Trade Settlements

Author YangLei
Tutor CheLiJuan
School Dongbei University of Finance
Course International Trade
Keywords Alipay Methods of International Trade Settlements Online Payment Platform E-commerce
CLC F724.6
Type Master's thesis
Year 2011
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With the recent globalization of economics and finance, international trade has been developing rapidly, international markets have greatly changed, the competition in international trade is fiercer and cross-border currency payments, and receipt activities of international trade settlements involving the credits and debits are experiencing a dramatic revolution. Traditional methods of international trade settlements like Letters of Credit or Collections are gradually replaced by new methods of international trade settlements like third-party online payments. Since the 1990s, a series of technical breakthroughs have changed the Internet dramatically, and E-commerce is the new way of doing business transactions with the development of networks and information technology and the wide use of computers. Due to the unique advantage of this new way to do business, transactions in E-commerce is beginning to be accepted and used by an increasing number of countries and different kinds of industries.E-commerce has emerged as the new way to do international trade with the wide use of the internet, making possible online transactions, negotiations, contract-signing, customs declarations, inspection declaration, insurance, delivery, and international trade settlements. By breaking through the single-logistics dominated pattern of traditional international’trade, the integration of online shopping, information and currency can be realized and the restriction of material, time, space and payment issued in traditional international trade activities can be removed, producing a tremendous blow to traditional way to conduct international trade. Recently, traditional international trade business transactions have decreased by an average of 4% per year, but the E-commerce side of international trade business transaction volume is always developing quickly and it has been predicted that it would increase by almost 30% per year. For our country, the application of E-commerce in international trade is still a new frontier, and some questions still need to be further discussed.The fast development of E-commerce has brought opportunities and challenges for all enterprises and the international trade area is the earliest one to feel the effects from E-commerce. E-commerce has the unique advantage of lowering the cost of international trade operations, improving the efficiency of transactions, lightening the dependence of infrastructure, and improving customer satisfaction. The global markets without border have been boosted by E-commerce, updating the transactions of international trade and increasing the risks at the same time. Therefore, we should focus closely on the developing trends of network trades and carefully study and explore the rooted law behind network trade and its influence on international trade. Besides, we should take positive measures to foster enterprises, innovative regulations and international competitive strength in order to make the foreign trade of our country keep its advantage in international markets, initiative, status, and fast and healthy development. Due to the positive application of information technology in the international trade area, E-commerce has made unprecedented progress whether in the way of transactions or in transportation media, penetrating every area of society. In the area of international trade, E-commerce has enlarged the space and base of international trade, shortened the distance and time of international trade, and simplified the international trade processes and procedures, making international trade realize globalization, and rationalization, making it paperless.Alipay is a vivid example of the application of E-commerce in international trade settlements. As the biggest third-party online payment platform with the advantage of safety, speed and convenience, Alipay has broken the obstacles restricting the development of E-commerce in our country. As an associated industry, Alipay has played an important role as the most advanced online payment platform. It was founded by the best B2B Company, Alibaba Company, devoted to providing high quality safe payment service for network transaction customers. Alipay has customized safe online payment services to online transactions, and is a kind of value-added service where payment for goods is temporarily kept by Alipay before the buyers receive their goods. It is only a matter of time before Alipay becomes an important method of international trade settlement. With the advance of the globalization of E-commerce, cross-border transactions have been put on the agenda, and Alipay’s strategy has emerged. In 2007, it featured a payment service where users could buy goods priced in 12 foreign currencies. This service was used in Hong Kong and South-East Asia, and promoted in Japan, America and Europe. Domestic customers can use RMB to buy goods priced in foreign currencies according to foreign shopping websites, and sell their goods to Chinese customers. Though it still has a long way to go in order to become the most important method of international trade settlements, the techniques, laws, taxes and safety issues faced by Alipay will greatly lower the cost of international trade settlements, improve the efficiency of international trade, shorten the process of transactions and providing more opportunities for enterprises. With the gradual development of technology, Alipay will be an important method of international trade.The objective of this thesis is to appraise the feasibility of Alipay as the new method of international trade settlements by presenting its unique advantages in international trade transactions, by doing the SWOT analysis and by analyzing the problems that Alipay will face in the future. This thesis can be divided into six chapters. Chapter .one is the introduction, background, research meaning, practical value and both foreign and domestic literature review. Chapter two introduces Alipay in detail, its market share, payment process, safety issues, weaknesses and more. Chapter three exposes the defects of traditional international trade settlements and compares Alipay with traditional methods and discusses the status of its usage in China. Chapter four focuses on the feasibility of Alipay as the new method of international trade settlements by doing the SWOT analysis with special attention to possible problems and solutions. Chapter five suggests improvements to Alipay as an important method of international trade settlement. Chapter six concludes that Alipay may become the most important international trade settlement method by using unique advantages that traditional methods do not have.

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