Study Of Formation Mechanism And Mitigation Strategy Of Cross-border Electronic Commerce Risk

Economic globalization has reached a stage of developing in terms of depth.Global markets have been firmly connected to an unprecedented extent due to the Internet economy,which was born by combining the real economy with the virtual economy.Widespread application of the Internet technology has triggered structural changes in day-to-day operations of traditional foreign trade enterprises while as well providing reliable infrastructures for the development of cross-border electronic commerce.Consequently,cross-border e-commerce is playing an increasingly crucial role in the global trading system.In China,the cross-border e-commerce industry has demonstrated stable and rapid development.This prosperity revealed unique advantages of the cross-border e-commerce industry,which lie in accelerating economic restructuring and in promoting industrial transformation based on innovation thoughts.However,cross-border e-commerce has still comprised a comparatively low portion of China’s total import and export trade volume owing to long-standing challenges faced by the industry,including cumbersome transaction processes,credit risks in cross-border payments and settlements,imperfect infrastructures,shortage of talents,comparatively low level of informatization in business operations,and immaturity of international business logistics.When transnationally operating,enterprises and platforms engaged in cross-border e-commerce would hence be faced with challenges of inconspicuous but severe management risks.A relatively high occurrence rate of trade risk events has practically hindered long and steady development of China’s cross-border e-commerce industry,causing enterprises locked in low-end of the global value chain and bogged down in the current competitive posture.Therefore,it is suggested to be of necessity that decision-making patterns,policy systems and corporate behavior be transformed to bring forth innovation into academic research and business practice of cross-border electronic commerce,and that suggestions of theoretical foundation be propounded towards improvement of supportive systems as well as towards development of related policies.This study is designed and conducted in order to investigate cross-border e-commerce in terms of the industry’s scale,characteristics and seasonal trends,and the risk level;to analyze cross-border e-commerce business risks and transaction risks in terms of formation mechanism as well as range and path of their effects;and to evaluate the effectiveness of forecasting and mitigating strategies against cross-border e-commerce risks.We have explored business risks and transaction risks as well as their formation mechanisms and mitigation strategies of cross-border e-commerce enterprises and platforms,especially Chinese cross-border e-commerce enterprises and platforms,from an insightful and comprehensive perspective which consists of theoretical frameworks including principal-agent theory,control theory,game theory and market microstructure equilibrium,and of methodological tools such as systematic simulation and machine learning.This paradigm of cross-border e-commerce risk mitigation has incorporated evolutional elements of various cross-border e-commerce operation patterns including multi-platform and cross-institution operation.Combined with cross-cultural comparison of typical electronic commerce economies and risk mitigation of firms and platforms in these markets,suggestions and proposals have been provided for preventing risks throughout the whole supply chain of international electronic commerce.Here are the main conclusions drawn from this study:For the purpose of investigating the industry’s scale,characteristics and seasonal trends,and the risk level of China’s cross-border e-commerce industry through taking China’s export e-commerce for instance,the present research has conducted a textual analysis towards the policy context of the cross-border electronic commerce industry thriving in China,summarized the opportunities and challenges for the development of China’s cross-border e-commerce industry,and constructed an index of China’s export e-commerce prosperity as well as an index of China’s export e-commerce risk magnitude.This part of the study suggests that: the industry scale of China’s cross-border e-commerce industry has been growing rapidly;the amount of export e-commerce suppliers increases steadily,while the growth in the average sales volume of these suppliers fluctuates;a drastic fluctuating tendency of the customs facilitation level is shown.The competitive focus of China’s cross-border electronic commerce exports has gradually shifted over time from reducing the cost of logistics and of warehousing to seeking cheaper and more efficient marketing techniques as well as marketing channels.The export e-commerce supply chain has generated three types of new trade patterns including the direct pattern,the coordinated embedded pattern and the network embedded pattern.The industry experienced a remarkable amelioration of risk magnitude;the most distinct increase in the magnitude of risk for customs clearance and tariff payments emerges which deserves attention,while an evident amelioration can be observed of the risk magnitude of product sales.Fur the purpose of exploring the default behaviors of international online vendors(IOVs)and the formation mechanisms of multi-round transaction risks within the scenario of imperfect information cross-border e-commerce,the present research has conducted an analysis towards the default behaviors of sellers based on the extended reputation model,constructed the behavior functions of both vendors and buyers through machine learning applying a dataset of real-world transaction information on Amazon.com,and subsequently developed a complex adaptive system(CAS)simulation of default behaviors of IOVs within the scenario of imperfect information.This part of the study indicates that: from the long-run perspective,IOVs are inclined to reduce their frequency of default behaviors in cross-border e-commerce transaction,while sellers with higher reputation are more likely to be active towards protecting their reputation;IOVs with higher default frequency in the initial stage are more apt to pursue default behaviors,whereas their counterparts of lower default frequency in the initial stage have a higher possibility to acquire and thus sustain the advantage of performance;both the honest trading behavior and the performance of IOVs are significantly influenced by their efforts to protect their reputation including advertising and promoting.For the purpose of investigating how the effectiveness of mitigation strategies against cross-border e-commerce transaction risks is influences by both risk mitigation style differences among cross-border e-commerce platforms and buyer decisions,the present research has adopted the extended mediated transaction risk model while introducing several determinants into the framework,including the three-party decision equilibrium of buyers,IOVs and platforms,as well as risk mitigation style differences of “intervention-investigation trade-off” among cross-border e-commerce platforms.Subsequently,a multi agent system(MAS)simulation has been conducted to simulate imitative behavior by particle swarm optimization under bounded rationality and to take into consideration perceived risks and psychic distance of online consumers.This part of the study reveals that: once increasing the frequency of ex post investigation towards transaction risk events,consumers would suffer less default losses and both IOVs and online buyers would gain more utilities;profits of non-leader(common)IOVs would increase by moderately reducing the frequency of ex ante intervention towards high risk orders,which leads to a lower degree of shopping concentration;risk mitigation strategies moderate the relationship between psychic distance and online shoppers’ choices of IOVs;preference of consumers for IOVs from the same nation as well as from relatively closer nations would become more obvious when cross border e-commerce platforms adopt risk mitigation strategies of more frequent ex ante intervention or higher ex post investigation intensity towards IOVs.Policy implications are as follows.Firstly,the positive market sentiment should be maintained;international communication and cooperation should be conducted;institutional guarantees should be provided for the development of cross-border e-commerce.Secondly,platform transaction risks should be actively observed,prevented and mitigated against;psychic distances perceived by potential cross-border e-commerce consumers among the leading markets worldwide should be cut down;ex post retrospect and elimination mechanisms towards default behaviors of trade entities should be established.Thirdly,regular credit assessment should be proceeded towards cross-border e-commerce platforms,while credit constraints should be strengthened towards IOVs through constructing novel reputation evaluation systems such as review and feedback communities.Fourthly,cross-border e-commerce credit evaluation mechanisms should be improved based on big data technologies;cross-border e-commerce manufacturers should be guided to reform their categories of commodities;associations and societies of cross-border e-commerce enterprises should be established to help deal with intellectual property disputes;novel insurance products should be encouraged to emerge for transnational logistics;information,consulting and financial services should be provided for cross-border e-commerce corporations;training systems of professional talents should also be reformed in both colleges and universities.