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Alibaba, Amazon, Mundus Agri — Kazakhstan's e-commerce expands its borders

Friday, 30 July 2021, 18:02:45

Long before the COVID-19 pandemic, Kazakhstan was developing options for domestic trade to enter domestic and foreign Internet sites. The e-commerce itself in the country originated in the 2000s with the opening of the first online stores. At the same time, it has acquired a massive character only in the last few years. The pandemic and quarantine measures pushed not only the Kazakhstani, but also the world economy to switch most of the trade relations to electronic rails. What was the transition of Kazakhstani trade to electronic platforms like and how the stage of strengthening and expanding the main online trading platforms in 2020 was completed, further in the PrimeMinister.kz review.

Put in numbers, in 2020 the share of e-commerce in the total volume of retail trade exceeded the mark of 1.1 trillion tenge (1,019 billion tenge — domestic Internet sites, 144 billion tenge — foreign Internet sites) and amounted to 9.7% of the total retail turnover (11.6 trillion tenge).

The number of online shoppers also showed an increase of almost 20%, amounting to 3.8 million active buyers compared to 2019 — 3.2 million buyers. Today, there are about 650 online stores operating on the market.

If in comparison, for example, in 2018 the volume of the e-commerce market doubled compared to the same period in 2017 (174 billion tenge in 2017) and amounted to 269 billion tenge, taking into account international electronic platforms. The share of e-commerce in the total retail turnover in 2018 was 2.9%.

Alibaba.com and entry of domestic producers to international trading platforms

In Kazakhstan, systematic work is underway to bring domestic producers to international trading platforms, in particular, Alibaba.com. By the end of 2020, 100 companies have already received a ‘Gold Supplier’ account on this platform, of which 71 companies remained with active accounts. Thanks to the assistance provided to the enterprises, domestic products worth $18.1 million were sold, more than 4,000 Kazakhstani goods were placed on the trading floor.

“At the moment, 50 companies (recruitment was carried out in November 2020) are in the maturing stage, negotiations are underway with potential buyers of products, and trial batches of products are being sent. Based on the available positive experience, it is assumed that this year, taking into account the planned implementation of the 3rd phase and the withdrawal of additional 50 companies to the platform, it will be possible to increase the total volume of export supplies to an amount from $50 to 100 million by mid-2022,’’ Azamat Askaruly, Director General of the Kazakhstan Trade Development Center QazTrade JSC, said.

Access to Amazon is open

Since May of this year, Kazakhstan has been included in the list of allowed countries on one of the world's largest e-commerce platforms, Amazon.

“The main problem of access to Amazon for our businessmen was the need to become a 'part' of the allowed countries: that is, to open a legal entity and a bank account in these countries to conduct all transactions on the site. But now these complications are out of the question. Kazakhstani entrepreneurs can receive payments directly through Kazakhstani banks and trade under their own flag - Kazakhstan can now be found in the list of seller countries. This is another successful step towards expanding e-commerce and the horizons for the export of Kazakhstani goods, since Amazon is one of the most popular platforms. It is very important that Amazon opens the way for small and medium-sized businesses — 60% of all retail sales of the marketplace are made by 1.9 million small and medium-sized enterprises,’’ said Azamat Askaruly, Director General of Kazakhstan Trade Development Center QazTrade JSC.

Hundreds of millions of active clients in more than 200 countries and territories of the world. And, curiously, sellers are registered in only 188 countries. Amazon's net sales were $386.1 billion last year.

On the site of the Russian Ozon

The Giant of Russian e-commerce has a 16 million loyal customer base and more than 80 million monthly users. The marketplace presents goods in 20 different categories, from clothing and food to children's goods and cosmetics, which represents a great potential for Kazakhstani entrepreneurs.

Now any Kazakhstani manufacturer can offer its goods on this universal site. Kazakhstani goods: footwear, jewelry and agricultural products have been presented at Ozon before. However, our companies had to open branches in the Russian Federation, which is extremely inconvenient and costly for business.

“The entry of local businesses to Ozon was facilitated by the improvement of logistics: now Kazakhstani entrepreneurs can deliver goods to Russia directly to the client on their own or with the help of third-party carriers. In the near future, Ozon will also offer its list of logistics partners who will transport goods from Kazakhstani businesses to Russia. Also, now the possibility of storing domestic goods for subsequent delivery across Russia and other regions is being worked out,” added Azamat Askaruly, Director General of JSC Center for Development of Kazakhstan Trade QazTrade.

The Ministry of Trade and Integration of the Republic of Kazakhstan also continues negotiations with other marketplaces. The task is to simplify as much as possible access for Kazakhstani producers to various trading platforms.

Among them is the electronic trade in agricultural products, access to the Mundus Agri platform, which is a unique information and trading platform in the global agri-food and agricultural market.

An information platform is very important in e-commerce

As the practice of 2020 has shown, one of the biggest complications for companies is their lack of awareness of the available opportunities for foreign economic activity. About 20% of companies noted the need for timely information. In this regard, the government is carrying out proactive work to provide information support to potential participants in international e-commerce.

Information is provided through official channels (portal, telegram channels, industry chats).

“As part of information support for business structures, 6 detailed reviews of the largest international electronic trading platforms were prepared, including such as Amazon, Rakuten, TradeKi, GlobalSource and a number of Russian marketplaces. An interesting trading platform is News Community, which brings together buyers and sellers, providing participants with key market news, press releases and background information for making informed decisions. In addition, together with the International Trade Center and the EU, a long-term project to support internal — regional and international trade in Central Asia “Ready4Trade Central Asia” is currently being implemented in the country,’’ noted Azamat Askaruly, General Director of JSC Center for Development of Kazakhstani Trade, QazTrade.

Within the framework of the first module of this project, 9 national business trainers have already been trained who are involved in training SMEs in online trading. 45 representatives of small and medium-sized businesses engaged in the field of textiles, sewing, handicrafts and agribusiness were selected, whose representatives are being trained. Also, at the moment, preparatory work is being carried out for the second module, which will last until May 2022.

Thanks to the implementation of this project, it is planned to form a pool of domestic enterprises that are actively conducting their business in the online environment.

In order to teach more students the basics of e-commerce, the Ministry of Trade and Integration of the Republic of Kazakhstan plans to launch a training module this year, which includes materials, video tutorials, interviews with various successful online business entrepreneurs.

To stimulate SMEs to switch to online mode, a measure is proposed to reimburse SMEs for creating an online store, which is consistent with world practice successfully applied in developed countries of the world, for example, in Singapore. Also in Kazakhstan, the issue of easing the requirements of tax legislation is being initiated to obtain a tax benefit in the form of exemption from income tax by subjects of electronic trade in goods.

To date, the Ministry of Trade of the Republic of Kazakhstan receives a number of proposals from investors for the creation of fulfillment centers. Together with Kazpost JSC, it is planned to launch 16 more fulfillment centers in all regions of the country by 2025. In pursuance of this event, Kazpost JSC approved the Plan for holding seminars in the framework of the development of e-commerce in the Republic of Kazakhstan in 2020. This event is aimed at involving domestic entrepreneurs in e-commerce. In 2020, 6 similar events were held on the theme “Online store: How to create and with what tools to promote. Export School, Digital Sales” in the cities of Almaty (twice), Atyrau, Taraz, Kyzylorda and Uralsk, during which 706 people were trained.

Since March 2020, seminars in the regions of the Republic of Kazakhstan have been suspended due to the introduction of a quarantine regime in the country. In this regard, instead of the 30 seminars planned according to the approved Plan, for the period from March to December 2020, 4 webinars were held, at which 2,916 listeners were trained. A total of 3,622 students were trained, out of the planned 3,600.

What is under the brand ‘Made in Kazakhstan?’

Or — a little about exports

Critics and skeptics often ask what Kazakhstan can trade? Only imports, and only oil for export.

Let us turn to the figures: last year the list of goods sold by Kazakhstani producers abroad exceeded 4,600.

According to the Minister of Trade and Integration of the Republic of Kazakhstan Bakhyt Sultanov, more than 4,600 types of products manufactured in our country were bought by buyers in Russia, China, the United Arab Emirates, Brazil, Australia, Canada, Singapore, South Africa ... The geography of our export covers almost the whole world. And we sell not only oil, but already processed goods. In some, the degree of processing is deep, in others it is insignificant. But all of them are not raw materials, but ready-made goods, which are known in the world under the brand ‘made in KZ.’

For example, our entrepreneurs send hydraulic truck cranes and fish fillets to Canada. Yes, Kazakhstan fillets of river fish, as well as pipes used in the oil industry, are sent to Canada, which is surrounded by oceans. Kazakhstan exports to France parts of helicopters and measuring instruments for the aviation industry.

Dredgers for offshore use go to the Netherlands, pile driving and extraction equipment to Greece, and pharmaceuticals to Switzerland. Algeria buys power pumps, bearings and wrench sockets from Kazakhstan. Argentina imports fittings from Kazakhstan, Ireland imports parts for drilling equipment and hydraulic installations.

Unalloyed aluminum, rolled metal products, copper, ferrosilicon, lead, ferrochrome, phosphorus, sulfur are also sent. Liquefied butane and propane are in great demand in dozens of countries. Last year alone, the country exported nearly $600 million worth of liquefied gas. Amino acids, nucleic acids and salts, gluconic acid — all this is sold by Kazakhstan.

Cigarettes, carbonated water, batteries, locomotives, cars, household chemicals, food products, confectionery, clothing, auto chemical goods ... According to the minister, there is a small company in Nur-Sultan employing about 10 people, but at the same time they are engaged in the export of parachutes to Uzbekistan and Vietnam. Plums and raspberries from our greenhouses, packaged in small boxes, are sold in shops in the United Arab Emirates.

It is stereotypically believed that sanitary ware is exclusively imported, while Kazakhstan, meanwhile, exports sinks, toilet bowls, and shower cubicles. And all — of domestic production — the plant is located in the Karaganda region and is the only one in Central Asia. All its products are made according to European technologies. By the way, the cap for Coca-Cola bottles is produced in Kazakhstan and exported.

4,000 types of Kazakhstani goods are sold on the Alibaba marketplace. There you can even buy vitamins for cats and dogs, which are produced in Almaty. And peanut bars for dieters, and silk handkerchiefs, and cotton T-shirts, and jackets, and eyeglass cleaning wipes …

In Kazakhstan, many different types of products are produced and exported. The country is gradually integrating into global production and trade chains. And the fact that our products are in demand on other continents testifies to the correctness of the chosen policy.

At all construction sites in the country, cement of domestic production is used, more and more products of light industry of domestic production appear in stores, furniture in houses and apartments of Kazakhstanis — local production, household and auto chemical goods, not to mention foodstuffs.

“Yes, there is high competition with products from other countries. But it only stimulates Kazakhstani goods to become better and to be more in demand by both local and foreign consumers. The Ministry of Trade and Integration is making efforts to improve the quality of domestic goods - so that our business would feel more comfortable both in the domestic and foreign markets,” said Azamat Askaruly, Director General of the Kazakhstan Trade Development Center QazTrade JSC.

In promoting the idea of ​​electronic commerce, an active position is taken by NCE Atameken

As you know, in the Enbek State Program for the Development of Productive Employment and Mass Entrepreneurship for 2017-2021 (hereinafter referred to as Enbek Program) there is a direction "Development of mass entrepreneurship", which provides for training in the basics of entrepreneurship under the Bastau Business project.

The training program of the Bastau Business project consists of 12 modules. Module 11 "Electronic services for business" includes the subsection "Electronic commerce" (satu.kz, olx.kz), as well as work with tenders on electronic platforms www.mp.kz, www.sk.kz. Currently, the operator of the project Bastau Business, the Ministry of Labor and Social Protection of the Population of the Republic of Kazakhstan was appointed. Operator for training NCE Atameken.

For business development under quarantine conditions, the program provides for the acquisition of knowledge about working on electronic trading platforms, online stores and marketplaces www.ebay.com, www.etsy.com, www.amazon.com, etc. The goal is to teach novice entrepreneurs to adapt their business in the current epidemiological situation and sell goods on various online platforms www.ebay.com and www.etsy.com.

In 2020, 33,183 people were trained, 14,397 Kazakhstanis opened their own business. It is assumed that in general, the result of this work will be an increase in the share of e-commerce to 15%, an increase in the number of active online buyers to 7.7 million people.

Kazakhstan exporters of processed goods in 2021 have already reimbursed more than 3.5 billion tenge

Since the beginning of the year, fourteen meetings of the relevant Interdepartmental Commission (IAC) were held, 164 applications from 89 entities were approved for a total amount of 3,500,766,523 tenge, of which:

1) for promotion domestic processed goods (advertising, warehouse rental, certification, exhibition) 5 applications from entities for a total amount of 48,070,176 tenge.

2) 159 applications from 86 entities for the delivery of domestic processed goods for a total amount of 3,452,696,347 tenge, namely:

- rail delivery of 3,067,927,342 tenge;

- car delivery 355 036 349 tenge;

- air delivery 19 894 519 tenge;

- sea delivery 9 838 137 tenge.

Of the total number of approved applications, 54 came from small businesses, 19 from medium-sized and 16 from representatives of large businesses. Among the approved applications, 844,646,980 tenge are the costs associated with the delivery of upper processing goods, 2,271,603,226 tenge of middle processing goods and 384,516,317 tenge of lower processing goods.

Based on the results of the first half of the year, the development amounted to 60% of the allocated funds. Consideration of applications takes place in the order of priority according to the date of the initial registration of the application. The following types are subject to reimbursement of part of the costs:

1) costs associated with advertising goods abroad;

2) costs of direct participation in foreign exhibitions, forums, fairs, competitions, congresses;

3) costs associated with the development, translation into foreign languages ​​and the publication of a specialized catalog for distribution abroad;

4) the costs of maintaining branches, representative offices, retail space, warehouse and retail shelves abroad;

5) the costs of carrying out procedures related to the registration of trademarks abroad, on electronic trading platforms;

6) the costs of carrying out activities related to the procedures for confirming the compliance of goods with the requirements established by technical regulations, standards, including organization standards, or the terms of contracts or confirmation of the right to carry out activities for the sale of goods abroad (certificates, permits, registration certificates and other documents) , as well as the costs incurred in the delivery of test samples of products to the test point and back for passing the certification procedure (in the case of a certificate or other supporting document);

7) costs associated with the procedures for obtaining a permit for the use of objects of exclusive rights (franchising) abroad;

8) costs associated with the passage of foreign certification, accreditation, inspection of subjects of industrial and innovative activities (in the case of a positive passage of the certification procedure, accreditation, inspection and the presence of a certificate or other supporting document);

9) costs associated with the delivery of goods and payment for transportation services by road, rail, air, sea transport and the organization of transportation.


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