1. Introduction

The initial form of China's cross border commerce on the internet can be traced back to the 1990s, which can be summarized as the "period of rapid electronification of foreign trade information." This period was also the initial germination and rapid development of China's Internet. The Internet revolution that began in the 1990s brought achievements to almost every aspect, including business, and the surface business model of cross-border Internet trade is also fully synchronized with the development of Internet technology

In the 1990s, it centered around Business-to-Business (B2B) information matching (Alibaba International Station), relying on static web pages. The 2000s saw the transition to a closed-loop transaction model, with breakthroughs in electronic payment technology, the implementation of export tax rebate policies, and transaction volume becoming a key metric. The 2020s saw the advent of smart localization, the in-depth application of Artificial Intelligence (AI) and blockchain technologies, and the implementation of regional agreements such as the RCEP. Ultimately leading to the formation of a modern cross border commerce on the internet system driven by data, featuring flexible supply, and a collaborative ecosystem as shown in Table 1 and Table 2.

Compared to the 2000s, the landscape can be divided into two: the "traditional model" and the "modern model." The former is represented by Alibaba and Taobao, while the latter is exemplified by TikTok. These models represent the B2B information collection and distribution model and the new, enriched model of live streaming combined with AI. The latter is subverting cross border commerce on the internet concepts based on the former, such as "online shopping."

Simultaneously, policy styles are evolving to keep pace with the times. However, the overall trend is from a "distributed" to an "integrated" approach.

The modern model exhibits three key characteristics: first, data-driven, leveraging AI algorithms to achieve precise product selection and on-demand production, reducing design cycles from 30 days to 7; second, ecosystem collaboration, building a flexible network of over 2,000 suppliers, and tripling inventory turnover; and third, proactive innovation, with businesses deeply involved in policy design and a multi-hub layout to mitigate risk. This transformation is essentially a digital economy reshaping traditional trade, driven by the rise of Generation Z consumption, the increasing penetration of digital technology (reaching 73%), and the deepening of regional trade agreements. China's cross border commerce on the internet industry is shifting from a "cost advantage" to a new stage of development characterized by "digital empowerment."

It's not just about technological iteration. Early on, the platform economy focused on reducing transaction costs. With the widespread adoption of the internet, the long-tail theory has replaced the "80/20 rule." Companies like SHEIN, driven by data, have made it possible to commercialize niche needs.

Currently, the diminishing marginal costs of digital technology are dominant. AI and cloud computing are enabling leading companies to form natural monopolies, while blockchain is reshaping global trade rules by reducing trust costs.

2. Literature review

2.1. Overall development trend of cross-border e-commerce ecosystem

There is hardly a single paper that fails to point out the current massive scale of China’s cross border commerce on the internet and affirms its enormous future development prospects. Wang’s research uses data and empirical analysis, and other computational methods to confirm that cross border commerce on the internet has a significant role in promoting the growth of international trade [1]. In China, cross-border commerce on internet platforms provides a level playing field for small and medium-sized enterprises (MSMEs) and individuals to participate in international trade [2]. It can be seen that analysis from the perspective of enterprises is also necessary. Wang2’s research focuses on the coordination role of industrial clusters because he believes that most variables are unquantifiable [3].

As for transaction costs, due to the lack of official statistics on cross border commerce on the internet of goods, empirical work in this area has so far been limited to a few cases with privileged access to proprietary datasets [4].

However, some papers point out that numerous challenges, some of which are pressing, will arise during this development process. Research on cross border commerce on the internet almost always focuses on analyzing these challenges. Based on the various journals published by previous researchers, these issues can be roughly categorized into three categories: security, convenience, and policy. All these issues share a common characteristic: a cycle of "problem emergence—exploration—solution—variation and recurrence" over time.

Researchers also like to conduct research from a specific behavioral perspective or other smaller parts. Furthermore, there has been a gradual increase in research on cross-border business transactions between Internet suppliers and consumers. Professor Chen used online shopping as an example to analyze the online shopping context that determines consumers' purchasing intentions and identified four clues that promote such consumer’s intending behavior, name-based online promotion clues, marketing clues, personalized recommendation clues on apps, and social comment clues on any media. All above can have more branches [5].

2.2. Specific models of commodity trading and supply chain

Supply chain innovation is inseparable from technological innovation. Blockchain and decentralized management are new technological trends, connecting to Web3 and the metaverse to empower each other. However, some issues remain unresolved in the integration of blockchain technology and supply chain management. Researchers such as Mr. Liu believe that achieving product information traceability in a decentralized blockchain system requires new system design, which requires knowledge in the field of supply chain management [6].

Previous studies have tended to focus on development models and have consistently proposed that macro models such as B2B and Business-to-Consumer (B2C) shape each other with cross border commerce on the internet models. Liu pointed out the special circumstances of B2B and B2C in China, and also pointed out six types of store formats in China; Su et al. used the relationship composed of nodes and connections (flows) as a guide, and used policy terms as data, arguing that the government is more inclined to regulate from the perspective of international transactions and regulatory policies [7].

Supply chain is something that cross border commerce on the internet is often studied by some scholars. One of the reasons is that it reshapes the entire supply ecosystem. Wang uses a multi-case study method to believe that the role of integration is more important [8]. He considers it from the perspective of customer service, and uses this to cut into the change of the supply chain. He proposes that cross-border enterprises have assumed the role of "integrators" of the supply chain. At the same time, he believes that the changes of the supply chain brought by cross border commerce on the internet are conducive to national policies, green policies, and carbon emission requirements [9]. Zhang constructs a multi-period difference model and empirically analyzes the impact on the resilience of corporate supply chains. It is found that it significantly enhances the resilience of the supply chain [10]. It can be said that cross border commerce on the internet has significantly rewritten the business and supply logic in its unique way.

Wang believes that traditional international trade consists of three stages: finding goods or products, signing contracts, and delivering goods or products [1]. However, today, the time and space path of its delivery has been greatly reduced, including information costs, negotiation costs, transportation costs, tariff costs, and intermediary costs [1]. He also affirmed the positive role of policy guidance.

2.3. Regulatory and transaction-restrictive policies and their research

Interestingly, mathematical models are often used to demonstrate regulatory policies for cross border commerce on the internet, which is very commendable. Regulation has always been considered an area that is not easy to analyze using quantitative methods, but many scholars have still provided some trends. Su's paper uses the K-Means clustering method and weighted matrix method to summarize and analyze policy terms, pointing out that China will adopt long-term and stable planning and affirming the leading role of the government [7].

cross border commerce on the internet not only plays a significant role in regulatory policies, but also in transactions. Yin et al. believe that it reduces transaction costs and increases efficiency in at least three stages: the contact stage, the contract stage, and the control stage [11]. Liang et al. used the Global Trade Analysis Model (GTAP) and the Computable General Equilibrium Model (CGE) to confirm the role of cross border commerce on the internet in promoting trade convenience [12].

Of course, there are still problems in the supervision of cross border commerce on the internet. Scholars such as Xue believe that the problem faced by both importers and exporters is the single window, and information exchange, mutual recognition of supervision, and mutual assistance in law enforcement are still difficult to achieve. Any mathematical model attempts to quantify it, but it is ultimately still affected by specific circumstances, and this is also under the condition that the data is still valid for a long time (5-10 years).

3. Conclusion

This article analyzes the 30-year development of cross-border internet commerce in China and systematically examines the impact of regulatory policies, supply chain changes, and technological innovation on business model innovation. The study finds that the evolution of cross-border internet commerce is essentially the result of the reconstruction and application of a series of economic principles in the digital age.Regarding transaction costs, the platform economy has significantly reduced information asymmetry in international trade through digital means, significantly improving the efficiency of global supply and demand matching. Regarding production methods, flexible supply chains have achieved a transition from economies of scale to economies of scope, and the small-order, quick-response model has created more agile market responsiveness. Regarding the institutional environment, China's unique regulatory sandbox policy provides a unique experimental space for corporate innovation, fostering a virtuous interaction between institutional and commercial innovation.

Based on this research, this article offers the following recommendations: First, enterprises should establish a dynamic capabilities framework, integrating policy responsiveness, technology application, and supply chain optimization into core dimensions of strategic management. Second, the government should continue to improve policies for cross border commerce on the internet pilot zones, particularly by providing institutional support for emerging areas such as cross-border data flows and green trade. Finally, small and medium-sized enterprises should leverage SaaS tools and industrial internet platforms to acquire digital transformation capabilities through an asset-light approach.