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As global trade shuffles and reconfigures itself after the recent tariff announcements, some trade links will weaken due to the increased costs, while others will become even stronger. Trade between Europe and China, one of the most significant trade relationships in the world, is on the rise, and will become even more important as both move away from the US. 

To make this relationship even stronger, in October 2024, technology providers Enigio and TradeGo developed an interoperable digital corridor for electronic trade documents to facilitate trade between Europe and China. 

This “Digital Silk Road” is a new kind of trade route, taking trade documentation – one of the last vestiges of traditional trade, paper-based and slow-moving – into the 21st Century. Trade Finance Global (TFG) spoke to Patrik Zekkar, CEO of Enigio, and Steven Zhou, Executive Director of TradeGo, to learn more about the Europe-China digital trade corridor and the potential of digitalising trade documents. 

China and Europe: Millennia of trade

China and Europe’s trade relationship go back to the 1st Century, when silk, tea, and porcelain were transported to Europe along the Silk Road in exchange for horses, wine, and gold. Marco Polo, the Venetian merchant who travelled to China in the 13th Century, returned with stories of China’s spectacular riches and its potential for trade with Italy and beyond.

Now, the EU is China’s second-largest trading partner, with a total of £622 billion of trade going between the economic superpowers each year. Chinese imports account for 21.3% of the EU’s total, ahead of any other country, while around 8% of the EU’s exports go to China. Tariffs by the US, which have made Chinese exports to the country massively rise in price, are leading to increased trade between the two countries, which is only set to rise as more tariffs come into effect.

While most aspects of modern supply chains are digitalised – from the tracking of goods, to fraud prevention measures, to even monitoring the temperature of freight containers in the middle of the ocean – one all-important aspect remains analogue: trade documentation. This is inefficient in the best of cases, and can have disastrous effects when things go wrong.

The use of paper-based trade documents “can hold up and delay shipments and offloadings and create a lack of resilience, flexibility […] and delays if the documents reach the destination of the shipments later than the actual containers,” said Zekkar. During the pandemic, for example, delays with documentation led to long waits, forcing importers to pay for expensive demurrage fees and goods to be held up for months. If a specific document is needed urgently, there just isn’t a way to get it to its destination quickly with traditional paper-based systems. 

Because banks in both the issuing and the receiving country need to check the documents, sometimes exporters face the absurd situation of a shipment having arrived at its destination, but not being able to move from the port because the documents needed to release it are still en route. 

A collaboration for digitisation

Enter Enigio and TradeGo. The Europe-China trade digital trade corridor, developed in a collaboration between the tradetech giants, is an interoperable digital channel for all sorts of trade documents, cutting down wait times from weeks to days or hours. While this will benefit traders everywhere, the most immediate effect will be felt by firms who keep goods in bonded warehouses while awaiting trade documents: not only will their goods be released earlier and reach the consumer much faster, but the firm will also avoid expensive demurrage and warehouse charges. 

The digital trade corridor lets parties in Europe and China electronically transfer documents like bills of lading, warehouse receipts, and invoices, speeding up transactions. In one recent case, a German exporter used the channel to send documents that would have usually taken at least 35 days to arrive. Using the channel, the end-to-end transactions took an hour and fifty minutes. 

To put it simply, “the corridor works. It’s delivered the business benefits values which we set out – shortening time, reducing cost, increased resilience, and of course, security: no one can tamper with electronic trade documents,” said Zekkar. 

The collaboration between TradeGo and Enigio has made it possible for the system to be completely interoperable, meaning exporters don’t need to onboard and learn two different systems to send and receive documents. European users can onboard Enigio while their Chinese counterparts can use TradeGo, and the two systems are fully interoperable, removing barriers to digital adoption. 

Zhou said the only way for trade to fully digitalise is to make systems intuitive, connected, and easy to use: ” We believe in a future when digital will become more popular, such as EBL adoption reaching 100% by 2030. [Using the systems] has to be just like sending emails: users can freely choose their preferred platform, and platforms [should] connect with each other.”

The potential of upheaval

Even when some trade barriers are lowered, the adoption of new digital solutions is slow. A massive industry has used paper-based trade documents for decades, and it will take time for people to adjust to digitisation. Encouraging even just a few firms to take the plunge into adoption is the crucial step—others will follow suit as the industry transforms.

The most important step trade companies can take is to make new technology as similar and compatible with existing processes as possible, only faster and more secure, keeping “change to the minimum but benefits to the maximum,” said Zekkar. 

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The impending trade war, which many anticipate will completely disrupt the global trade landscape, could be so transformative that it paves the way for quicker digitisation. The “new trade system” – different trade routes and shifting relationships as global trade moves away from the US – might make room for innovation, highlighting the importance of resilience and flexibility. 

Paper-based trade documents, prone to delays and fraud, expose entire supply chains to systematic risk and higher costs, which firms will be less willing to bear once they face the risks and costs associated with tariffs. 

As Chinese and European companies adapt to tariffs, they are bound to explore new markets, and their relationship will only get stronger. “New markets mean new risk, new uncertainties, and that means trade and trade finance need more support, because trade will not stop. Trade always finds its way, but it needs to be supported with flexibility, agility, and resilience,” said Zekkar.