Soon after Chinese Spring Festival, the winter for Cross-border e-commerce seems will come very soon.
In the past one month, new suggestions regarding cross-border e-commerce reverted, the policy from promoting cross-border e-commerce may turn to restrict it, according to Chines Finacial Daily. These ” suggestions” said to be approved by Chinese Commerce Dpt, Custom Dpt, and Finance Dpt, to be finalized in April
Key changes:
- Cancel the allowance of tax on baggage and articles accompanying incoming passengers and personal postal articles, previously the tax value under RMB50 is exempt from tax.
- Increase the tax rate, previously the tariff on baggage and articles accompanying incoming passengers and personal postal articles have 4 level, 10%, 20%, 30% and 50%, after the new regulation, it will be increased to 15%, 30% and 60%. The average increase is 12%. For luxury products the tax rate will be 60%.
Impacts:
The cross-border e-commerce product price will no longer have significant price advantage compare to normal importing products. Chinese consumers oversea shopping tax will increase.
This new regulation will drive Cross-border e-commerce platform to introduce more price level products into Chinese market. As previous low tax products will no longer have price advantage.
Main reasons for the changes:
- The government realized the huge potential of consumer based innovative international business model.
- The dramatic increase of cross- border e-commerce lead to the boost of small parcels which is becoming more and more difficult to manage and monitor. A large number of products has skipped quality, security, safety check to flood into Chinese market.
- To restrict B2C cross-border e-commerce, and promote B2B cross-border e-commerce to balance Chinese importing and exporting (Chinese exporting has been decreasing in the last few years) ,which is more cost effective for Chinese custom.
2014 and 2015 was the spring for Cross-border e-commerce in China, quite a lot of UK and other western brands/ companies successfully sell their products through the cross-border e-commerce channel to Chinese market. Such as Lush, Cambridge Satchel, Sainsbury, NYR, and Look fantastic etc. The change of the policy will push the companies to find other ways to break into the Chinese market.
Enter into Chinese market is never easy for western companies, to understand the policy and the market to make very quick response is essential.
If you are interested to know how to enter Chinese market, please feel free to contact us.
