China has been sending mixed signals on how it will regulate the growing purchases by Chinese consumers from overseas websites.
The most recent signal, however, suggests the government will continue its relaxed policy, which bodes well for foreign brands and retailers selling online to China’s growing middle class.
In a statement released last week through the Ministry of Commerce of China, the State Council, China’s highest government authority, said Chinese customs officials will continue to treat cross-border e-retail orders the same way they treat personal purchases Chinese travelers make when abroad. That means Chinese consumers will continue to be able to buy items from brands without a license to do business in China as well as certain goods that would otherwise have to pass Chinese safety tests.
The government also approved an additional five pilot cities where customs agents can expedite the handling of consumer online purchases from abroad: Hefei, Chengdu, Dalian, Qingdao and Suzhou.
China previously approved 10 cities for expedited handling of cross-border e-commerce purchases by consumers. Those cities typically establish a large number of warehouses where foreign retailers and brands can store merchandise they bring into China duty-free, and then send items as they are ordered through customs under the relaxed cross-border e-commerce rules.
The ministry’s announcement eased worries sparked in April 2016 when the Chinese government announced plans to tighten its rules on goods purchased from online websites in the spring of 2017.
“The policy statement of last April indicated stricter supervision,” says Li Pengbo, CEO of the China Cross-border E-commerce Research Center, a consulting company. “The new statement makes clear the government will manage cross-border orders as individual items, not subject to the restrictions on goods that must apply for business licenses and pass hygiene inspection. The expansion of pilot cities from 10 to 15 also shows the policy will remain relaxed.”
China in 2013 launched a test to treat consumer purchases from foreign websites as personal items when it established the Shanghai Free Trade Zone, and it subsequently expanded the trial to nine other cities. Goods imported under these rules frequently face lower customs duties than commercial merchandise.
What’s more, these rules allow Chinese consumers to buy from overseas e-retailers items, such as food or cosmetics, that would have to be approved as safe by the Chinese government if brought into the country to be sold in stores.
China, for example, requires animal safety testing of cosmetics, which creates a barrier for foreign brands that do no animal testing for fear of offending some consumers. The cross-border rules allow individual Chinese consumers to buy small quantities of such products that would not otherwise be available in the country. A Chinese consumer is permitted to buy up to 20,000 RMB ($2,900) of products from foreign websites each year under this cross-border e-commerce policy.
This policy has helped to open the door to shopping on overseas e-commerce sites for many Chinese consumers who crave foreign goods. Cross-border e-commerce purchases by Chinese consumers grew 86% to 219.8 billion yuan ($31.99 billion) in 2016 from 118.43 billion yuan ($17.22 billion) in 2015, according to China’s National Bureau of Statistics.
The State Council also said last week that the government will consider a new e-commerce law in the near future that will provide more details on its policy regarding purchases from overseas websites.
For more information about Chinese e-commerce market, please click here for the Internet Retailer 2016 China 500.