Selling online to China’s growing middle class will become easier for some overseas retailers and brands under new regulations announced by the Chinese government.
China’s Ministry of Finance announced last week reductions in import duties for 187 product categories, including food, nutritional products, apparel, electronics and home products.
The new regulations take effect Dec. 1.
On average, the government is reducing tariffs for those products to 7.7% from 17.3% on consumers’ small online orders. For example, the duty on baby formula will be reduced to zero from 20% and on diapers the duty will go to zero from 7.5%, the ministry says.
“The reduction of tariffs is a big boost for global brands and cross-border e-retailers,” says Zhang Zhouping, a senior analyst at the Chinese E-commerce Research Center. “Before, for products such as cosmetics, the duty tax was up to 30%. Now as the overall price of goods decreases, the consumer demand will grow dramatically.”
The tariff reductions represent another step by the Chinese government to make it easier for China’s growing middle class to buy products from foreign websites.
To facilitate such purchases, the government in recent years has established so-called “cross-border e-commerce” policies that provide for expedited customs handling of small orders from overseas retail websites. Those rules also allow Chinese consumers to buy items from online retailers that do not have a license to do business in China as well as certain goods that would otherwise have to pass Chinese safety tests.
In another move that will ease cross-border shopping, China’s food safety authority, the General Administration of Quality Supervision, Inspection and Quarantine, last week clarified that online retailers selling baby formula through cross-border e-commerce rules will not need to register and obtain permits from the agency. Stores operating in China will have to obtain such approvals to sell formula.
The stricter rules on baby formula are a response to scandals about tainted products and had raised fears that they would disrupt the growing online sales of formula by foreign companies to Chinese parents.