The cross-border e-commerce (CBEC) market is hot and competitive in China. This sector mainly focuses on import e-commerce targeting Chinese consumers.
Chinese consumers purchase foreign products online from local CBEC platforms, global e-commerce websites such as iHerb, and Daigou agents who are usually Chinese residing overseas.
Products can reach Chinese consumers via direct shipping (personal parcel or business clearance) or the bonded warehouse model.
Import CBEC Platforms
Top import cross-border e-commerce platforms in China include:
1. Tmall Global, part of Tmall platform and owned by Alibaba Group, is leading the import cross-border e-commerce platform in China.
2. JD Worldwide, part of JD.com
3. Xiaohongshu, a social e-commerce platform where China internet users share their “best products” stories
4. Kaola, previously owned by Netease and now sold to Alibaba Group
In 2019, the single transaction limit of cross-border e-commerce retail import goods is RMB 5,000 (compared with 1,000 yuan before 2016), and the annual transaction limit per person is RMB 26,000.
In the future, it may increase with the increase of Chinese residents’ income, and further relax the restrictions on cross-border consumption of Chinese consumers.
In 2019, the import value-added tax will be 13% and 10%. In other words, under normal circumstances, the current comprehensive tax rate of cross-border e-commerce is 11.2%.
CBEC comprehensive tax = (consumption tax + VAT) x 0.7
Free Trade Zone
The Pilot Free Trade Zones (“Pilot FTZs”) offer a high degree of openness in relation to foreign investment and international trade in both goods and services.
China initially had 10 pilot cities for cross-border e-commerce, where the business is conducted as a “bonded import” or “direct purchase import”, including Shanghai, Hangzhou, Ningbo, Zhengzhou, Chongqing, Guangzhou, Shenzhen, Tianjin, Fuzhou and Pingtan.
The China (Shanghai) Pilot Free Trade Zone was officially launched on 29 September 2013. And on 20 April 2015, the State Council released framework plans for the Guangdong, Tianjin and Fujian Pilot Free Trade Zones.
In May 2020, The State Council approved the establishment of integrated pilot zones for cross-border e-commerce in 46 cities and areas.
Bonded warehouse is a popular CBEC model adopted by some businesses to sell to Chinese consumers.
Like a standard warehouse, the bonded warehouses in China allow businesses to store their products closer to Chinese consumers for faster delivery without the custom duties until released from the bonded warehouse. They are used for storing imported or exported goods.
Bonded warehouse refers to those specific to the storage of bonded goods and other goods not having gone through customs procedures. It includes public bonded warehouse, self-use bonded warehouse, and dedicated bonded warehouse (e.g. bonded warehouse for liquid hazardous articles, bonded warehouse for materials, bonded warehouse for consignment sales and maintenance, etc.).
Export CBEC Platforms
The top export CBEC platforms among Chinese sellers are AliExpress (owned by Alibaba), Amazon, Wish, and eBay.
Chinese sellers are also active on Lazada (owned by Alibaba Group) and Shopee to reach buyers in the Southeast Asian countries.
Overseas Chinese consumers often buy on Taobao and use an agent or parcel forwarding service to get the products delivered.