The Chinese government has also been paying attention to increasing cross border e-commerce, not least as a way to boost sluggish foreign trade. In 2015, total export and import value decreased 7 per cent year-on-year, the first time China’s foreign trade has fallen since 2009.
According to China’s Ministry of Commerce, the volume of cross-border e-commerce in 2016 will reach 6.5 trillion yuan and in coming years may account for as much as 20 per cent of China’s foreign trade.
So it came as a surprise to many industry insiders when, last month, the government announced a change in the way in which e-commerce packages would be taxed when entering China.
For many product categories the change increased the amount of tax that would need to be paid (previously, the vast majority of personal packages coming into the country were simply levied a flat 10 per cent).
Under the new system, which came into effect on April 8, these packages are essentially treated more like commercially imported products, subject to import, customs and VAT charges of varying rates in China, depending on the product category.
According to Zakkour, although extra importation charges may seem to be an attempt to hobble the burgeoning industry and encourage Chinese consumers to shop at home (as some commentators have claimed) the change is simply an attempt to close loopholes for C2C dai gou agents and legitimise the industry for B2C players.
“The changes will have a minimal net impact on cross -border sales,” Zakkour said. “Many product categories, such as cosmetics and body care, will benefit, others will see an increase in taxes, such as certain food and beverage products, but overall it is not going to dampen growth.”
“The desire for foreign products in China is continuing to grow. Chinese consumers are willing to pay a premium for foreign products for reasons of trust, authenticity and safety.”
“What will amount to something like an 11 per cent tax on these products will not dampen this desire, especially as these products will still be more affordable than buying in brick-and-mortar stores in China.”
Casey Hall is a freelance journalist who has worked in Shanghai for more than six years including stints as Managing Editor for Talk Magazines and as a contributor to a variety of international publications, including The Wall Street Journal Asia, International New York Times, CNN International and Forbes.