Chinese Rule Changes Ease Restrictions on Cross-Border Goods

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New guidance from the Chinese government on cross-border ecommerce has given merchants clarity on potential policy changes, making it easier for them to sell goods in popular categories like food, cosmetics and health supplements normally subject to stricter scrutiny.

Alizila reported that China’s Ministry of Commerce said overseas goods purchased online and distributed through bonded warehouses will continue to receive “some” preferential treatment, avoiding quarantine and quality checks that would put a crimp on importing many popular foreign products.

In April 2016 Beijing announced changes to a pilot program meant to make it easier for Chinese consumers to buy online directly from overseas merchants. At the center of the program were bonded warehouses, where products coming from overseas markets aren’t subject to normal import duties or rules for quarantine and quality checks, especially on food, cosmetics and health supplements.

According to Alizila, the proposed changes would have increased tariffs and removed preferential regulatory treatment. This caused concern among international brands as some of the most popular foreign items purchased online in the above categories are also the most tightly regulated by Chinese authorities.

After the announcement, Alizila reported, cross-border ecommerce orders dropped as much as 60% in major trading hubs like Shenzhen, Zhengzhou, Ningbo and Hangzhou. Responding to industry concerns, regulators said they would suspend the rollout of the new quarantine and quality check restrictions until the end of 2017, leaving in place a higher import tax.

Then in March, regulators extended the suspension indefinitely, saying all goods shipped through bonded warehouses would be considered “personal items” and therefore exempt from the stricter regulations.

Alizila said the government might issue further guidance on cross-border ecommerce before the current rules are formalized on Jan. 1, 2018, but the announcement gives stakeholders time to prepare for any potential changes. Thus online sales of cross-border goods can continue unabated; Marketer pegged sales in China will reach $157.7 billion by 2020, up from about $86 billion in 2016.

Part of the ministry’s announcement included the addition of five more pilot zones for bonded warehouses in Dalian, Hefei, Chengdu, Qingdao and Suzhou, bringing the total to 15. This allows for faster delivery and reduced shipping costs.

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