E-Commerce in China

E-commerce in China: A Guide for Australian Business

Business Update June 2016

Cross border e-commerce (CBEC) is a special import channel which allows products to be sold directly online sale to consumers (B2C). The channel has temporary exemptions to tariffs and other regulatory requirements which apply to conventional international trade (B2B).

The channel was established by a series of pilot policy announcements by the General Administration of Customs in 2014. On 8 April 2016, the policy was substantially revised and extended by the Ministry of Finance (and other agencies) until at least 12 May 2017.

China’s major established e-commerce marketplaces—such as Tmall, JD.com, VIP.com, Kaola.com and Suning.com—operate dedicated portals selling popular CBEC merchandise, such as fashion, health food, skincare and cosmetics and baby and maternity products.

Chinese online shoppers use CBEC to access a wider choice of international products at a lower prices compared to traditional retail.

McKinsey and Company estimate that the value of cross-border consumer e-commerce transactions was valued at more than 50 billion Australian dollars in 2015. While there are no official trade statistics on the volume of Australian products sold to China through this channel, Australia is estimated to the fourth most popular source of products behind the United States, Japan and Korea.

CBEC is not the only means to sell imported products online in China. All products imported via B2B conventional trade through the China Australia Free Trade Agreement can also be sold online—as well as in traditional retail outlets. Austrade estimates the offline market for food and beverage accounts for approximately 80 per cent market share, and is the most suitable channel for most bulk, fresh and frozen shipments to China.

How does CBEC work?

Bonded warehouse mode

Products on two lists of 1,293 HS codes can be imported into one of 25 approved CBEC bonded warehouse zones across China, or shipped from an overseas distribution centre that is linked to Chinese customs. These ‘positive lists’ includes packaged foods, UHT milk, infant formula and wine. Goods can be imported in bulk through this channel and picked and packed locally for final delivery.

  • CBEC positive list one (released 08 April 2016):
    Chinese (Source: Ministry of Finance (official)), English Source: Swiss Global Enterprise
  • CBEC positive list two (released 15 April 2016):
    Chinese (Source: Ministry of Finance (official)), English Source: Swiss Global Enterprise

A flat tax of 11.9 per cent is applied to the final online retail price at the time of purchase (calculated as a 30 per cent discount on VAT). A discounted rate of consumption tax also applies to:

  • luxury goods (14 per cent)
  • cosmetics (14 per cent)
  • wine (21 per cent)

Individual consumers are permitted to buy up to 2,000 RMB worth of such goods per order, up to a limit of 20,000 RMB per year.

Until the end of a grace period on 12 May 2017, products on these lists will generally not be required to comply with China’s product standards and import regulations (see Advice for exporters). However products must be legally sold in Australia.

Postal and courier mode

Products can also be shipped directly from overseas merchants (B2C) and individuals (C2C) to China via the postal and courier system. This including products not on the bonded warehouse positive lists.

Similar to the bonded warehouse model, these products are generally exempt from the requirement to be pre-registered with Chinese authorities. No announcement has been made by Chinese authorities how long this exemption will apply.

Products entering China via this method are subject to the following personal postal tax rates, which were announced on 8 April 2016:

  • Food, beverage, healthcare, toys, furniture: 15 per cent
  • Sporting equipment (except for golf and accessories), fishing equipment, shoes, clothing: 30 per cent
  • Wine, jewellery, golf equipment and accessories, watches and cosmetics: 60 per cent

Advice for exporters

While cross-border e-commerce remains an attractive channel to promote, market and sell products to Chinese buyers, Australian exporters are advised to register their products with Chinese authorities as early as possible before the end of the regulatory grace period on 31 December 2017.

An overview of common regulations is contained on page 40 of the Austrade publication e-Commerce in China: A Guide for Australian Business. This guide can be downloaded by filling in the form below.

Individual consumer products that are compliant with the relevant national safety and quality (guobiao) standards and import quarantine protocols, can be registered online with the China Import and Export Inspection and Quarantine Bureau at http://ire.eciq.cn/.

While many ambient packaged food products sold in Australia will already be compliant with China’s relevant food standards (and can be registered with minimal cost), these measures are independent of Australia’s domestic system and are not a part of the China Australia Free Trade Agreement. Special rules apply to fresh produce, health food, cosmetics and infant formula.

The exact regulatory requirements differ according to each product, and exporters are strongly encouraged to seek professional advice from an import agent, a logistics company, law firm or regulatory affairs advisory.

Further reading

E-commerce in China: A Guide for Australian Business

The E-commerce in China: A Guide for Australian Business offers practical advice, facts and insights on how China’s e-commerce marketplaces work and how to access them.

If you would like to download a copy of the guide, please fill out the form below. This publication is intended for use by Australian businesses and a valid ABN is required to download the guide.

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