China crackdown on overseas personal shoppers boosts ecommerce

“China crackdown on overseas personal shoppers boosts ecommerce”

China is cracking down on imports of consumer goods by overseas personal shoppers and seeking to replace them with imports via ecommerce websites that can be taxed, providing opportunities for foreign brands in a fast-growing $23bn market.

Chinese consumers have for years relied on compatriots travelling or living abroad to buy goods for them — from infant powdered milk to luxury handbags — due to a lack of availability at home, high tariffs and the perception that foreign goods are safer.

The scale of the “daigou”, or “buy on behalf”, trade is difficult to determine as those imports are often undeclared to avoid taxes, but analysts say it is worth tens of billions of dollars a year. 

A new law aimed at holding ecommerce platforms responsible for fraudulent goods sold by vendors on their sites, which is due to take effect in January, requires all daigou who advertise online to register with the government and pay full import taxes. In recent months, customs have stepped up airport checks, while Chinese courts have jailed several merchants for up to 10 years for tax evasion.

“The Chinese government’s crackdown on daigou is good for us,” said Jia Ming, general manager of cross-border platform Ecmoho, which primarily sells health products made by the likes of Nestlé, Unilever and Johnson & Johnson. “A lot of daigou is tax avoidance, in which case it would be cheaper than our products.” 

Since 2014, Beijing has allowed platforms such as Alibaba’s Tmall and JD.com to let consumers buy goods directly from overseas without paying tariffs, and at a lower rate of sales tax than regular imports — typically 11.9 per cent versus 16 per cent — on up to Rmb20,000($2,875) of goods per year.

In addition to lower prices, the platforms offer a wider choice of goods since exporters can skirt restrictions faced by Chinese retailers such as bans on particular ingredients.

Since such purchases are not subject to tariffs, they are insulated from China-US trade tensions. “We don’t see the US-China trade war having a significant impact on cross-border retail ecommerce sales,” said Shelleen Shum of eMarketer, a research group. 

At a trade expo in Shanghai this month designed to promote China as a key importer, Alibaba said it would import $200bn of goods from more than 120 countries in the next five years. Kaola, the most popular cross-border platform, run by tech company NetEase, estimates it will buy about $11bn of overseas goods over the next three years.

Tabpear.com is an information consulting company that helps overseas brands enter China. We have successfully helped the marketing of bumgenius cloth diaper brand in China. Our services include Baidu’s network marketing, Baidu optimization, WeChat marketing, We are able to accurately develop the marketing strategy of overseas brands in China based on brand positioning.

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