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March 18, 2014

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Home » City specials » Hangzhou

City leads in cross-border online shopping

A whole new way for Chinese consumers to shop online is developing, and it can offer a better chance of getting genuine foreign-branded goods in a reasonable time at prices sometimes better than those of stores in China — even after taxes and shipping is paid.

Hangzhou-based Alibaba Group is one of the big players in the emerging field of cross-border online shopping.

While it has been a long-held belief that products in developed countries are more expensive than in China, Chinese shoppers are realizing that’s not always true. That’s where e-commerce companies smell an opportunity.

Qin Yue, a young man from Hangzhou, found a pair of loafers he liked made by the American brand Columbia, but he was put off by the price in a local Columbia store which, even after a 20 percent discount, was still 1,039 yuan (US$169).

He then found the same shoes on Columbia’s US website at US$80, and saw that a seller on eBay.com offered the loafers at US$62. He bought the shoes from eBay and his total cost was US$135 — a savings of US$34 even after the international shipping cost and import charges were added.

Qin saved money partly because he understands English and has a Visa credit card.

But China’s e-businesses are stepping into the breach to give other people access to international online shopping in Chinese and with payment in yuan.

Last month, Alibaba subsidiary Tmall Global (www.tmall.hk) opened. The website is in Chinese and the homepage banner says it provides customers in China’s mainland 100 percent authentic overseas goods imported with original packaging and delivered from foreign countries and areas.

“We want to offer access for every Chinese consumer to overseas goods,” said Fan Feifei, an operations specialist at Tmall Global.

Tmall also announced an agreement with the Hangzhou Customs earlier this month to make paying Customs duties easy and fast, while providing a favorable tax rate in some cases and discouraging smuggling.

Under the agreement, all goods bought via Tmall International and sent to Hangzhou will be handled separately from other packages. Customs pre-charges the duty online once the buyer clicks the “buy” button (like a hotel pre-authorizing a room security charge), and actually levies the charge after the product arrives and is cleared, shortening the delivery time.

The duty rate applied to each product is the same as the tax on baggage and articles accompanying incoming passengers and personal postal articles, according to Hangzhou Customs. That’s the rate charged on small amounts of imported goods for individuals’ use, not business purposes. It’s usually lower than the rate levied on commercial imports.

Products are exempt from duties if the taxes would be less than 50 yuan, except in the case of 20 types of goods including cameras, computers, refrigerators, and air conditioners.

Customs declarations often require time-consuming procedures like filling out tables, and some sellers try to evade taxes. But the new agreement shows a way to shorten clearance times and increase voluntary compliance with the law, according to officials of the Cross-border E-Commerce Regulation Center of the Hangzhou Customs.

Officials anticipate that under the arrangement, goods delivered from foreign countries and areas will reach Hangzhou buyers in two weeks.

Hangzhou is the first city in the country to operate such an innovative plan for e-commerce goods.

Also last June, the city launched China’s first cross-border e-commerce industrial park, where Customs, e-commerce trading companies, and logistic enterprises all operate in one place to optimize efficiency.

Fan confirmed that Tmall Global is now looking for similar agreements with other cities’ Customs offices.

Foreign sellers on Tmall Global can be overseas brands, retailers or e-commerce platforms.

Tmall has signed up over 140 online stores selling goods of thousands of international brands, which Tmall officials said mainly fall in the categories of mother and baby products, foods and health care products, cosmetics and skin care products, and fashion, shoes and bags.

The website is in Chinese, and customers can pay with Chinese yuan via Alipay, China’s equivalent to Paypal.

All foreign sellers are required to outsource their online customer service to Chinese companies. Tmall assists sellers by recommending outsourcing companies to them. They are required by Tmall to ship goods within 72 hours, and to offer an address in China’s mainland for refunds.

Alibaba is just one of the mega e-businesses digging for gold in this new market.

JD.com started its JD Overseas Go program, and Suning.com began its Global Shopping program last year. Kuajingtong.cn, run from the Shanghai Free Trade Zone, was opened last year.

The pie they’re rushing to slice up is huge. Statistics from the China E-Commerce Research Center show that last year overseas purchasing in China exceeded 74 billion yuan, 54 percent higher than in 2012.

The figure does not include transactions that dodged import duties, which are believed to be not an insignificant amount, especially for online shopping, an area that’s hard to police.

While big e-commerce companies are helping to standardize the market, the “war” among them for market share has just started.

JD Overseas Go has announced it is setting up warehouses in Russia and Southeast Asia. It now provides products from international brands such as home appliances, mother and baby products, foods and health care products.

Suning.com’s Global Shopping is the country’s first B2C (business to consumer) e-commerce company approved to operate international express delivery services. Also, its subsidiary Redbaby is running an overseas e-shopping program selling international mother and baby goods.

Before such big companies stepped into the market, online buyers mostly used foreign shopping websites, or bought from individual sellers who claimed to be supplying genuine goods from foreign countries, known as C2C or consumer to consumer.

It is difficult to verify the authenticity of such goods, however, and evasion of duties was frequent.

Zhuo Saijun, senior analyst of Analysys International, said while the field is moving from C2C to B2C sales, it still has a long way to go.

“The competition among large e-commerce companies is now at the first stage, during which they grab more territory,” Zhuo said.

He said the second phase of competition would be strengthening of core competencies by, for example, finding good and constant supplies of goods. At the third stage, they will compete for services.

Also Zhuo believes the authorities should regulate the purchasing channels.




 

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