China cross-border e-commerce rules extension a major business boost for industry

By Gary Scattergood contact

- Last updated on GMT

Cross border e-commerce sales have been soaring for supplement firms. ©iStock
Cross border e-commerce sales have been soaring for supplement firms. ©iStock

Related tags: International trade

Supplement and food firms operating in China’s booming cross border e-commerce market have been buoyed by a year-long extension of the existing trade laws, which were due to be replaced on January 1.

There had been widespread uncertainty about the rules that could come into force from next year. Originally, officials planned to introduce more stringent rules, before backtracking and keeping the current system in place until January 1, 2018.

Now the current system will remain in place until January 2019.

This means many goods will still be regarded as personal trade, rather than for commercial distribution, allowing overseas firms to bypass complex local registration requirements.

The extension covers products shipped to bonded warehouses in China before being sold through e-commerce sites, and those bought by “daiguo’ shoppers overseas beofe being sold on to Chinese consumers.

China will also  set up more cross-border e-commerce pilot zones to facilitate trade and boost China's global competitiveness, ruled a  State Council executive meeting chaired by Premier Li Keqiang.

Li said: We need to enable the healthy development of cross-border e-commerce and speed up the growth of new engines, making the foreign trade sector more adaptive to new circumstances and better endowed with new advantages. Prospects for cross-border e-commerce are very bright."

Supplement companies, especially those from Australia and New Zealand, have seen sales soar in recent years on the back of cross border e-commerce.

Positive development

Companies such as Blackmores saw their sales take it a hit in the wake on the regulatory uncertainty.

“The transition period for supervision of CBEC retail ­imports being extended from the end of 2017 to the end of 2018 … is an ongoing reflection of the government’s support for further ­expansion of free trade zones and of CBEC, which is a very positive development for Australia and companies such as Blackmores,”​ its CEO Peter Osborne told The Australian​.

According to the Australian Trade and Investment Commission — Austrade — the Chinese health food market, which includes vitamins, dietary supplements, animal and herbal extracts, and Traditional Chinese Medicine (TCM), is currently valued at RMB200 billion (US$30 billion), and is projected to grow by 10%​ every year until 2025.

The ageing population is a large factor for this growth, with the population aged 65 and over in China is expected to reach 13% by 2020.

Supplements for women and children are also in high demand. With the change of the family planning policy in 2015, it is expected that one to two million additional babies will be born each year for the next four to five years.

Industry trade body Complementary Medicines Australia said the Australian supplements industry had seen the value of exports double in just two years, with more than half of these exports destined for China and Hong Kong.

CMA CEO Carl Gibson said today: "The announcement from China's State Council to extend the grace period for new rules for cross-border online trade by another year is good news for Australian Complementray medicine businesses and good news for Chinese consumers who trust the safety, quality and efficacy of Australian theraputic products.

"The package of e-commerce announcements from Beijing shows that the Chinese authorities are determined to get the new rules right and ensure the implementation of new rules goes smoothly and is welcomed by CMA."

Related topics: Manufacturers, Suppliers, Financial plays

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