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Detailing Announcement NO. 56: the Influence on Cross Border E-commerce Trade

E-commerce enterprises or individuals that undertake cross-border e-commerce trade should be subject to supervision and control by Customs in accordance with the provisions starting August 1 2014.Since cosmetics take up a large proportion in import goods and reached 77.38 billion RMB in online transactions in 2013 up from 6.02 billion RMB in 2008, Chemlinked is elaborating on what new obligations will follow.

E-commerce enterprises or individuals that undertake cross-border e-commerce trade should be subject to supervision and control by Customs in accordance with the provisions starting August 1 2014, according to “Announcement NO. 56 2014” released by the General Administration of Customs(see CL News on August 5). In essence this announcement means that imported goods have become a key regulatory target and there will be a series of measures exerted over cross-border e-commerce trade. Since cosmetics take up a large proportion in import goods and reached 77.38 billion RMB in online transactions in 2013 up from 6.02 billion RMB in 2008, Chemlinked is elaborating on what new obligations will follow:

Overseas Purchasing Agents Using E-commerce Platforms Set to Lose Out

The announcement states,

  • E-commerce enterprises must submit the “manifest of goods” to declare inbound and outbound goods to customs and individuals must submit the “manifest of articles” for customs declaration, otherwise the goods or articles will be regarded as contraband.
  • Individuals should go through tax collection and exemption formalities in accordance with the relevant regulations of personal postal articles when filing a customs declaration. Regarding the controlled articles, individuals are required to submit approval documents issued by the competent departments.

These rules primarily affect enterprises that evade taxes and have a significant impact on most overseas purchasing agents that use e-commerce platforms. Before the implementation of this announcement, articles sold by the purchasing agents are all carried or sent into China as self-use articles to avoid paying taxes. Under the new announcement all merchandise requires declaration by submitting manifests and paying associated tax.

Transfer Companies Are Subject to Supervision by The Customs

The announcement remarks that operators of customs supervision areas storing inbound and outbound goods or articles traded through e-commerce platforms are required to file a record with customs to conduct e-commerce business. As a result, transfer companies which play an important role in overseas online shopping are subject to strict supervision by the Customs and are now required to normalize and legalize their operation.

Because of Chinese lack of confidence in domestic goods and the low prices of goods purchased via overseas online shopping, the market of overseas online shopping in China has taken off and soared to 70 billion RMB in 2013 up from 12 billion RMB in 2010. In the short term, the sales of overseas online shopping may be affected a little by the stricter supervision on the transfer companies, but in the long-run the sales will rise after the normalization and legalization of these transfer companies.

Counterfeits Will Be Taken out of Circulation

As the announcement stipulates, E-commerce enterprises, individuals, payment companies, operators of customs supervision areas or logistics enterprises must timely transmit data of transaction, payment, warehouse and logistics to an E-commerce Clearance Management system. As all information of imported products will be collected in E-commerce Clearance Management Platform, it will be easy for consumers to identify whether it is authentic or not once the Customs open a query system for the public.

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