Expansion of Cross-border E-commerce Retail Pilot Zones Unleashes Positive Signals

By Lily Wang

On March 22， the Notifica- tion about the Expansion of Cross-border E-commerce Retail Import Pilot Zones and Strict Implementation of Regulation Requirements was issued， in which it is clearly mentioned that pilot zones for cross-border e-commerce retail import are being expanded.

Experts and business insiders believe that with the release of policy dividends， cross-border e-commerce imports will encounter greater market opportunities. This will not only promote the stable growth of foreign trade and inject new momentum into global trade， but will also allow for the formulation of a new development pattern featuring a strong linkage between the domestic and overseas market， and mutual development of the east and west region. This will also bring greater challenges for supervision during the following period of time.

Meeting the upgraded demands of domestic consumption

“The increase in import pilot cities will stimulate the growth of the crossborder import e-commerce industry. Against the background of consumption upgrading and domestic circulation， the policy dividends of cross-border e-commerce will continue to be unleashed. It is estimated that in the next 3-5 years， the industry transaction volume will also continue to grow，” said Cao Lei， Director of the www.100ec.cn E-commerce Research Center.

Zhu Qiucheng， CEO of Ningbo New Oriental Industry and Trade Company， said that cross-border e-commerce mainly refers to exports. With the signing of RCEP， cross-border import e-commerce will be exposed to larger groundbreaking opportunities.

Lin Zhiyong， Director of the Xinguang Digital Trade Research Institution， said that it is important to consider the timing and economic background of the expansion of crossborder import e-commerce pilot cities. He said that the policy denotes two aspects of significance：

First， the global pandemic is still very serious. All countries are maintaining comparatively strict border entry requirements， which has a great impact on the economy. In the past， the scale of Chinas overseas tourism shopping was very large. The expansion of the crossborder e-commerce retail import business will help to release this part of consumer demand which has been suppressed by the pandemic.

Second， the global economic and political situation is becoming increasingly complex， and the uncertainties in international trade are increasing due to geopolitical changes. This policy can play a special and positive role in stabilizing foreign trade and stimulating domestic demand， especially in terms of promoting the “dual circulation”.

“In recent years， the pace of innovation and development of Chinas foreign trade has been growing. As a new form of foreign trade， cross-border e-commerce has become a new engine for Chinas foreign trade development，” said Hong Yong， an associate researcher at the Institute of E-commerce of the Research Institute of the Ministry of Commerce. In 2020， Chinas cross-border e-commerce imports and exports reached RMB 1.69 trillion， which was an increase of 31.1%. Exports reached RMB 1.12 trillion， showing an increase of 40.1%， and imports reached RMB 0.57 trillion， an increase of 16.5%.

This expansion of pilot zones is also part of the implementation and continuation of previous policies. Hong Yong said that in 2019， China proposed the gradual formulation of a policy tailored to the cross-border retail e-commerce of all comprehensive bonded areas. In 2020， the Ministry of Commerce said that it would take the construction of pilot Free Trade Zones， comprehensive test zones for crossborder e-commerce and comprehensive bonded zones into consideration， and would launch a study to include qualified cities in the pilot scope of cross-border e-commerce retail import.

Li Pengbo， a researcher from the www.100ec.cn E-commerce Research Center and partner of Tongtuo Technology Group， said that the policy of expanding cross-border e-commerce import pilot zones shows that the 1210 bonded import pilot scheme has proved successful and can be promoted on a large scale.

“Local governments have high expectations for driving local economic growth through reform and opening up. The expansion of these pilot areas responds to these demands and gives local governments more space for development，” explained Wang Jian，professor at the University of International Business and Economics and director of the International Business Research Center. He continued by saying that from the current operation effect of crossborder e-commerce retail imports is good. It not only achieves the purpose of supervision， but also increases tax revenues， allowing more imported consumption to return to China and meeting the demand of Chinese people for imported products. For local cities， it can also activate the economy and drive the development of related industries. Further expanding the scope of this requires the replication of policies in more regions and cities. As long as local governments have the demand and are able to satisfy conditions， the central government will also lend their support.

“The further expansion of crossborder e-commerce retail import pilot schemes is mainly determined by Chinas actual domestic consumption demand，” explained Wei Hao， professor at the School of Economics and Business Administration of Beijing Normal University and director of the National Import Research Center. He also said that as early as August 2019， the State Council issued the Opinions on Accelerating the Development of Circulation and Promoting Consumption， which proposed to meet consumersdemand for high-quality foreign goods. When considering the development characteristics and trends of pilot free trade zones and comprehensive bonded zones， it is necessary to expand the scope of pilot cities for cross-border e-commerce retail imports， and to pay close attention to adjusting and expanding the list of cross-border e-commerce retail import commodities.

Wei Hao believes that in recent years， the income level of most Chinese people has gradually improved， and the phenomenon of consumption upgrading has become increasingly prominent. The import of distinct and high-end products has become an important means for meeting the requirement for domestic consumption upgrades. On the basis of traditional import methods， the development of cross-border e-commerce retail imports can enlarge the scale of high-quality commodity imports and improve peoples lives.

New challenges for supervision

With the rapid development of cross-border e-commerce， under the regulatory guiding principle of“encouraging innovation， inclusiveness and prudence”， Chinas regulation of cross-border e-commerce retail imports has undergone roughly two stages. First， from May 2016， the transitional arrangement of “temporary supervision according to personal goods” started to be implemented； second， in November 2018， the six departments issued the Notification on Improving the Supervision of Crossborder E-commerce Retail Imports for the first time， which clarified the supervision of cross-border e-commerce retail import goods according to personaluse import goods， and stipulated that the requirements for an import license， registration or filing were not applicable in these cases. Such arrangements ensured the continuity and stability of supervision during the transitional period.

In terms of import supervision， the notification proposed that after expansion， the relevant cities and regions were able to carry out online bonded import （under customs supervision mode code 1210） business after local customs had confirmed compliance with supervision requirements. This bonded import mode for online shopping refers to the mode where cross-border e-commerce enterprises uniformly deliver goods from overseas to domestic warehouses through centralized procurement， and where logistics companies directly deliver goods from warehouses to customers when consumers place online orders. Hong Yong said that the expansion of the scope of the pilot scheme for the online shopping bonded import mode will greatly benefit the healthy development of cross-border e-commerce retail imports in the future.

In addition， during the pilot expansion of cross-border e-commerce retail imports， the policy emphasized that each pilot city should take the main responsibility for the scheme， strictly implement the regulatory requirements， and promptly investigate and deal with violations such as “online shopping bonded+ offline self pick-up” and secondary sales outside the special customs supervision area， so as to ensure the smooth operation of the pilot work and promote the healthy and sustainable development of the industry. Bai Ming， Deputy Director of the International Market Research Institute of the Research Institute of the Ministry of Commerce， said， “supervision will closely follow the development of cross-border e-commerce imports to ensure the healthy development of the industry.”

“In the short run， this may lead to rapid growth in imported consumer goods， but in the long run， consumers will become more rational. In terms of categories of cross-border retail imports， we can continue to expand the categories， to include items such as urgently-needed drugs. Of course， this will pose greater challenges for supervision，” Wang Jian said.

Hong Yong believes that the pilot expansion scheme has raised the requirements for supervision in the new pilot areas. In the next step， replication and promotion of successful experiences should be increased， in order to prevent inaction or rashness of supervision.

Hong Yong also stated that the expansion of cross-border e-commerce retail import pilot schemes will promote the coordinated development of the regional economy in the eastern， central and western regions of China. The online shopping bonded import business in the pilot areas will greatly save logistics costs of cross-border e-commerce and shorten the logistics time of cross-border e-commerce， which is conducive to promoting the cross-border e-commerce business of agricultural products， in particular fresh agricultural products. This will also facilitate returns and exchanges of crossborder e-commerce retail import goods， so as to improve customer satisfaction.

At the same time， China has the most promising domestic demand market in the world. Increasing the import of high-quality products will allow more countries to share the benefits of Chinas huge market. “Some foreign exporters are bound to seize this huge business opportunity by increasing exports to China and exploring the Chinese market. They will also pay more attention to the development of the cross-border e-commerce retail business， so as to connect with Chinas import enterprises， and increase thescale of Chinas imports，”Wei Hao said.