About 25pc of China’s population will make cross-border online purchases by 2020

Country to account for bulk of such transactions globally as competitive pricing, better living standards to fuel purchases, say industry experts

PUBLISHED : Thursday, 16 June, 2016, 9:43pm
UPDATED : Friday, 17 June, 2016, 1:44am

A quarter of China’s entire population is expected to order items through cross-border e-commerce channels by 2020, with competitive pricing and higher living standards fuelling demand, according to industry experts. Shelleen Shum, an analyst with eMarketer, a digital research firm, said demand for foreign goods will continue to remain “strong” thanks to the better prices and varieties offered by overseas merchants, despite the new cross-border e-commerce tax that was implemented in April.

The launch of Alibaba’s Tmall Global in 2014 and online retailer JD.com’s JD Worldwide last year has also helped boost growth of cross-border online shopping on the mainland, an eMarket report said earlier this week.

In 2015, the number of people making cross-border e-commerce purchases in China grew by over 70 per cent, compared to the nearly 40 per cent in 2014. The report attributed the surge in growth to an increasing knowledge of foreign products combined with a higher standard of living in China.

By the end of the decade, eMarketer forecasts that over 291 million buyers from China will purchase goods online from overseas sellers, a number which exceeds the population of Indonesia, the fourth most populated country in the world.

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In April, a new tax aimed at regulating overseas e-commerce purchases was implemented by the Chinese government. Prior to this, imported goods purchased online via retail sites were treated as personal postal articles and were subject to parcel tax, which is approximately 10 per cent if the value does not exceed 1,000 yuan (HK$1,178). Under the new tax structure, cross-border shopping via online channels would entail higher duties – 70 per cent of the combined amount for customs duty, VAT and consumption tax usually levied on traditional imports. While such duties and taxes vary widely depending on the items imported, they are almost certain to exceed 10 per cent.

However, analysts believe that the industry would not be adversely impacted by the additional taxes. “There might be some impact but it will not be major,” said Kitty Fok, managing director for IDC China. “There is an increased demand from Chinese people for buying overseas goods because of better product quality and brand image. Customers who make such purchases are willing to pay more,” said Fok.

About 15 per cent of the Chinese population will spend an average of US$473.26 each this year on overseas online purchases, amounting to US$85.76 billion, the report said.

China’s biggest e-commerce giant, Alibaba, said last year that more than a third of its consumers bought products from international brands or merchants during its Singles Day shopping festival in November, with US merchants selling the most imported goods to Chinese buyers.

Alibaba owns the South China Morning Post.