Shanghai free-trade zone spurs China Eastern’s plans

Hong Kong luxury retailers beware. Shanghai-based China Eastern Airlines is likely to obtain approval for a cross-border e-commerce business in the city's planned free-trade zone that will allow it to sell upmarket items and food directly to mainland shoppers.

Liu Shaoyong, chairman of the carrier, told reporters on the sidelines of a forum hosted by the company that the business-to-customer section of the Shanghai free-trade zone was ready and set to receive the green light from regulators.

The e-commerce services offered by the mainland's third-largest air carrier will be based in the zone's business-to-customer section. The tax breaks are likely to spark a surge of purchases by locals of foreign products ranging from luxury handbags and clothes to seafood.

"Airlines will be among the top beneficiaries of the free-trade zone," Liu said. "The e-commerce licence is in the pipeline, but it's too early to say anything more."

It is believed that China Eastern's e-commerce business will eventually be allowed to deliver imported items to mainland customers outside the free-trade zone as well.

"We have plans to take advantage of the free-trade zone to bolster our logistics businesses," he said. "With the establishment of the zone, air freight will become one link in the chain of our comprehensive logistics business."

Liu's remarks indicate that China Eastern is pursuing growth by diversifying into e-commerce, a sector currently dominated by Alibaba.