Shenzhen is giving 2 million yuan to cross-border e-commerce merchants as ‘made in China, sold on Amazon’ sellers continue to suffer

Shenzhen is offering cross-border e-commerce merchants a subsidy of 2 million yuan as encouragement to find alternatives to Amazon
At least 50,000 accounts of Chinese merchants have been affected since May, causing a loss of more than 100 billion yuan for the industry

Amazon

Iris Deng

Published: 2:08pm, 16 Aug, 2021

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Shenzhen, known as China’s Silicon Valley, is offering cross-border e-commerce merchants a subsidy of 2 million yuan (US$308,000) as the “made in China, sold on Amazon” community continues to suffer from the US e-commerce giant’s crackdown on review fraud.

Online merchants based in Shenzhen that were affected by the crackdown were invited to a meeting last week to share their losses, responses and plans after the closure of their stores and to raise the “expectation of government help”, the Commerce Bureau of Shenzhen said in a notice seen by the South China Morning Post.

The meeting was part of the Guangdong province commerce authority’s efforts to “study and formulate relevant solutions” in the aftermath of the Amazon ban on Chinese merchants, and to “help lift cross-border e-commerce companies out of the difficulties”, the Shenzhen commerce bureau also said in the notice.

Earlier this month, the bureau announced that it would grant 2 million yuan to cross-border sellers for each “independent store” – websites built by the merchants themselves as opposed to opening a store on a larger platform – they set up.

To qualify, applicants must have started operation before 2019 and have monthly sales worth US$300,000 or more. In addition, an expert panel will review each application, according to the bureau’s announcement.

Chinese merchants wary of Amazon’s zero-tolerance policy on fake reviews

Under the scheme, operators of overseas warehouses identified by China’s Ministry of Commerce as best-in-class cross-border service providers will also be awarded 3 million yuan while other warehouse operators can apply for 2 million yuan.

Shenzhen, home to some of the country’s biggest technology companies, is also a cross-border e-commerce hub.

The city has more than 40,000 firms involved in the industry, accounting for about 35 per cent of the entire sector across China, according to the Shenzhen Cross-Border E-commerce Association.

Amazon’s extensive clampdown on review fraud has proven to be a blow to Beijing’s ambition to promote cross-border e-commerce as a new trade model.

Aerial view of the SEG Plaza, a landmark skyscraper in downtown Shenzhen, home to many of the city’s hardware merchants. Photo: Martin Chan

Last month, Li Xingqian, director of the Foreign Trade Department at the Ministry of Commerce, said the cross-border e-commerce industry is “ going through some growing pains” as a result of Amazon’s decision, but he added that China would help its companies comply with international standards and protect their “legitimate rights and interests”.

As more Chinese merchants flocked to international retail sites like Amazon and eBay to reach additional consumers, some also brought with them the grey area practices common in Chinese marketplaces, including fake reviews and inflated sales numbers, according to industry insiders.

Since May, the Seattle-based e-commerce giant has banned some of the biggest Chinese brands on its platform, including Aukey and Mpow.

Shenzhen Youkeshu Technology Co said in June that Amazon had closed 340 of its stores and frozen more than 130 million yuan of its funds on the platform.

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At least 50,000 accounts of Chinese merchants have been affected since May, causing a loss of more than 100 billion yuan for the industry, according to a report by the Shenzhen organisation in July.

Faced with the setback on Amazon, the many in the “made in China, sold on Amazon” community are planning to reduce their reliance on the world’s biggest e-commerce marketplace.

Instead, they will turn to independent websites and other online retail platforms such as eBay and AliExpress, Wang Xin, executive chairman of Shenzhen Cross-Border E-Commerce Association, said in a recent interview.

AliExpress is operated by Chinese e-commerce giant Alibaba Group Holding, owner of the Post.

This article appeared in the South China Morning Post print edition as: Shenzhen to aid firms removed by amazon