E-commerce is playing an increasingly significant role in cross-border trade in goods and services. In 2018, the value of China’s cross-border e-commerce trade in goods was around 134.7 billion RMB, of which 78.58 billion RMB was from import. Currently, Chinese cross-border e-commerce is growing at an estimated annual rate of 20-30%.
For SMEs, cross-border e-commerce platforms have become increasingly important venues for accessing global market, because of a much lower entry cost associated with capital investment and human resources, as well as greater opportunities to expand customer base comparing to traditional international trade.
However, in certain markets, regulatory requirements regarding cross-border e-commerce fail to keep up with the dynamics and trends of e-commerce in terms of their efficiency and effectiveness, posing substantial challenges for a more positive role for the Customs (with regard to trade facilitation, revenue collection, general security etc.), hindering economic growth, and compromising the competitiveness of nations.
Having taken effective measures, such as streamlining procedures for revenue collection, platform interfacing, etc., to support the growing cross-border e-commerce flows, China has become a “role model” for trade facilitation with regard to cross-border e-commerce, which helps China become the world’s No.1 e-commerce market.
Notably, national governments and international organizations have vowed to work together to promote the harmonization and unification of international standards in relation to cross-border e-commerce, so as to enhance the fairness, transparency, stability, predictability and security of the online trading environment. (Beijing Declaration, First Global Cross-Border E-Commerce Conference, 10 February, 2018)
This Guideline is specifically drawn up for EU SMEs and lays out the legal aspects regarding the offering and sale of goods and services to Chinese customers (B2C) online.
In Part One, the guideline elaborates on how EU SMEs can access the Chinese market through e-commerce without local presence, i.e. without establishing a legal entity in China. EU SMEs can sell their goods and services through their own platform, or opt to join a third-party platform, either located in or out of mainland China. This section focuses on the applicable regulatory requirements (Supervision Systems) imposed on the imported products and analyse the advantages and disadvantages thereof. Cross border e-commerce retail import is specifically addressed in detail in this Part. Lastly, this section will cover e-commerce of services, with a special focus on online games.
In Part Two, the guideline will elaborate on models for EU SMEs’ e-commerce business in China with local presence, i.e. by establishing a Chinese legal entity (including but not limited to a foreign invested enterprise, FIE). The Chinese legal entity can either join an existing Chinese platform or create its own, or even create and manage a third-party platform in mainland China. Special attention is paid to value-added telecommunication services (VATS), which are explained by numerous concrete examples for a better understanding.
As a reminder to the readers, despite titled “e-commerce”, this Guideline primarily focuses on the areas of market access policies and special license/permit requirements for carrying out e-commerce to or within mainland China, instead of discussing relevant regulatory requirements and obligations applicable to the operation of e-commerce as introduced by the new issued PRC E-Commerce Law at length.
This 46 pages-guideline includes the following information:
- E-commerce in China without Local Presence – Goods
- Chinese Customs Supervision Systems
- General Trade Supervision System
- Postal Articles Supervision System
- Retail Import Supervision System
- Preliminary summary
- Chinese Customs Supervision Systems
- E-commerce in China without Local Presence – Services
- Online services: general
- A special example of online services: online games
- Foreign companies’ involvement in the business of online games
- Copyright import regulations
- E-commerce Operation by Establishing an Onshore Entity in China – General Introduction
- Online Sales by FIE through Onshore Third-party Platform
- Online Operation of Sales and Other E-commerce Business by FIE through Onshore Self-established Platform
- VATS Operation Licence Requirements
- VATS vs. Non-VATS
- EDI (e-commerce business) vs. Information Service
- Other Common Types of VATS Operated via Online Platform
- Market Access Policies foe Foreign Investment in the VATS Industry
- General Requirements for Foreign Investment in VATS
- Procedures for Obtaining Aprroval for Foreign Investments in VATS and VATS Operation Licence
- Alternative Solutions to Work around Foreign Investment Restriction for VATS
- VIE Structure
- Partnership with PRC Licence Holder
- Other Regulatory Requirements on Online Service Platform
This report was published during the EU SME Centre in China Phase II (2014-2020), which was funded by the European Union (ICI+/2014/346-276).
The report was drafted in collaboration with external creators, who worked under service agreements with the Consortium running the EU SME Centre Phase II. The copyrights and intellectual property of this publication belong to the Consortium partner China-Britain Business Council. The latter was authorised by and acted on behalf of the Consortium running EU SME Centre in China Phase II. The China-Britain Business Council, which is currently part of the Consortium running the EU SME Centre in China Phase III, has granted the rights of use of this report to the current Consortium. The report is therefore re-published and made available during the EU SME Centre Phase III.