Cross-border E-commerce (1) 1. Introduction to Cross-border E-commerce Cross-border e-commerce can be defined in both broad and narrow sense. In a narrow sense, cross-border e-commerce is almost equal to cross-border retailing, in which transaction parties in different countries reach agreements and settle accounts through the Internet and deliver/receive the goods via cross-border logistics. In a broad sense, cross-border e-commerce equals electronic foreign trade. It’s a kind of international business, in which the product display, negotiation and transaction are done via the Internet and goods are delivered through cross-border logistics. The cross-border e-commerce mentioned here refers to the latter one, which only covers cross-border e-commerce transaction, excluding cross-border e-commerce services. It consists of the cross-border online B2B deals as well as the B2B deals in O2O pattern. In terms of the export flow of cross-border e-commerce, producers or manufacturers display their products on cross-border e-commerce platforms. After the products are selected and paid by customers, they will be sent to logistics companies by cross-border e-commerce operators for delivery. The products will finally reach the customers after two inspections at customs (for export and import). Some cross-border e-commerce operators cooperates with third-party comprehensive service platforms and entrust them with logistics, goods inspection and alike procedures. Import flow is just opposite to that of export flow. Due to the excessive dependence on traditional sales model, long transaction duration, relatively less profit margins and alike problems, traditional foreign trade is increasingly unfavorable to the business development of small and medium foreign trade companies. As a business model based on the Internet, cross-border e-commerce is rebuilding the international trade chain of SMEs. By breaking the monopoly of foreign channels such as importers, wholesalers, distributors and retailers, which exists in traditional foreign trade, cross-border e-commerce enables companies to contact with individual wholesalers, retailers and even consumers directly, which effectively simplifies the transaction and saves goods circulation costs. There were basically no traditional foreign trade companies and manufacturing companies in e-commerce sector prior to 2012, and they began to set foot in this area in about 2013. Cross-border e-commerce is gradually becoming a significant choice of traditional companies. 1. Policies about China Cross-border E-commerce The making of policies about China cross-border e-commerce falls into three stages: Early Stage (2004-2007), in which 3 policies preliminarily regulate the development of e-commerce, placing extra emphasis on the industry; Development Stage (2008-2012), in which 10 policies involve supervision, payment and settlement, and so on, placing extra emphasis on support and guidance; High-tide Stage (since 2013), in which more than 10 policies focus on export and involve implementation. Different Customs Supervision Regarding the goods traded via cross-border e-commerce, there are mainly three means for goods to cross national boundaries: (1) Customs clearance of goods: for the situation that Chinese import and export companies display products and make agreements with foreign wholesalers and retailers online and finish shipments offline, these goods shall be included in customs statistics. There are also some companies building cross-border e-commerce platforms for import and export companies, such as Onetouch in Shenzhen which helps SMEs with their foreign business, and the involved goods are also included customs statistics. (2) Customs clearance of express: according to a survey carried out by General Administration of Customs , more than 95% of the goods traded via cross-border e-commerce and delivered by the five biggest express companies in China are declared as import and export goods at customs and are included in cargo statistics. Only less than 5% the goods are declared as personal belongings and are not included in customs statistics. (3) Customs clearance of mail: goods bought online and delivered by mail are mainly daily essentials. According to related regulations issued by General Administration of Customs and the State Council, goods for personal use of reasonable amount are out of compulsory customs clearance and statistics. With the development of cross-border e-commerce, trading is becoming more and more fragmented. Some of traditional trade has shifted to cross-border e-commerce, and goods are delivered by express or mail. Under this circumstance, General Administration of Customs is searching for an improved statistical system to cover all goods. Different Customs Clearance For different trading modes of cross-border e-commerce, there are following differences in customs clearance: (1) B2B export: if goods are exported on a large scale, they are actually in traditional trade. For goods exported on a small scale by express or mail, it’s hard to get customs forms, and there are also some troubles in goods inspection, settle ment of exchange and tax reimbursement. (2) B2B import: the overall situation is basically the same as that of B2B export. (3) B2C export: because it mainly targets overseas customers with relatively small orders but high trading frequency, and goods are usually delivered by express or mail, it is not included in current customs regulatory system, so there are also some troubles in goods inspection, settlement of exchange and tax reimbursement. (4) B2C import: these goods, which are delivered by express or mail, are mainly bought for personal use, and they’re not involved in customs statistics. Domestic consumers have large demands for overseas products, which encourages emergence of parallel traders and illegal purchasing agents. Besides, the current cargo regulatory system is unsatisfactory in maneuverability, so relevant departments are trying to improve and perfect it. Exploration of Customs Clearance of Express and Mail In cross-border e-commerce, goods delivered by express and mail often face troubles in customs clearance, settlement of exchange and tax reimbursement. In order to solve these problems, General Administration of Customs selected some pilot cities to study the standard regulations and management system of cross-border e-commerce and improvement of customs clearance management and service. The project innovates in two aspects: policy innovation, which explores management system suitable for cross-border e-commerce, and innovation of information technology, which enables related departments to work together and share data with enterprises in e-commerce, payment and logistics sectors. In December 2012, General Administration of Customs officially selected five cities including Shanghai and Chongqing as the pilot cities. In October 2013, the project was carried out in some other suitable cities which are usually logistics centers, port cities, places of origin, etc. There are four kinds of business can be applied for by pilot cities. According General Administration of Customs, only six cities, including Chongqing, Guangzhou and Shanghai, are allowed to operate import business of cross-border e-commerce, and other cities can only deal with export business. 2. Status Quo of China Cross-border E-commerce In 1998, the first group of cross-border e-commerce platforms represented by Alibaba B2B and Made-in-China emerged. These websites mainly released information, promoted deals and bridged sellers and buyers. However, there were also some problems. Firstly, without professional and in-depth service, logistics and payment are satisfactory. Secondly, the websites could hardly offer other profound and professional services except for information. Finally, enterprises would negotiate and make deals offline after online inquiry. With the development of this sector, some B2B e-commerce enterprises represented by DHgate gradually transformed into transaction platforms with commission as their major profit source. Since 2013, B2B enterprises began to offer services during and after the trading, covering logistics, storage and financing. Meanwhile, there were gradually some cross-border B2C enterprises since 2006, including DX, Lightinthebox and OSell. These companies greatly reduced the intermediate parts of the industry chain and made generous profits from the difference between purchasing and selling price. They are developing rapidly in recent years. The GMV of China cross-border e-commerce amounted to 3.1 trillion Yuan in 2013, rising by 31.3% and making up 11.9% of the total foreign trade volume. With unveiling of many favorable policies concerning cross-border e-commerce, many insiders are actively improving the industry chain. It’s expected that this sector will maintain a rapid and stable progress for a few years and will contribute 20% or so to the total foreign trade volume in 2017. China ’s cross-border e-commerce structure reveals that in 2013, export accounted for 88.2% of the total GMV, so the import business is still in its early stage. With domestic consumers’ increasing demand for overseas products, it’s expected that the import sector will grow constantly in future. However, as import business is sensitive to state’s policies, its growth will be relatively steady and slow. From the perspective of transaction modes, B2B was absolutely the dominant mode with a share of nearly 93.9% in 2013, and such situation is expected to maintain due to its considerable and stable orders. B2C will also gain certain progress in future thanks to the fragmentation trend of cross-border e-commerce. It’s estimated that B2C’s share will rise to 10% in 2017. (from 2014 China Cross-border E-commerce Report by iResearch) (Words:1414)