China’s cross-border e-commerce trade facing uncertainties amid government regulation

One in five online Chinese shoppers made a purchase on cross-border e-commerce platforms last year, twice as many as in 2014, but tighter tax and customs regulations signal that the flourishing industry has reached an inflection point, a recent study said.

Dubbed Haitao in Chinese, the 120 billion yuan in cross-border online trade propelled by demand for global brands and facilitated by an explosion of online marketplaces in China is now plagued by policy uncertainties over tax, product safety and logistics issues, according to a report issued Thursday by consultancy Oliver Wyman.

The latest twist in the outlook of the burgeoning online business comes amid an exploding consumer sector in China, which a top government think tank estimates will generate sales topping 50 trillion yuan in the next five years from 30 trillion yuan in 2015.

More than 40 per cent of the 50 trillion yuan would come from e-commerce, according to a separate report jointy released by the Chinese Academy of Social Sciences(CASS) and Hong Kong-based Fung Business Intelligence Centre.

“Chinese consumers are probably the most informed and digitalised in the world,” said Wai-Chan Chan, a partner with Oliver Wyman. “As Chinese consumers travel abroad, they are increasingly aware of offline prices around the world.”

The number of Chinese holidaymakers travelling overseas this year is expected to increase by 11.5 per cent to 133 million, according to the China Outbound Tourism Research Institute, which also forecasts the growth trajectory in the coming five to 10 years to remain steady.