China: E-commerce platforms aim to be game changers in global trade

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02:49

Buying goods made overseas has got easier. Thanks to increasing demand from the cross-border e-commerce platforms, the foreign-made products many know and love will now enjoy fewer taxes.

China established an e-commerce bonded mode to waive customs taxes on foreign products. But the precondition is the buyers had to be real customers, not retailers.

When buying something from overseas, consumers are usually worried about the high costs of tariffs and low assurance of quality. Cross-border e-commerce company, like Xiaohongshu, offered a solution.

Products overseas were shipped to a warehouse located in a tax-protected zone in central China's Henan Province without going through customs procedures, until buyers placed orders.

"We have provided a platform that ensures the quality of the goods. This model can boost customers' loyalty and (the company's) credibility. That's the biggest advantage of cross-border e-commerce,” said Luo Tong, director of Xiaohongshu's Warehouse in Zhengzhou.

Xiaohongshu's warehouse in Zhengzhou, Henan Province, China. /CGTN Photo

Baby products were the main items sold on e-commerce platforms.

China's milk powder industry suffered from a food quality scandal that surfaced in 2008. Since then, many parents have opted to buy foreign products via cross-border purchasing agents. Still, quality can't be guaranteed.

The e-commerce platform could also be applied offline in O2O (online to offline) stores in the bonded zone in Zhengzhou. Unlike buying items from an ordinary store, customers needed to show an ID and pay with an account that matches their names.

"We come here to buy things for our child and my wife. My wife is having our second child," said Wang Li, an O2O store customer, "We trust the quality of the products here. The O2O mode is a brand new idea for us."

China wanted to be the game changer for international trade amid the tide of anti-globalization. The nation constantly tweaked its laws and regulations on cross-border e-commerce, as the country's market scale reached 9.1 trillion yuan or 1.36 trillion U.S. dollars in 2018.

An O2O store in a tax-protected zone in Zhengzhou, Henan, China. /CGTN Photo

“We will do cross-border exporting at the next step. We will reverse the current model. We will sell Chinese products to the rest of the world and boost other people's quality of life, too,” said Zhang Hongchao, vice president of Henan Imported Materials Public Bonded Center Group.

Zhang said the bonded zone was finding ways to increase the efficiency of buying and selling, and the Belt and Road framework can help increase connectivity among countries to enhance trade.

“China's Belt and Road initiative pursues common prosperity. Our importing and exporting e-commerce mode are the real practices of the initiative,” Zhang said.

As an inland city, Zhengzhou was probably not an ideal location to participate in global trade. But the idea of a cyber Belt and Road route connecting central China's Henan Province with the rest of the world.