verseas online purchasing comes into fashion Attractive price and range of goods lure shoppers seeking a better deal, Gao Qihui reports in Beijing. Jia Huiyi, a 27-year-old woman working in Beijing, explored a new way of shopping when she u
verseas online purchasing comes into fashion
Attractive price and range of goods lure shoppers seeking a better deal, Gao Qihui reports in Beijing.
Jia Huiyi, a 27-year-old woman working in Beijing, explored a new way of shopping when she used an overseas purchasing service to buy a pair of popular UGG boots.She paid 557 yuan ($85) for her boots from a Chinese Australian who runs an online store for Chinese mainland customers. The same boots in a franchised store on the mainland would have cost more than 2,000 yuan, Jia said.
Competition and taxes The increasing popularity of overseas purchasing services has led to business opportunities for new agents - and, in its own way, China Customs. A Web search for shops related to "US purchasing agent" at taobao.com, which is owned by Alibaba Group Holding Ltd and is China's largest e-commerce site, yields 3,937 shops. A search for "South Korea purchasing agents" yields 8,240 shops. That means more and fiercer competition for the agents. "I opened my online shop more than half year ago, but I have not received any orders," said Zhao Qian, 21, who owns an overseas purchasing e-shop at taobao. A regulation that China Customs introduced in September is adding price pressure for overseas purchasing agents, most of whom are individual operators. The agents or their overseas partners mail most products to the Chinese mainland as personal articles to evade customs duties, essentially turning the transactions into a black market, said Fang Yingzhi, an analyst at CERC. Previously, customs duty on mailed personal items was waived if it was 500 yuan or less. Now, the exemption limit is 50 yuan. And the duty on cosmetics, the most popular type of overseas purchase, is 50 percent. For example, a bottle of sunscreen, which is categorized as a cosmetic, costs 800 yuan. A duty rate of 50 percent makes the duty 400 yuan. Under the old rules, no duty would apply because it fell under the 500 yuan limit. Now it exceeds the limit of 50 yuan, making the cost of that mailed bottle of sunscreen much higher. It might truly be for personal use, but China Customs assumes that the sunscreen and similar mailed items are intended for resale. Customs explains on its website that such goods "have the nature to gain profit" and will enter the trading circle again. The duty exemption is higher, at 5,000 yuan, for agents who personally bring the overseas products from abroad rather than mail them.
Agents feel it
The selling price set by overseas purchasing agents usually includes the original purchase price in the overseas market, local excise tax there, freight costs, the import tariff and a service charge, said usashopcn.com's Shi.
The new import duty on mailed items gives three choices to purchasing agents: Raise prices on the high-duty items, spread that extra cost over a wider array of items, or take a loss.
"My business is definitely affected by the regulation," said Li Xiaolu, a Chinese immigrant living in New York. "The cost rises and the profit goes down."
Li, who started her business in September 2009, thinks it will be more difficult for her to continue the service due to fierce competition and what she considers an unfavorable import duty.
The advantage goes to agents with big overseas purchasing services.
Whether the agents have a stable supply of goods and buy the goods at lower prices are key elements in the industry, said Su Huiyan, an analyst with Shanghai-based iResearch. The big agents can buy directly from the brand owners, Su said, but small ones can buy only from dealers or even the supermarket - at higher prices.
And agents who deal with a wide variety of goods can adjust the prices in some categories to make up for lower profit in others, or can shift their business to product lines that are less affected by the higher duties. Agents with small operations often don't have those options.
Su also said that the new customs regulation won't affect the large, professional overseas purchasing companies because they generally have declared imported products at customs all along.
But customers still come out ahead. Even with the import duty included, the ultimate price of most products bought from overseas is still lower than the price in domestic franchised stores, CERC said it in its report. The domestic price is higher now because it includes the import tariff, too.
Wu Ning, an individual agent who has purchased products from Hong Kong for more than a year, said, "As long as the tax imposed by the customs stays at this level, the demand for overseas purchasing services will not decline."