Q & A on China’s New Tax Policy and “Positive List”

Recently, we receive a lot of queries on China’s newly installed tax policy on import eCommerce and the concomitant “positive list”. We encourage our readers to ask any questions about the China market and are more than willing to answer these questions. As a specialist on China’s eCommerce market, we are keen to share our expertise and thoughts. Leave a message here if you have any questions!

Q: What kind of products does the “positive list” affect?

A: The impact of the “positive list” is limited. It won’t impact the industry much as it covers almost all consumer goods. Most of the regular products that were once popular in OOS market are enlisted. Several items are not included, such as adult milk powder and liquid milk. Sellers of these products will be affected if they sell through B2C direct shipping model or bounded warehouse model. However, there is no need to panic.

1. Products that are not enlisted can still be sold into China through UPU shipping model.

2. The “positive list” will be amended and expanded according to the market demand. (See example here)

Q: Why introduce this new policy?

A: The policy and regulation of cross-border eCommerce in China were opaque and full of loopholes before. For example, many merchants use cross-border eCommerce to import raw materials to skirt tariffs. Another reason for this change is that the domestic retailers and traditional import merchants lobby the government against import eCommerce, accusing import eCommerce of paying little tax and disturbing the market.

Q: Is this the reason why Asos pulls out of China?

A: No. Asos was not operating through cross-border eCommerce. It operated in a traditional way in China—setting up offices, bulk import, local registration, etc. It pulled out of China due to its failure to adapt to the local market. There were some giants that already operated in China very successfully before Asos moved in, such as Uniqlo and ZARA. These competitors are very experienced in selling fashion products in China, they even beat the local rivals. After pulling out of China, Asos will continue selling to China through cross-border eCommerce.