State Council Raises Limit on Cross-Border E-Commerce Purchases, Luxury Retailers Rejoice

On November 21st, Chinese Premier Li Keqiang announced that the government will be expanding the scope of cross-border e-commerce trade in China.

by Azoya Consulting


Source: Shutterstock

On November 21st, Chinese Premier Li Keqiang announced a series of changes that will significantly expand the scope of cross-border e-commerce trade in China. The announcement was made at the State Council's bi-annual meeting. The State Council consists of 35 members and is the chief administrative authority in China. 

The most important change was the raising of the current limit on cross-border e-commerce purchases. In the past, cross-border e-commerce purchases were limited to 2,000 RMB per purchase and customers were restricted to an annual limit of just 20,000 RMB. The recent change raises these limits to 5,000 RMB per transaction and 26,000 RMB in a given year1. 

Such purchases refer to items shipped across borders through business commercial shipping (B2C or BC shipping) and customs clearance processes. They also apply to goods stocked in bonded warehouses in Hong Kong or Chinese free trade zones.

Additionally, 63 new items will be added to the cross-border e-commerce "white list". Goods on the white list are not subject to import tariffs; customers only have to pay 70% of the relevant legal value-added taxes and consumption taxes. We talk more about the white list and relevant taxes here.

New China E-Commerce Changes Benefit Luxury Goods Retailers

The most visible beneficiaries will be luxury goods retailers, as handbags and watches in the luxury industry regularly sell for well over 2,000 RMB. These new regulatory changes are bound to encourage luxury goods players to invest more in China e-commerce. 

Luxury goods brands were initially slow to adopt e-commerce. It is normally difficult to replicate the luxury experience online, where there is an emphasis on discounting and there are no well-trained assistants to help high-end customers pick out items.

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Source: Pexels

However, over the last few years their attitudes towards e-commerce have changed as demand has become increasingly driven by young, tech-savvy millennials in China. A report by Deloitte and Secoo notes that now 43% of luxury fashion brands have their own direct sales brand websites in China, up from 20% in 20142

China luxury sales topped 142 billion RMB in 2017, comprising 32% of the global luxury market, according to a market report by Bain & Company3.

Other China Cross-Border E-Commerce Regulatory Highlights 

   -   The regulatory changes extend the current supervision policy of cross-border imports indefinitely, from January 1st, 2019 onwards. This means that imported CBEC goods will not be required to apply for import licenses, registrations, or filings associated with general trade. CBEC goods will continue to be treated as imported goods for personal use.

   -   The supervision policy will be extended to new cities: Beijing, Shenyang, Nanjing, Wuhan, Xi'an, Xiamen, and more, adding 22 cities in total. This brings the total number of cross-border e-commerce cities to 37. 

   -   The government will look to improve policies concerning cross-border e-commerce exports from China

   -   The government will focus on improving product quality and safety standards. Cross-border e-commerce companies and payments and logistics providers may be held to a higher standard.

Other Recent China E-Commerce Changes

   -   Personal postal shipping tax changes. From the beginning of November, taxes on inbound postal shipments in China were reduced from 30% and 60% to 25% and 50%, respectively. This will benefit cosmetics makers, as most cosmetics and personal care items fall in the 25% bracket and high-end cosmetics fall in the 50% tax bracket. 

   -   General trade import permits for cosmetics. From November onwards, those obtaining permits for importing cosmetics can now obtain them from local governments. Before, such permits could only be obtained in Beijing. This will reduce the application period by 1-2 months, though it will still take a few months in total. The requirements for obtaining such permits will not change - i.e. cosmetics brands will still have to agree to animal testing requirements. 

   -   China passes first e-commerce law. Passed on August 31st and effective starting January 1st, 2019, the new e-commerce law strives to protect the rights of e-commerce consumers and regulate e-commerce operations. One key point to note is the law's requirement that individual sellers on platforms such as Taobao and WeChat be required to obtain business licenses and file tax returns. We talk more about the e-commerce law and how it affects cross-border e-commerce operators here.


The government is placing a strategic importance on the cross-border e-commerce industry. Chinese consumers purchase through cross-border e-commerce to find quality products that oftentimes cannot be found in China. This includes categories such as cosmetics, luxury, health & nutrition, and mom & baby. 

The government is looking to standardize and tax cross-border purchases, as well as protect consumers from quality and authenticity issues. While in the past many had purchased smuggled items through gray-market daigou agents, it seems now that the trend is shifting towards cross-border e-commerce.

The new regulations are likely to bring significant tax revenues to local governments such as Ningbo and Hangzhou, where cross-border e-commerce transactions are common. Retail imports of cross-border e-commerce in China increased 53.7% to reach 67.2 billion RMB in the period between January and October 2018, according to data from the General Administration of Customs4.

1 "跨境进口政策来了,重大利好! 年度2.6万,单笔5000元,37个城市." 21 Nov 2018. 跨境进口老歪. 22 Nov 2018 <>

2 ”China Luxury E-Commerce Whitebook." 8 Dec 2017. Deloitte, Secoo. 22 Nov 2018 <>

3 "2017 China Luxury Market Study." 18 Jan 2018. Bain & Company. 22 Nov 2018 <>

4 "Policies refined to boost cross-border e-commerce." 21 Nov 2018. The State Council of the People's Republic of China. 22 Nov 2018 <> 

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