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[Editor’s Note]Next year will be the 20th anniversary of China’s 2C e-commerce. In 2003, as Taobao and eBay began to expand in China, ordinary consumers officially began to contact the concept of “e-commerce”. As China’s e-commerce market continues to mature, China’s e-commerce platforms are also trying to go global through cross-border e-commerce. So how does China’s e-commerce and even the entire foreign trade industry face this difficult transformation? In the complex geopolitical and trade environment, what challenges will cross-border e-commerce face in the future? FT Chinese Network recently organized a special topic on “Cross-Border E-Commerce”. For editing matters, please contact Yan [email protected].
In the previous article, we mentioned logistics innovations such as e-commerce dedicated lines that China’s cross-border logistics industry has gradually developed in response to the development of e-commerce. In this article, we will describe another link closely related to logistics – customs clearance and supervision.
In international logistics, the exporter (consignor) can be an enterprise or a natural person; and the importer can also be an enterprise or a natural person. From this cross-classification, four common forms of international customs declaration can be obtained. Generally speaking, in terms of the amount and weight of international logistics, the largest form is company-to-company—that is, general trade.
General trade is characterized by large quantities. This form of customs declaration is closely related to the traditional wholesale-retail: the importer places a large order from the exporter, and after customs clearance, it is stored in the company’s warehouse, and then distributed and retailed in the form of domestic logistics from the warehouse. Therefore, even commodities worth hundreds of thousands or millions can be cleared at one time.
The general trade industry is an industry with highly complicated paperwork – it is often necessary to submit import and export contracts, invoices, and bills of lading to the customs of the two countries, and to declare in accordance with the category codes designated by the customs. Therefore, there is a special occupation in the import and export industry called “customs declarant”.
Under the large-volume trade mode, the cost of customs declaration work is not high when it is evenly distributed to each commodity. However, this customs declaration model conflicts with the idea of pursuing flexibility in the cross-border e-commerce industry. In the cross-border e-commerce industry, although the exporter is still an enterprise, the importer has become an individual at home. As a result, the total amount and total amount of goods corresponding to each customs declaration has dropped significantly—naturally, the number of packages and customs declarations that customs and exporters need to process has also increased sharply.
When the cross-border e-commerce industry was just emerging, sellers often solved this problem by breaking up packages into parts. The so-called “breaking the whole into parts” is to use the person-to-person mail customs clearance mode (customs clearance by postal mail) in the name of individuals. As the name suggests, postal customs clearance was originally a customs clearance mode for international postal services, which improved customs clearance efficiency through simplified declarations (such as not requiring declaration of commodity content by customs code).
However, the postal customs clearance model also has big problems. Although the use of postal customs clearance mode simplifies the customs declaration procedures for cross-border e-commerce sellers, it is more friendly to sellers; but for the customs, not only the workload problem caused by massive packages has not been solved, but also the problem of irregular declaration has been introduced. New problems have made customs supervision more complicated. At the same time, in the case of exporting goods through postal channels, enterprises cannot enjoy trade preferences such as export tax rebates under the original general trade—the simplified procedures for sellers are actually at the cost of higher costs.
If it is considered that cross-border e-commerce facilitates the sale of some rare animal and plant products or pirated products that infringe intellectual property rights, then the responsibility of customs is even more important. Therefore, the existing customs clearance process of the customs is bound to need to be digitally transformed in response to the challenges brought by the new business of cross-border e-commerce: on the one hand, the customs needs to screen out controlled items and taxable items from a large number of packages; On the one hand, for most low-value commodities with reasonable prices, customs also need to release them in a timely manner.
Therefore, customs of all countries in the world are cooperating with e-commerce platforms to optimize customs procedures related to cross-border e-commerce. As the world‘s largest cross-border e-commerce exporter, China Customs has made a lot of improvements in supervision to serve massive cross-border parcels. For example, the announcement issued by the General Administration of Customs in 2014 added a new mode of “list release, summary declaration” (that is, the so-called 9610 customs clearance method), which allows enterprises to pass consumer order information (commodities, logistics and payment) through the customs. The “single window” API forms a “manifest”. The customs first handles the customs clearance procedures for import and export of goods according to the list, and then periodically summarizes them to form a declaration form; enterprises pay import duties or declare export tax rebates according to the declaration form.
In this model, cross-border e-commerce platforms and logistics companies share the work of customs to some extent. One of the sharing is reflected in category supervision: one of the characteristics of cross-border e-commerce commodity export is that although the total number of packages is large, the number of commodity categories is far less than the total quantity of packages. Therefore, if the commodity categories can be supervised in advance, a certain In this sense, the workload of customs supervision can be reduced.
So, where is the most appropriate place to regulate commodity categories? Of course, it is a cross-border e-commerce platform. In order to supervise the commodity categories in advance, the declaration of the commodity type by the customs has been advanced from the time of customs declaration to the time when the commodity is put on the shelf. Imported and exported goods or whether they are intellectual property infringement goods) and import tariffs, and the pre-collected tariffs are directly listed on the commodity page alongside the commodity prices.
At the same time, since e-commerce products require logistics information (such as consignee’s mobile phone number, address) and payment information (payment credit card, third-party payment platform), customs can also conduct annual quota management on this. For example, customs can identify a unique natural person by mobile phone number, address, credit card number, etc., thereby limiting the total amount of goods that a natural person can import tax-free each year.
Therefore, by accessing the purchase data of the e-commerce platform, the customs can realize automated declaration, and advance part of the customs clearance process to when the goods are on the shelves, further simplifying the product declaration process.
Since its implementation in February 2014, the “list release, summary declaration” (9610) model can be said to have greatly facilitated the business of China’s import and export cross-border e-commerce sellers. With the continuous enrichment of cross-border e-commerce, customs supervision methods have also changed. For example, the combination of cross-border e-commerce and the traditional bonded zone model formed the “bonded cross-border trade e-commerce” (1210) model (later evolved into variant 1239).
Under the 1210 model implemented in August 2014, the declaration and tax payment are further separated-the compliance review is carried out when the product is on the platform. Export tax rebate); after that, every time the consumer places an order, the seller will deliver the order from the warehouse in the bonded area (if it is an import direction, the customs will collect an import duty for the order). Under this model, importers can stock up on a large scale of popular products that consumers like in advance, without having to pay full tariffs at one time according to the general trade model, which not only reduces the time for consumers to wait for products, but also facilitates the capital turnover of merchants; Export merchants can obtain all export tax rebates at one time without going through tax refund procedures one by one, which facilitates the capital turnover of merchants.
The 9610 and 1210 models we just mentioned are both consumer-oriented (the consignee is generally a natural person). With the gradual complexity of cross-border e-commerce, customs supervision methods will naturally need to continue to innovate and improve. One of the innovations in regulatory methods is aimed at B2B trade between enterprises.
We mentioned in the previous article that although B2B cross-border e-commerce has a longer history than B2C cross-border e-commerce, due to various reasons, B2B cross-border e-commerce has been using the traditional general trade (0110) supervision method Complete customs clearance. Although there is no problem with the operation of this method, the efficiency can still be improved. For example, B2B cross-border e-commerce also relies on cross-border e-commerce platforms, so it is also possible to advance the declaration of product categories to the stage of product shelves. Therefore, for B2B cross-border e-commerce, the customs launched the supervision method of “cross-border e-commerce business-to-business direct export” (code 9710) in 2020, so that B2B trade through cross-border e-commerce platforms can be carried out without going through the general Trade mode clearance. This enables small and small-volume export trade for overseas SMEs to enjoy lower transaction costs, and facilitates Chinese foreign trade companies to trade in response to the needs of foreign SMEs.
Another regulatory method launched in 2020 is “cross-border e-commerce export overseas warehouse” (code 9810). This kind of supervision corresponds to the logistics model of “collecting and transporting to overseas warehouses for redistribution” mentioned in the previous article by FBA and Cainiao. Before the implementation, after the enterprise puts the goods on the e-commerce platform, it needs to wait for the overseas consumers to place the order and arrange the delivery before they can use the 9610 method to handle the customs declaration; if they want to ship the goods overseas in advance to save delivery time, they still need to follow the 0110 general trade way to handle. In addition to the 9610 model, the 9810 method additionally solves the problem that cross-border e-commerce companies want to save delivery time – after the company puts the products on the shelves, it can arrange for the products to be exported to overseas warehouses (according to the 9810 method for customs declaration), and after the products are actually sold Then go through tax refund procedures.
Looking back on the innovation of customs supervision methods for cross-border e-commerce in the past ten years, we can see how the customs optimizes the supervision method according to the characteristics of cross-border e-commerce, and reduces the transaction costs of cross-border e-commerce while performing supervision and duties. The international competitiveness of cross-border e-commerce in terms of timeliness improves the business environment for cross-border e-commerce practitioners.
So far, we have finished the part involving information flow and logistics in cross-border e-commerce. In the next article, we will cover the remaining part of cross-border e-commerce: capital flow.
(This article only represents the author’s own opinion, editor in charge: Yan Man [email protected])