Shanghai Pilot Free Trade Zone (“FTZ”) encourages the cross-border e-commerce industry. As a pilot cross-border e-commerce platform approved in the FTZ, (“跨境通”or “Kua Jing Tong” in Chinese) launched on a trial basis on November 18, 2013.

This project was constructed by Orient Electronic Payment Co., Ltd, a Shanghai-based company that owns the Easipay electronic payment platform and previously helped construct China’s electronic customs declaration system. Dedicated to providing an online shopping platform for overseas e-commerce operators to sell directly to individual consumers located in China, is opening up a new era for cross-border e-commerce transactions in China.

  1. builds up an accountable legitimate trading channel for foreign e-commerce operators to reach consumers in China.

Given the inflated retailing prices for imported high-end goods in China, such as luxury products and cosmetics, Chinese consumers used to shop overseas or turn to online purchase from overseas websites. However, due to the internet censorship in China, the access to such websites could often become difficult, unavailable or even totally blocked. In the meantime, the delivery of such products is usually made via the international express courier service. In case that the relevant customs declaration requirements are not met, the package could be delayed or even confiscated by China Customs. Moreover, under the relevant PRC laws, a foreign e-commerce operator must physically set up a legal entity in China and go through the complex application process before running online store in China on its own. So, in practice, it is hard for a foreign e-commerce operator to build an efficient and accountable direct selling model for Chinese retailing market.

However, with the emergence of, foreign e-commerce operators may directly build online stores on the platform even without physical presence in China.

On the logistics side, foreign e-commerce operators may either (1) cooperate with or a logistics provider to use their bonded warehouses in the FTZ to receive all incoming shipments, and later with help from express customs clearance provided by, have the bonded goods distributed from bonded warehouses to individual consumers outside the FTZ per their online purchase orders; or (2) directly mail from overseas to individual consumers in China, with a 2-dimentional bar code (generated by for each purchase order) attached to each package, through which, such delivery may undergo express clearance processes at China Customs.    

Through the platform, foreign e-commerce operators may have a new B2C business model to reach individual consumers in China.

  1. also benefits Chinese consumers with lower tariff rates and transparent customs clearance processes.

Domestic consumers may directly buy overseas products available at the website. Such consumer products, whether delivered from overseas by international mail or from the FTZ warehouses by postal or express mail, would be treated as “articles for personal use” at the customs clearance. The applicable tariff rates are on average lower than those for merchandise in general trade. As a result, the prices for on-line purchase from foreign on-line seller are more likely lower than in conventional stores in China.

Meanwhile, for each product, the website would list its retail price, tariff and total price. As such, consumers would have a clear picture about how much tariff is going to be paid under their orders. In comparison, such tariff information usually is not available at overseas websites or online overseas shopping agents (“海淘” or “HaiTao” in Chinese). In reality, in such cases, it is not clear if the customs clearance procedures are properly followed, and there is a possibility that the customs duties might be underpaid or escaped, and sometimes even the smuggling activities are involved. With, all purchases would have undergone express customs clearance with the relevant tariff being duly paid. However, the annual purchase via for each individual purchaser is currently capped at RMB 20,000.


With all facilities provided by the platform, a more efficient and accountable direct selling channel is expected to be built up between foreign on-line sellers and Chinese consumers. Given the price advantage to Chinese consumers brought by, brands are advised to review and adapt their conventional brick-and-mortar store strategies to maintain the competitive advantages in Chinese retailing market. Also, it could be anticipated that would impact the business performance of current online overseas shopping agents in China.