With the gradual liberalization of epidemic prevention control policies, control of freight transportation and warehousing has been relaxed; and consumer daily lives are gradually returning to normal. This is an opportunity for brands to consider selling their products directly to China.
On December 7, 2022, the China government issued the latest epidemic prevention policy. Therefore, health codes are no longer used in public places, and the landing inspection was no longer carried out. China consumers return to normal life and economic business is gradually recovering. Consequently, this phenomenon has stimulated the growth and development of cross-border e-commerce industries.
According to CCTV.com, from January 8, 2023, Guangdong-Hong Kong cross-border truck transportation resumed to pre-pandemic normal activity level. What’s more, customs clearance has also eliminated many complicated processes and cargo management. This greatly facilitates the customs clearance of freight, reduces the delivery time to Chinese consumers; and leads to an overall improvement in consumer shopping experience.
China relaxed “COVID” brings cross border e-commerce changes, which deserve the attention of overseas brands or merchants:
1. Stimulate Chinese Consumer Confidence
Due to the three-year control of the epidemic, work and livelihood have been affected, and China economy has been slow. The lock-down period has led to a decline in Chinese consumer confidence as everyone was hoping for the epidemic to end as soon as possible. When the announcement was made to relax “COVID” policies many people welcome the news and quickly regain confidence. Work is back to normal and many Chinese have already started travelling for holidays to countries that do not impose restrictions on mainland travelers. Meanwhile, retail business in major cities are back to normal in light of the upcoming Chinese New Year celebration. Therefore, the next wave of growth for the cross-border e-commerce import consumer market is highly anticipated.
2. Express freight is more efficient and less costly
In the past, China imposed strict control of the COVID-19 situation, so international logistics service was uncertain and faced suspension any time. Goods could not be shipped to certain covid infected regions and were often left stranded in warehouses. This impacted logistics delivery time and costs, affecting consumers’ desire to buy from overseas ecommerce. Now that China’s international logistics and domestic express delivery have returned to normal, cross-border logistics will reduce the costs of selling to China consumers directly, while consumers also receive goods faster.
3. Expect increase adoption for CBEC bonded warehouse imports
According to the China Economic Times, China has 165 integrated pilot zones for cross-border e-commerce and this number is still rising. The government not only supports cross-border e-commerce trade with bonded warehouse, but also shows optimism about the huge CBEC market potential.
The UPU model, which was commonly used in the past, is the choice of most brands or merchants due to its active and fragmented shipping mode. During the epidemic, the shortcomings of shipping using UPU model became apparent – longer customs clearing time and higher costs. Indeed, many brands shipping using the postal mode have experienced parcels being intercepted at customs, took a long time to clear and pay higher tax for goods resulting in huge increase for business costs.
Conversely, when overseas merchants use CBEC bonded warehouse to ship products to China consumers, those limitations of UPU model can be avoided. For a start, inventory is shipped to China bonded warehouse for pre-clearance thus reducing customs clearance time. Next, product sold via cross-border ecommerce can enjoy preferential tax rates. Hence, when a Chinese consumer placed an order, the pricing is competitive and products can be delivered within 2-3 days.
China relaxed “COVID” policies has minimized the overall impact of the epidemic on economic development, stimulated the recovery and development of the cross-border e-commerce import consumer industry, and provided new opportunities for brands and merchants selling products direct to China consumers.