These changes in preference happened as a result of scandals over fake products and contaminated food crises that occurred in the past. Chinese consumers started bringing from their overseas travel a large volume of products in their luggage, such as baby milk formula, beauty products, luxury items, and healthy food. Later, they sold them to friends or through e-commerce platforms.
This informal market for imported products exceeded $40 billion in 2018.
Products entering the country were often difficult to find in China or were more expensive abroad because of taxes and import laws. After realizing that this new consumer demand was unstoppable, the Chinese government implemented a new e-commerce law, which came into force in January 2019, to regulate informal imports and ensure the quality of products entering the country.
Along with the new e-commerce law, they launched a list of 1,300 HS codes to be imported at preferential tariffs and simplified regulations. However, products imported through this system can only be sold on special cross-border e-commerce platforms in China.
How big is e-commerce in China? According to e-marketer, they estimate that by 2023, over 63% of total retail sales in China will be made through e-commerce. Today, e-commerce sales in China account for over 40% of global e-commerce sales, which is more than e-commerce sales in the United States, United Kingdom, Germany, France and Japan all combined.
By selling through cross-border e-commerce, brands can reach Chinese consumers directly with no intermediaries.
Some main benefits of selling under this system compared to traditional imports are:
- Simplified Import Process
- Higher sales margins in China
- Ability to get firsthand feedback and product performance data
- Communicate the brand message directly to consumers
- Reach a billion people as quickly as possible
Exporting to China is becoming simpler and Latin America brands can benefit from this by using the cross-border e-commerce system as a first step to test their products on the market. The approach that will help Latin America brands achieve sustainable growth is to reach the preferences of Chinese consumers through interesting and compelling stories to sell.
* To receive the list of tariff ratings translated into Spanish, we invite you to contact Litao.