NATURAL PRODUCTS NEW ZEALAND SUMMIT 2018

China cross-border e-commerce access: 'Too early to say what will happen in 2019' – trade expert

By Gary Scattergood contact

- Last updated on GMT

Cross-border e-commerceand daigou sales will continue to dominate, says Damon Paling.
Cross-border e-commerceand daigou sales will continue to dominate, says Damon Paling.
Exporters to China have been told to 'watch this space' over cross-border e-commerce rules, which provide the easiest access to the nation's soaring supplement market, but are due to end this year.

The current regulations had been due to expire at the end of last year, before officials extended the transition period to the end of 2018.

This means products imported through cross-border e-commerce continue to be regarded as personal trade, rather than for commercial distribution, allowing overseas firms to bypass complex local registration requirements.

The extension covers products shipped to bonded warehouses in China before being sold through e-commerce sites, and those bought by daigou​ shoppers overseas before being sold to Chinese consumers.

However, speaking at the Natural Health Products New Zealand Summit, New Zealand Trade and Enterprise trade commissioner Damon Paling said it was still too early to say what would happen at the end of this year.

"The extension gave us a little stability, but we are waiting to see what happens next,"​ he said. "Hopefully, it will be business as usual, but watch this space."

"By and large, we hope to have continued market access through cross-border e-commerce through 2019, but there is always a chance it could become more difficult and more costly."

He also cautioned that New Zealand's ongoing free-trade talks with China were unlikely to lead to immediate domestic market access for supplement and functional food firms.

"You would still need to go through the blue hat registration process for domestic market access," ​he added.

"That's why cross-border and daigou sales will continue to dominate."

Vertical opportunities

In terms of building an e-commerce business in China, Paling, who is based in Shanghai, said companies did not have to rely on the biggest players, TMall and JD.

"It can be difficult to get in and get listed,"​ he said. "For a smaller company, you may want to look at some of the smaller, vertical sites, or maybe go in via a listing with (retail chain) Chemist Warehouse.

Away from the regulations and e-commerce, Paling said growing health awareness among consumers and policy action from government ensure that opportunities would abound for supplement firms.

He said 115 million people in China had type 2 diabetes, with a further 50% of the population classed as pre-diabetic.

Furthermore, 300 million of the 1.4 billion population are smokers.

"We see that products around heart health, sleep and digestion are very popular in TCM. We need to explore if there can be a cross-over into this space for New Zealand ingredients,"​ he said.

Paling added that plant-based protein-enriched products were becoming very popular among young men, with calcium supplements and vitamins maintaining strong market share.

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