Why US-China trade war will strengthen cross-border ecommerce boom: Industry experts

Shanghai-based Dai Yin, associate of Keller and Heckman LLP — which counts food and food additive clients within the range of industries it serves — said the increasing trade tension between the two countries would lead to more people turning to online channels and ecommerce platforms for food procurement.

She added cross-border ecommerce was continuing to receive "preferential treatment”​ because “nowadays, China is really promoting this industry segment”​.

“Personally, I think the trade ‘war’ won’t last forever, because the US and China both need each other,” ​she said, but added ecommerce would be one of the few winners in the ongoing dispute.

Regulatory ease​

Kazef Chan, senior purchasing manager of Tmall International Asia — the online retail site spun off from Taobao and operated by the Alibaba Group — underlined the regulatory advantages of ecommerce.

Companies entering the market through traditional, general trade routes, are subject to many "registrations".

“But nowadays under the new channel, cross-border ecommerce, you don’t actually have to pay the tariffs. You just have to pay 70% of the VAT,”​ said Chan.

“This has so many benefits for all suppliers, not just for food but all the brands.​

“The tax is lower, all the processes are much simpler and, especially for food items, all the brands or suppliers have it easier for labelling.​

 “You just have to use all the wordings and statements in the home country and you can send the goods to the port in China and they will be placed in the warehouse.​

“When customers place the order on the e-platform, they can (quickly and easily) go through all the customs clearances.”​

Rules change?​

Chan added that there are many foods that cannot go through the general trade route, or have great difficulty in doing so, but can go through cross-border ecommerce.

Responding to FoodNavigator-Asia’s query, Chan cited instant bird’s nest as an example.

While dry bird’s nest enters through general trade and goes through manufacturing in China, instant bird's nest firms found it difficult to gain regulatory approval.

“So cross-border ecommerce is another way for instant bird’s nest (to be imported or sold). Many brands are booming from the second half of 2017 because of this,” ​he said.

However, Dai cautioned that the existing ecommerce rules are due to expire at the end of this year, with uncertainty surrounding the government’s next move.

She said the official word is that the government is still in discussion about the measures to be taken.

Both speakers’ views were shared at a panel discussion at Food and Hotel Asia 2018 in Singapore.