Policy shift to crimp overseas online buying

New policies could curb China's fast-growing market in online overseas purchasing, industry participants said.

Over the past decade, many Chinese living overseas have taken advantage of policy loopholes by selling and shipping goods that would cost far more in China.

The government has decided to close those loopholes using new policies that take effect on April 15.

The policies, issued on March 28 by the General Administration of Customs, include new duty procedures for imported products and restrictions on collaboration between domestic postal and logistics companies and overseas ones, which are the main channels for overseas purchases.

"For sure, the good era has gone," said a woman surnamed Su, an online overseas purchasing agent specializing in items from The Body Shop, the UK beauty chain.

The Shanghai native started her online business in 2006 while studying computer science and working as a part-time sales representative for the brand in the UK.

She subsequently returned to her hometown and abandoned the technology sector, instead working for herself and selling thousands of bottles of shampoo a month.

"I am not about to lift the price of all my products right now, as what I am selling now was shipped here months ago. I can't tell what will happen next, but price hikes will definitely be the last choice, because they will scare away many customers," said Su.

While the future is uncertain for small and medium-sized online purchasing agents, some foreign logistics companies that rely heavily on shipping to Chinese shoppers are cutting back or suspending some operations.

USZCN.com, a logistics company in the United States that is tailored for Chinese online shoppers, put a notice on its website saying it was suspending new member registrations for 25 days.

Other bigger players like China United Logistics and Transparcel have been more cautious in shipping goods and pre-charging tax on duty-paid prices.

According to a report by the China e-Business Research Center, the overseas purchasing market in China reached 24 billion yuan ($3.8 billion) last year and is likely to double this year.

"Value-for-money products, appreciation of the yuan and goods aplenty are the three major things that attract domestic shoppers," said Mo Daiqing, one of the leading researchers of the report.

"But with the new policies, the market is sure to hit a snag with squeezed profit margins and confused customers," said Mo.

Though Mo agreed that the new rules might help "clean up the chaotic market", she said the new policies will also drive many participants out of the fiercely competitive business.

The report said that among all items, cosmetics and skincare products, milk powder and handbags and suitcases were the three goods most frequently purchased overseas through online agencies.

More than half of the imported milk powder came into China through just this type of online buying, the report said.