Amazon.cn to begin cross-border e-commerce

The Chinese branch of global online retail giant Amazon said Wednesday that it will let Chinese customers to directly buy products listed on the company's international websites such as amazon.com as well as allow small and medium mainland firms to sell to Amazon customers overseas.

Amazon.cn, the Chinese branch, signed a Memorandum of Understanding with the China (Shanghai) Pilot Free Trade Zone (FTZ) and the Shanghai Information Investment Ltd that will enable these changes for Chinese customers and firms.

"China's e-commerce market is one of the most dynamic in the world with tremendous potential," Diego Piacentini, vice president of Amazon International, which oversees Amazon.cn, was quoted as saying in a statement that Amazon.cn e-mailed to the Global Times on Wednesday.

The online retail titan did not specify how Chinese consumers would pay customs duties when they make cross-border purchases on the company's international websites.

Amazon is also planning to establish a logistics and warehouse center in the Shanghai FTZ, whereby goods imported from Amazon's overseas sites and vendors will enter China through the FTZ's cross-border e-commerce platform, according to the statement.

China's online shopping market has boomed in the recent five years thanks to the development of the country's Internet network and cheap express delivery services. According to Beijing-based iResearch Consultancy, the transaction volume in China's online shopping market is expected to reach 2.76 trillion yuan ($449.24 billion) in 2014, which will more than double to hit 5.63 trillion yuan in 2017.

Mainland customers avoid paying China's hefty customs duties by purchasing directly from foreign vendors online. Chinese online shoppers call this haitao, or buying from across the ocean.

Since the demand for haitao has been growing rapidly in recent years, Amazon's move "will have a bright future if it can offer products with high quality, and convenient services including after-sales services," Zhang Yi, CEO of Shenzhen-based Internet research firm iiMedia Research, told the Global Times Wednesday.

Despite the popularity of haitao, mainland consumers have limited ways of buying products overseas. Some consumers buy products directly from ebay.com and amazon.com and then pay a third-party courier service provider to deliver the goods. Others buy from individual vendors on Alibaba Group's taobao.com, but face the risk of buying fake products.

Chinese consumers welcomed Amazon's move of starting cross-border e-commerce in the country.

"It will be more convenient to buy from Amazon," Xia Tian, a 31-year-old resident in Beijing, told the Global Times Wednesday.

Xia said she used to buy maternal and children's products on amazon.com and paid third-party express delivery companies for transportation. "It will cost at least two to three weeks for me to receive the goods," Xia noted.

It took seven to 10 days for Amazon to directly transport products from the US to China during testing, Wang Peng, general manager of Orient Electronic Payment Co, which is under Shanghai Information Investment, was quoted by news portal thepaper.cn as saying Wednesday.

Xia also has concerns about whether after-sales services will be better after Amazon starts its cross-border business in China.

Some domestic online retail companies, such as tmall.com and suning.com, have also launched their haitao businesses, but have not succeeded so far.

"A lack of popular overseas products is one of the major obstacles for domestic enterprises in starting haitao businesses," Zhuo Saijun, deputy director of e-commerce research center at Analysys International, an Internet consultancy, told the Global Times Wednesday.

Zhuo warned that Amazon should also be cautious about their expansion in China, where comprehensive rules for haitao have not been released.

The Chinese customs body recently released a new rule to regulate overseas purchasing services.

Cross-border e-commerce traders and individuals making cross-border transactions will be subject to oversight from China's customs authority, and will need to submit information on orders, payment and logistics before filling out customs declarations, according to a statement released by the General Administration of Customs in July.