Clearly out of favor, page-75

China signals extention to cross-border import rules
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by Michael Smith
Shanghai | China has signalled it will allow Australian infant milk and vitamins exporters more time to comply with tough new cross border e-commerce rules which was a risk to sales in their fastest-growing market.

A senior official with China's Ministry of Commerce said late Wednesday that products sold online into China and through the personal shopper networks known as daigous would still be treated as "personal individual use" into next year.

The official also said China would take a "innovative" and "prudent" approach to new regulations which mean Australian companies and their manufacturers have to meet strict new rules around Chinese labelling on products.

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Executives from Australian companies closely watching the shift in China's e-commerce regulations on Wednesday night were interpreting the Chinese government's latest statement on the issue as a sign that the current policies would continue into next year. However, they said it remained unclear exactly when the changes would be implemented.

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New licensing and labelling regulations for dairy products, vitamins and cosmetics imported into China were due to be introduced in January. However, Australian importers were worried about complying with the new rules designed to tackle food safety and tax avoidance in time because of lack of detail.


Dairy giants Bellamy's and a2 Milk and vitamin groups Blackmores and Swisse were among the companies following the changes closely.

However, it remained unclear whether the latest comments were a sign that the existing rules would be extended beyond January or replaced with temporary regulations during a transition period, compliance experts said.

"It is still not clear if the new cross-brder ecommerce rules will be extended or not," Zhang Zhouping from China's E-Commerce Research Centre told the Australian Financial Review.

"The Chinese government has sent out a strong message in supporting and encouraging the development of e-commerce importers. It is clear that China is going to expand its import sector and e-commerce importers are very important participants in this sector."


President Xi Jinping said in a speech at the opening of a huge import-themed trade fair in Shanghai on Monday that China would accelerate the development of cross-border e-commerce but did not give details.

Analysts and lawyers said some Australian importers faced a hit to their sales if the rules were introduced in two months as previously expected.

China's National People Congress announced plans in August to tighten cross-border e-commerce rules but did not provide details. New regulations designed to give consumers greater protection apply mainly to dairy, vitamin supplements and cosmetics sold into China via e-commerce channels. But there are also implications for the personal shopper networks as they will be more closely regulated and subject to tax, which will reduce their profit margins.

It is not the first time there has been confusion around changes in China's regulation. Hundreds of millions of dollars was wiped off the combined market value of China-focused stocks in 2016 over proposed e-commerce rule changes.