Retail in Asia

Headline

New Chinese import tax policy may hurt Japanese retailers

Chinese visitors’ ravenous appetite for Japanese products has been a boon for many Japanese retailers, but confusion stemming from a lack of clarity in Beijing’s new customs duty policy may compel Chinese overseas travelers to cut back on shopping, potentially hurting the Japanese economy in the process.

A Chinese blogger who is believed to have just returned from an overseas trip posted a message on Weibo, a popular Chinese microblogging site, on April 8, outraged by the amount of customs duties charged at the airport. The post included a photo of a receipt for 5,000 yuan ($769) in customs duties, presumably for things the writer had purchased while visiting abroad. It drew many responses from those who were unsure or confused about what was going on. “Does this mean I will have to pay a high amount of tax if I buy a lot of things while holidaying overseas?,” another blogger asked.

The large number of responses to the post and the high level of confusion were probably due largely to the fact that the new customs duty regime just came into effect on that day. The truth of the matter is that the new rules do not concern goods brought back by people on overseas holidays.

The new policy is squarely aimed at “personal shoppers” known as daigou, who purchase products overseas and sell them to online customers in China at a profit. Although this is done as a business, these professional shoppers camouflage the goods as personal parcels.

Until the policy change, these agents were able to take advantage of a taxation regime that applied lower import duties to personally imported items than those on goods imported by businesses. Furthermore, if the total import duties for a parcel came to less than 50 yuan, the tax was waived.

Beijing closed this loophole because sales of foreign goods imported by professional shoppers had grown so much that the taxation policy’s unfairness to legitimate businesses could no longer be overlooked. In 2016, online sales of foreign products imported by shopping agents are estimated to reach 1.2 trillion yuan, which is equivalent to more than 10% of China’s overall imports.