New rules clamp down on private agents sneaking overseas purchases into China without paying taxes

By Li Lei Source:Global Times Published: 2018/10/18 18:43:41

○ Many Chinese make extra money by taking foreign goods into the country without paying tariffs

Starting in January 2019, rules will target this kind of tax evasion

○ Experts suggest lowering import taxes in response to massive demand

Working staff from Japan's Kansai International Airport arrange luggage for passengers on February 27, 2016. Many Chinese passengers brought empty suitcases to take Japanese products back to China. Photo: VCG

Miaomiao (pseudonym) was working part time in a hotel in Australia's Brisbane before she became a private shopping agent (known as daigou in China) to make some extra money while taking care of her baby.

"Australia's healthcare products and milk powder are favored by Chinese consumers," Miaomiao told the Global Times. "Milk powder in Australia is a big bargain compared with China."

Every week Miaomiao sends more than 50 tins of milk formula directly to her customers in China using an international courier after collecting orders from her customers via WeChat.

However, a new law in China promises to bring big changes to people smuggling foreign goods into China to avoid taxes, starting on January 1, 2019.

Miaomiao told the Global Times, "I will manage to send the milk powder back through every legal way, because the moms trust in and rely on milk powder from Australia. As for the luxury bags, I guess I will stop taking them to China personally."

A Chinese couple, who work as private shopping agents, is repacking products they brought in South Korea before flying from Seoul to China in November 2016. Photo: VCG

Trillion-yuan business

A report released on, a Chinese e-commerce think tank, shows that in the first half of this year, China's import volume on e-commerce platforms hit 1.03 trillion yuan ($151.4 billion), and the number will increase to 1.9 trillion yuan by the end of this year.

 The report also shows that China has over 75 million frequent users of transnational online shopping services and the number will swell to reach 88 million at the end of 2018.

China's Legal Daily dubbed this a "trillion-yuan business without production but with circulation."

It's not an exaggeration to say that private overseas shopping agents have become important in many Chinese people's daily lives. However, smuggling, tax evasion, counterfeiting and personal information leakage have often made this business a target of public criticism.

A transnational online retailer said that shopping agents bring goods in the name of personal use to evade tariffs, and evade personal income tax after selling these goods, the Legal Daily reported on Tuesday.

On Zhihu, China's Quora-like question-and-answer platform, many articles uncover various "traps" related to daigou  and how to avoid them.

 "Everything can be forged, packages, receipts in different languages, anti-counterfeit labels and everything, there's no way to tell them from the real ones with the naked eye," an insider said in a post.

A man surnamed Lin in Ningbo of East China's Zhejiang Province said he was swindled by an online shop on Taobao, China's leading e-commerce platform. Lin told the local media that his wife spent 5,399 yuan ($794) on two pairs of sandals from an online shop on Taobao which claims to sell luxury goods. The sandals were proved to be counterfeit. The sellers admitted the fraud but refused to offer a refund and disappeared from the platform.

An anonymous courier told the Global Times that some courier companies provide a service to change the delivery address at the customers' request. "Your parcel might have been delivered from a domestic point of origin but you receive notification that it has been sent from a bonded warehouse," said the courier.

According to China's newly released e-commerce law, private shopping agents conducting business on WeChat Moments and streaming live platforms should register with the industrial and commercial administrative departments and pay tax accordingly.

Taking effect on January 1, 2019, the law is China's first on the e-commerce sector.

"The e-commerce law is necessary to control the lawless competition in e-commerce," said Liu Junhai, a business law professor with the Renmin University of China.

"The law explicitly defines illegal conduct in the e-commerce sector, and protects the consumers' legitimate rights," Liu told the Global Times.


Fascinated by foreign goods

In a WeChat group with more than 300 members, Feng Xiaohua (pseudonym) received a dozen shopping requests for various items including leggings, pillows and even seafood.

"Basically, I can help buy any product in North America," said Feng. Residing in Canada, Feng travels a lot between North American metropolises and China on business errands.

"All my buyers think products there are cheap and safe, with no need to worry about the quality, especially milk powder," Feng told the Global Times. "I am just trying to make some pocket money on the sidelines of my work."

Miaomiao told the Global Times that she was surprised to see milk powder was sold at up to 400 yuan a tin, while the same brand only costs 260 yuan in Australia.

However, there are voices that believe that some facts about milk powder made in China have been overwhelmed by prejudice.

"China-made milk powder and legally imported milk powder is more superior compared those from daigou in terms of nutrients and safety," an anonymous retiree from a large Chinese milk powder company who has 20 years of working experience told the Global Times. "Domestic manufacturers are making utmost efforts to provide the best product to win market share under fierce competition," he noted.

"The progress domestic milk powder companies have made has never been understood by customers due to a lack of proper channels," said the insider.

"Positive news on China's milk powder is scarcely spread compared with flourishing rumors," the insider said. He believes it is the asymmetric information that results in people's distrust of domestic milk powder.

Liu believes that irrational consumption is one of the problems. "Indiscriminate trust in foreign brands, the phenomenon of following suit and a fervent pursuit of luxury items also boost China's thriving daigou business," Liu said.

A McKinsey report on the global luxury market shows that Chinese consumers spent 500 billion yuan ($7.4 billion) on luxuries in 2016, representing almost one-third of the global luxury market. The report also predicts that affluent Chinese consumers are projected to make up to 44 percent of the global luxury consumption across the globe by 2025.

Dim future

"Maybe I will have to stop bringing stuff for my family and friends," Chen Huimin, a student in the US, said with slight sadness. Chen used to bring luxury bags and cosmetics for her family and friends without charging extra money.

He Xiaoyun told the Global Times she will wait and see. "I will stop if there's no other way."

She and her husband travel frequently to Seoul and Tokyo, and help some friends buy cosmetics and luxury bags to offset traveling expense.

"Products carried by shopping agents entering China are merchandise, and should go through customs and be subject to tariffs," said Huang Chao, a lawyer with the Jiangsu Yihua Law Firm.

"The law regulates economic activities of both online retailers and e-commerce platforms. This will play an important role in forging an honest, fair and better e-commerce environment," Huang told the Global Times on Wednesday.

"Licensed shopping agents can be trusted by more consumers, which helps to boost sales," said Huang.

Huang also said that it will be easier for consumers to file complaints and safeguard their legal rights once a dispute occurs during online trade.

"The law guarantees fair competition. Legitimate and honest private shopping agents will be protected and those who violate the law will be punished," said Liu.

"Private shopping agents should not be banned indiscriminately," Liu noted.

Liu said that China's legal system is being improved with rapid economic and social development. The e-commerce law is to enhance people's sense of fulfillment and happiness.

Liu suggests that authorities further decrease the import tariffs on luxury products to fulfill Chinese people's growing demand.

Liu also calls for e-commerce retailers to pay tax according to the law and to stand against illegal activities such as selling counterfeit goods.






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