China to extend transition phase for cross-border retail

China will delay enforcing tougher rules on the country’s fast-growing cross-border retail market until the end of 2018, a boost for global firms that have been tapping the round-about route into the world’s number two economy.

Cross border-retail sales - goods either shipped directly to shoppers in China from overseas or from bonded warehouses in free-trade zones within China - are expected to hit 758 billion yuan ($115.4 billion) by 2018, according to data from McKinsey & Co and iResearch.

Planned new rules will broadly increase taxes and regulations on products sold via cross-border channels, but Chinese authorities will extend a transition phase for implementation by a year, China’s ruling State Council said late on Wednesday, giving retailers more time to prepare and adapt.

The delay of the tougher rules signals broader support from Beijing for cross-border retail. The market has been rattled by see-sawing regulation over the last couple of years, affecting firms shipping popular goods from dairy to health products in countries such as Australia.

“We need to enable the healthy development of cross-border e-commerce and speed up the growth of new engines, making the foreign trade sector more adaptive to new circumstances,” the official Xinhua news agency quoted Premier Li Keqiang as saying.

“The prospect of cross-border e-commerce is very bright.”

China sparked widespread confusion among retailers and brands in the cross-border shopping market in 2016 with increased taxes and abrupt bans on some goods. It later rowed back on some measures and introduced a transition period for others.

The country will also look to set up more pilot zones with looser restrictions on cross-border trade, Xinhua said, which would follow over a dozen such zones that have been established since 2015.

($1 = 6.5700 Chinese yuan renminbi)