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Chinese e-commerce concerns ease, stocks rebound

Wednesday 13th April 2016

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New Zealand companies using Chinese e-commerce platforms say recent regulatory and tax changes won't impact their business, as investors buy back stocks sold out of nervousness earlier this week.

On April 8, China changed the tax rules for products imported via cross-border e-commerce platforms such as Alibaba's Tmall, with online purchases no longer eligible for a lower personal parcel tax rate of 10 percent on parcels worth less than 1000 yuan (NZ$223), or no tax on parcels worth less than 50 yuan (NZ$11.13).

Parcels from e-commerce sites now attract an 11.9 percent tax, the same tax as any other imported good. A single transaction exceeding 2,000 yuan or an individual spending more than 20,000 yuan a year will attract customs duty on top of tax. A day earlier, its Ministry of Finance issued a "positive list" of goods which are still allowed to enter China through the country's free trade zones.

Fonterra Cooperative Group, which has previously said it is looking to double its business in the country to $10 billion within the next five years with huge growth expected from e-commerce platforms, said the new regulations would not have a significant impact.

"Less than 1 percent of our products are sold through cross-border e-commerce channels so the impact on our business is very minimal," said Jillian Laing, Fonterra's vice president of greater China brands. "Our full range of brands is still available on all of China's major e-commerce platforms, distributed from within China, and in a wide range of retail outlets." 

New Zealand Post, which operates a Tmall Global web store which stocks New Zealand brands such as NutraLife, Red Seal, Lindin Leaves and Earthwise, said the impact was minor.

Most of NZ Post's cross-border parcels are carried into China via direct mail, and they will continue to be charged personal postal articles tax with the 50 yuan (NZ$11.13) tax exemption remaining, a spokesperson said. Just 4 percent of Tmall Global's orders are carried through a commercial channel, which is subject to the tax changes.

Companies which sell their products heavily into China, namely dual-listed infant formula producers such as A2 Milk Co in New Zealand and Australia, and Bellamy's and Blackmores on the ASX, have been sold off heavily since the announcements were made, despite infant formula remaining clearly on the "positive list" of products permitted within the free trade zones.

A2 Milk led the local index down yesterday, and dropped 8.7 percent to $1.78 over Monday and Tuesday's trading sessions, but was up 1.1 percent to $1.80 at 4pm. ASX-listed stocks also recovered, with Bellamy's gaining 6.2 percent to A$9.43 and Blackmores up 1.1 percent to A$166.75. 

A spokesperson for New Zealand Trade and Enterprise said the new e-commerce policy introduced could impact on companies operating in the food, wine, health products, skincare and cosmetics sectors.

"NZTE and MPI (Ministry for Primary Industries) staff are working with the relevant authorities in China to clarify how the new policy introduced on April 8 will affect New Zealand companies," they said.

 

 

 

 

BusinessDesk.co.nz



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