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 an «innovative» and «prudent» approach to new regulations.
Executives from Australian companies who are closely watching the shift in China’s e-commerce regulations are interpreting the statement as a sign that current policies would roll into next year.
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 timeframe for the new rules, which are designed to tackle food safety and tax avoidance, because of lack of detail.
Ms Hrdlicka, who is just back from a trip to China, said a2 Milk had been anticipating this decision for some time, and working with its daigou personal shopper partners to ensure they register themselves in China, send their product in through free trade zones and are pay appropriate tax.
«We view the statement by the Ministry of Commerce as making it clear they will not make abrupt changes and help the market transition,» Ms Hrdlicka told The Australian Financial Review.
«They are seeking to ensure commerce remains intact with improved practice of governance in the channels and they will transition to these practices over time. The Ministry of Commerce is saying, we are going to be pretty relaxed about the implementation of the new legislation.»
The a2 Milk Company was one of eight companies presenting to the Chinese government last week as part of the Special Foods Conference in Beijing. Ms Hrdlicka was also part of a small group of infant formula and vitamins producers that sat down with regulators privately to talk about what the future looks like in China.
She added there is «no play book on how this will work», and it could take several years before the implementation framework is even clear, and before anyone is held to full account under the new law.
Left wondering
Rival formula maker Bellamy’s Australia, and vitamin groups Blackmores and Swisse are among the other companies following the changes closely.
Some compliance experts have been left wondering if latest government comments were a sign that the existing rules would be extended beyond January or replaced with temporary regulations during a transition period.
«It is still not clear if the new cross-border ecommerce rules will be extended or not,» Zhang Zhouping, from China’s E-Commerce Research Centre, told the 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.
