Tax policy won't derail online retail sector
- By Xin Zhiming
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E-mail China Daily, April 13, 2016
Procedural defects aside, the move will reshape the industrial landscape since the main players, which enjoy financial advantage, will consolidate their positions because they have capability of absorbing the rising costs. Small players, which are more cost-sensitive, may find it difficult to operate.
The trading of imported goods, however, will not be seriously affected given the strong demand from the rising numbers of well-off consumers in the country. According to the Boston Consulting Group, the number of households with a monthly income of 12,000 yuan ($1,855) to 22,000 yuan in China may increase by 100 million in the next decade.
And a report issued by investment bank Credit Suisse in 2014 said the average net assets of people on the Chinese mainland have increased rapidly from $5,670 to about $21,300 and the number of the middle class people with an asset of $10,000-$100,000 has doubled since 2000.
No matter which criterion one uses, it is indisputable that Chinese people's individual wealth has been increasing fast in recent years, fundamentally changing their consumption behavior and the business landscape as well.
Chinese people are willing to pay more to get better quality products and services thanks to their rising incomes. And recent food scandals have made them more resolute in their decision to purchase imported products, such as baby formula, on e-commerce platforms if they can afford to pay for them.
The Ministry of Commerce estimates the value of China's cross-border e-commerce trading will reach 6.5 trillion yuan this year, increasing to 8 trillion yuan in 2017. And although the extra 10 percent tax experts say online buyers of imported goods will have to pay may not be a small amount, it is not enough to derail the high-rate growth of the e-commerce industry.
The author is a senior writer with China Daily.
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