Cross-Border E-Commerce in China

How cross-border e-commerce works in China

Cross-border e-commerce in China runs in two directions, and each is governed by a different set of rules. Inbound, foreign brands sell consumer goods directly to Chinese shoppers through platforms such as Tmall Global, JD Worldwide and Douyin, under a special retail import regime with its own tax rates, product list and customs procedures. Outbound, Chinese manufacturers, brands and traders sell to consumers and businesses abroad through global marketplaces, their own websites and overseas warehouses.

The inbound regime is a deliberate policy choice. Goods bought by an individual consumer within set value limits are treated as personal purchases rather than ordinary imports. That lets many products reach Chinese consumers without the registration, labelling and first-import approvals that apply to general trade, in exchange for strict limits on value, product type and resale.

The outbound side is shaped less by Chinese law than by the rules of importing countries. Chinese law still matters, because export declarations drive VAT treatment, foreign exchange receipts and the tax position of the selling entity. But the bigger risks for exporters in 2026 sit abroad: the end of low-value duty exemptions in the United States and the European Union, platform liability rules, product safety obligations and intellectual property enforcement against marketplace sellers.

The legal foundation in China is the E-Commerce Law, in force since 1 January 2019, which applies to platform operators and sellers and expressly requires cross-border e-commerce operators to comply with import and export rules. It is supplemented by joint circulars of the Ministry of Commerce (MOFCOM), the General Administration of Customs (GACC), the Ministry of Finance and the State Taxation Administration (STA), and by GACC announcements that set out the customs procedures for each trade mode.

China has also designated cross-border e-commerce comprehensive pilot zones in well over 150 cities, covering every province. Pilot zones offer simplified customs, tax and foreign exchange procedures, public service platforms that join up data from platforms, logistics providers and payment institutions, and access to the export tax measures described below. Shenzhen, Guangzhou, Hangzhou, Ningbo and Zhengzhou are among the most active.

Trade modes and the customs codes behind them

Customs treats each cross-border e-commerce flow as a distinct trade mode with its own supervision code. The code chosen determines what data must be filed, which tax rules apply and whether goods may be held in bonded stock before sale. Choosing the right mode is therefore a structuring decision, not an administrative detail.

For an inbound brand, the main choice is between direct mail (9610) and bonded stock (1210). Direct mail needs no inventory in China but delivery is slower and every parcel passes through international express channels. Bonded stock gives domestic-speed delivery, but the brand or its agent commits capital to inventory inside a bonded zone and must manage returns, expiry and the risk that goods become unsaleable if the product list or rules change.

For exporters, the B2B modes introduced in 2020 matter because they allow export declarations to be filed in a simplified way while still supporting VAT refunds where the conditions are met. Many Chinese sellers on global marketplaces still ship under informal arrangements or through freight forwarders using consolidated declarations. That approach can leave the real seller without proper export records, which later causes problems with VAT, foreign exchange receipts and proof of origin.

A general trade route remains the right answer for products outside the retail import list, products sold through offline channels, and brands that want to build a long-term domestic distribution business.

A worked example shows the trade-off. A European skincare brand testing China might start with bonded stock of its best-selling serum in a Hangzhou or Shenzhen bonded zone, sold through a flagship store on a cross-border platform. Consumers receive goods in a few days and pay the reduced retail import tax. Once sales prove demand, the brand can register the product for general trade, appoint a distributor and print Chinese labels, while keeping the cross-border store for new or niche lines. Throughout, it must keep prices, classifications and descriptions consistent across both channels, because Customs compares them.

Many groups use both: cross-border e-commerce to test demand and reach early adopters, and general trade once volumes justify product registration and Chinese labelling. The interaction with classification, valuation and origin is covered on our page on tariffs, origin and customs valuation.

Tax rules for cross-border e-commerce imports and exports

Retail imports

Since 1 January 2019, a retail import bought through an approved cross-border e-commerce channel benefits from a preferential tax treatment if it stays within two limits: RMB 5,000 per transaction and RMB 26,000 per consumer per year. Within those limits, the import tariff rate is zero, and import VAT and any consumption tax are charged at 70% of the amount that would otherwise be payable. The tax is collected by the platform, logistics enterprise or domestic service provider acting as withholding agent.

A single item whose value exceeds the per-transaction limit, or purchases that would take a consumer above the annual limit, are taxed in full as general trade imports. The purchase is also recorded against the buyer's annual allowance, which is tracked by identity number. The person paying must be the person whose identity is declared, and platforms must verify this. Buying on behalf of others, using borrowed identities or splitting orders artificially are long-standing enforcement targets.

Only goods on the List of Cross-Border E-Commerce Retail Import Commodities, the so-called positive list, qualify. The list covers mainstream consumer categories such as cosmetics, food supplements, infant products, household goods and small electronics, and it has been expanded more than once. Products outside the list must be imported through general trade with the usual approvals.

Exports

On the export side, retail exporters registered in a comprehensive pilot zone can benefit from an exemption from VAT and consumption tax on goods for which they lack purchase invoices, provided they meet registration and data conditions. Qualifying enterprises in pilot zones may also have enterprise income tax assessed on a deemed profit basis, at a 4% deemed profit rate, which simplifies compliance for small sellers. Goods exported under the B2B modes with proper invoices can generally claim export VAT refunds in the usual way.

Tax enforcement is tightening. Regulations of the State Council requiring internet platforms to report the identity and income of operators selling through them to the tax authorities took effect in 2025. Combined with data from customs, payment institutions and banks, this gives the tax authorities a much clearer picture of sellers who previously operated informally. Sellers should reconcile platform turnover, export declarations and foreign exchange receipts.

Duties of platforms, sellers and service providers

The retail import regime spreads responsibility across several parties. The overseas seller is the party that sells to the Chinese consumer and bears primary responsibility for product quality and safety. Because it is outside China, it must appoint a domestic service provider registered with Customs to file declarations, act in China on its behalf and share responsibility. Platforms must verify sellers, keep transaction records, cooperate with Customs and handle complaints and recalls.

The consumer must be told that the goods are imported for personal use, that they may comply with the standards of the country of origin rather than Chinese standards, and that they may not carry Chinese labels. That disclosure is what allows goods to be sold without first-import registration or filing. It does not remove product safety obligations: if a product proves unsafe, the seller and platform are expected to stop sales, recall goods and report to the authorities.

Goods bought through the retail import channel may not be resold. Reselling them offline, or using bonded stock to supply distributors, falls outside the regime and can be treated as evading duties and import controls. Customs also targets fake "personal" purchases, misdescribed goods and under-valuation. Serious cases can become smuggling investigations; see our page on smuggling cases.

General consumer law applies alongside the customs rules. The Consumer Rights Protection Law and its 2024 implementing regulations, the E-Commerce Law's rules on platform responsibility and the 2025 revised Anti-Unfair Competition Law all bear on pricing, promotions, reviews and returns. Live-streamed sales add advertising law duties. Our page on consumer protection covers these duties in more detail.

Data is the other major layer. Platforms, sellers and service providers handle identity numbers, addresses and payment details of Chinese consumers. The Personal Information Protection Law applies, and any transfer of that data to an overseas seller's systems is a cross-border transfer that must satisfy one of the legal routes, now simplified by the March 2024 provisions on cross-border data flows. See cross-border data transfer.

Selling abroad: outbound cross-border e-commerce risks

Chinese sellers face a rapidly changing rulebook in their main markets. The changes are not aimed only at China, but Chinese sellers feel them most because they supply a large share of low-value parcels worldwide.

• United States. The US ended duty-free de minimis treatment for goods from mainland China and Hong Kong on 2 May 2025 and suspended it for all countries from 29 August 2025. Parcels now pay duty, including additional tariffs on Chinese goods, and carriers and platforms demand more complete data. Models that relied on direct mail from China have shifted to bulk imports into US warehouses, where the importer of record carries customs liability.
• European Union. The EU removed the customs duty exemption for goods valued at €150 or less from 1 July 2026, applying an interim flat duty of €3 per item in low-value consumer consignments until a percentage-based duty replaces it, planned from 1 July 2028. VAT on low-value imports has been collected through the Import One-Stop Shop since July 2021. The General Product Safety Regulation, applicable since 13 December 2024, requires a responsible economic operator in the EU, and the Digital Services Act places traceability duties on marketplaces.
• United Kingdom and others. The UK collects VAT at the point of sale on consignments of £135 or less and has reviewed its low-value relief. Other markets, including several in ASEAN and Latin America, have lowered or removed thresholds and introduced platform VAT collection.

Intellectual property enforcement is the other recurring risk. Brand owners in the United States often file multi-defendant trademark and design suits against marketplace sellers and obtain temporary restraining orders that freeze seller accounts and funds. Sellers who ignore the proceedings usually face default judgments. Clearing trademarks and designs before launch, keeping evidence of independent design and responding quickly through US counsel are the practical defences. Our pages on trademarks and US Section 337 investigations explain the related tools.

Structure matters too. Many sellers trade through Hong Kong or other offshore companies, hold stock in overseas warehouses and collect revenue through payment service providers. Each layer raises questions of permanent establishment, transfer pricing, VAT registration abroad, foreign exchange repatriation into China and who is the importer of record. Getting those answers wrong rarely causes immediate problems, but it surfaces painfully in a platform audit, tax inquiry or account freeze.

Cross-border e-commerce compliance checklist and common mistakes

The following steps reflect the issues that most often cause losses for brands and sellers. They apply whether you are a foreign brand selling into China or a Chinese seller expanding abroad.

1. Map the flows. Record each product, channel, trade mode, importer of record, warehouse and payment route. Many groups discover that the same product is sold through three channels with inconsistent declarations.
2. Classify and value consistently. Use the same tariff classification and pricing logic across cross-border and general trade, and document related-party pricing. Customs compares channels.
3. Allocate responsibility in contracts. Service provider, platform and logistics agreements should cover declarations, tax withholding, recalls, data protection, indemnities and termination, including the run-off of bonded stock.
4. Control resale risk. Monitor for grey-market diversion of bonded goods into offline channels, which can expose the brand as well as the diverter.
5. Prepare for product incidents. Have a recall and complaint plan that works in China and in each export market, with clear lines to platforms and regulators.
6. Clear intellectual property early. Register trademarks in China and in each target market before launch, and record them with Customs where useful.
7. Reconcile tax data. Match platform turnover, export declarations, invoices and foreign exchange receipts at least quarterly.

Common mistakes include treating a domestic service provider as a mere courier, selling items that have dropped off the positive list, relying on freight forwarders' declarations without checking them, and assuming that a low-value parcel model will survive the end of de minimis regimes abroad. Each can be corrected cheaply if found early, and a short annual review of every channel, product list and contract is usually enough to catch them before Customs, a platform or a foreign regulator does.

The rules also continue to change. The positive list, pilot zone measures, platform tax reporting, US tariffs and EU customs reform have all moved within the last two years. Businesses that build monitoring of official announcements from GACC, the STA and their main export markets into their compliance calendar avoid most surprises. Sector context is on our e-commerce sector page.

How TRW & Co helps

We help foreign brands and Chinese sellers plan and run cross-border e-commerce from a cross-border legal perspective. For brands entering China, we compare trade modes, negotiate platform, service provider and logistics agreements, and build compliance and recall protocols. For Chinese sellers going abroad, we advise on the laws of the jurisdictions where our lawyers are qualified and coordinate counsel in the US, the EU and other markets on customs, product safety, platform terms and IP disputes, and help structure offshore entities and warehouses. Where PRC legal advice, customs filings or representation before Chinese authorities is needed, we work with licensed PRC law firms and customs specialists. Please contact us to discuss your channels.