While Hong Kong retailers are suffering from slowing sales to mainland visitors, cross-border e-commerce offers a new alternative that could help them make up for the loss and reach even more Chinese consumers.
Because of quality concerns, mainland customers prefer to buy items like infant formula and healthcare products abroad.
Many of them cross the border to buy such items in Hong Kong, some resort to smuggled goods, while others go to websites that offer overseas shopping services.
The emerging cross-border e-commerce model, which allows mainland consumers to buy products directly from overseas manufacturers and brands through an online platform, is not only more convenient but also offers cheaper goods in view of the tax advantage and elimination of layers of agents.
“If Maxim’s wants to sell its mooncakes to remote places in mainland China, the group first needs to find agents and dealers in the provinces and cities. The whole process involves at least four to five layers of agents. But now with cross-border e-commerce, it is much easier. All Maxim’s needs to do is to set up an online sales platform,” Wu Dongshuo, general manager of Globex E-Services Ltd., told the Hong Kong Economic Journal.
Last year, customs authorities and the National Development and Reform Commission jointly launched a pilot program for cross-border e-commerce.
There are now seven pilot cities including Shenzhen’s Qianhai, Shanghai, Chongqing and Hangzhou.
Qianhai stand out among these pilot cities because of strong policy support from the municipal government and its proximity to Hong Kong and Shenzhen.
Most global brands can be found in Hong Kong, and Hong Kong and Shenzhen top other Chinese cities in cargo throughput.
“This is a huge opportunity for Hong Kong companies,” Wu said.
Globex assists retailers in customs clearing, payment and logistics. The import-export service provider is already benefiting from the fast-growing market.
“During peak periods, we process about 220,000 packages a day,” Wu said.
Baby products such as infant formula and diapers, cosmetics and healthcare products are the most popular.
In the first half, Globex processed two million orders worth around 180 million yuan (US$29 million) from Qianhai alone.
Under the new rules in Qianhai, e-commerce companies can store their goods in the free-trade zone and deliver them directly to customers who place their orders online.
Customers receive the goods in about two to six days.
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