Russia to issue new rules on overseas online tax exemption for China's cross-border electricity dealers

Absrtact: In late June, the Russian Ministry of Finance issued a new regulation on the country's overseas online tax exemption policy, triggering a collective spat in China's cross-border electricity industry, and also the sensitivity of cross-border electric business to more uncertain risks than domestic traders. According to the rules

In late June, the Russian Ministry of Finance issued a new regulation on the country's overseas online tax exemption policy, triggering a collective spat in China's cross-border electricity industry, as well as the sensitivity of cross-border electric business to the more uncertain risks faced by domestic dealers.

According to the regulations, since the late July, the Cross-border purchase of parcels can be duty-free entry from the price of less than 1000 euros and no more than 31 kilograms per month, adjusted to 150 euros or more than 10 kilograms of the parcel entry to collect the value of 30% of the tariffs.

Industry insiders believe that, because Russia is China's cross-border power companies, one of the most important market, the new deal will be the current China's Cross-border electricity business enterprises have a huge impact. In the future, if enterprises want to gain development opportunities in Russia, they must set up overseas warehouses or set up branch offices to operate locally. However, some people in the logistics industry think that from the product structure of the export of Russia, overseas warehouses may not be the best choice, but the establishment of border warehouses more flexibility.

Unearthed emerging markets

The data show how Russia's new rules have caused such a backlash in China's Cross-border electric-business firms.

According to customs data, China's cross-border electricity dealers in 2013 turnover of 70 billion yuan, although much lower than the size of domestic electricity dealers, but rapid growth. According to the China Electronic Commerce Research Center's monitoring data, from 2008 to 2013, cross-border electricity quotient turnover of the annual composite growth rate of 31%.

According to Zhang Zhifeng, chairman of Shenzhen Jiefang Road Network Technology Co., Ltd., who is engaged in cross-border electrical business for many years, the competition has been fierce in the rapidly growing cross-border electricity market, because it is a mature developed market. As a result, many companies engaged in cross-border electricity business have been eyeing emerging markets, and with Alibaba's fast selling, Russia has become a popular emerging market for Chinese companies.

According to customs statistics of the Russian Federation, 7 million entries were reached in Russia in 2013, with a total amount of over 2.8 billion euros, of which parcels from China accounted for more than 60% per cent. At present, the total amount of goods sent to Russia through China's E-commerce platform is not less than 4 million dollars a day, the number of parcels is nearly 300,000.

But the most exciting thing for Chinese sellers is the growth potential of the Russian market. Russia's retail sales accounted for 1.9% of its total retail sales, compared with 6.3% in China and 6.5% per cent in the global average. Both in China and around the world, Russian electricity dealers are very low in retail sales. Because of the higher prices of stores sold in Russian offline entities, locals have been keen on online shopping and are growing fast. It has been predicted that if the Russian electricity quotient ratio is raised to 4.5%, according to the Russian power quotient of 12 billion U.S. dollars in 2012, it means that the share of electricity dealers will increase to 36 billion U.S. dollars. And with the popularity of Russian broadband, as well as changes in consumer buying habits, will encourage more Chinese products through the Internet to enter Russia.

The rapid development of the Russian electricity market has attracted the international power business giants to enter successively. 2013 Amazon set up an office in Russia, the same year its Russian website online. Meanwhile, the British electric business Asos also fancy the Russian market, recently launched a Russian website. Among them, there are manufacturing advantages of Chinese enterprises are unwilling to full, through various channels to squeeze into the Russian market. At present, China's cross-border electric business enterprises mainly export 6 kinds of commodities to Russia, respectively, clothing, electronic products, shoes, bags, auto parts products, jewelry, sellers mainly concentrated in Jiangsu and Zhejiang and Shenzhen, the former main export apparel, the latter specializing in electronic products and jewelry.

Border positions are standard.

Although Cross-border electrical business growth is rapid, but compared with domestic trade, its face more uncertainties, such as Cross-border logistics, payment settlement, policy changes in various countries, consumer buying habits, and so on, affect the stability and continuity of Cross-border electric business. Russia's new rules, is to engage in the Russian export enterprises direct precision blow.

According to professional engaged in the Russian logistics enterprises, Heilongjiang Russian Speed International Logistics Co., Ltd. deputy general manager Wang Bin, Russia's online retailers believe that the government of foreign retailers set the threshold is too low to cause unfair competition, on the one hand, the price of overseas goods is lower than the domestic retail prices, On the other hand, domestic retailers must pay tariffs and other taxes on imports from abroad. So in May this year, representatives of these retailers lobbied President Vladimir Putin to demand fair treatment. The next day, Mr Putin was said to have asked the authorities to adjust tax exemptions for overseas internet parcels.

Some analysts believe that the adjustment of China's external Cross-border electric power business has a huge impact. Russian consumers have developed the habit of comparing prices in a state where fast-selling encourages price competition. Zhang Zhifeng After research found that the current cross-border electricity buyers are mostly not the mainstream of local e-commerce, and are all planning consumer groups, they will not impulsive purchase, very sensitive to price. This adjustment will significantly increase the cost of these price-sensitive people, and the original profit of the Cross-border power to reduce the price of the space is not large, the impact on sales is obvious. Zhang Zhifeng predicted that the future Cross-border electricity business competition will no longer be peer competition, but with the local online sellers, offline physical stores of the regional-oriented competition.

In this respect, some experts suggested that in the future to obtain opportunities in Russia, localized operation will be the main trend, that is, set up overseas warehouses in Russia, or directly set up a branch of local operations, the goods shipped to the Russian warehouse, and then by the local warehouse will be the net shopping parcels handed out. At present, overseas warehouses in Europe and the United States market operation is very mature, and even the view that overseas warehouses will become the next standard for cross-border electricity, will be greatly resolved to shorten delivery time, reduce logistics distribution cycle fluctuations, but also conducive to the provision of localized after-sales service.

But for this response, Wang Bin think is not a good way. He said that at present, China's cross-border electricity dealers export to Russia is mainly textile products, and overseas warehouses are mainly suitable for large, size-exceeding products, and the establishment of overseas warehouse success and risk is not low, once the goods into the warehouse, sales do not go out, it is difficult to return to the domestic; and choose "White clearance" (refers to the formal customs procedures), Will increase costs to weaken competitiveness, choose "gray clearance" (refers to the formal customs procedures), there is no legitimate source of products, once seized, will be wiped out. On the contrary, Wang bin proposed to the Russian trade enterprises, can choose to store the goods in the Frontier warehouse.

From the cost point of view, in three ways, "white clearance" overseas warehouse cost > Border warehouse cost > "Gray clearance" overseas warehouse cost, the cost of the Frontier warehouse is in the middle position. Because the bulk of the goods to involve large tariffs and cumbersome customs clearance process, in contrast, the border warehouse does not have these problems. Customers receive orders, goods from the border out of the customs clearance, to ensure the clearance efficiency, but also to ensure the safety of the goods. But in terms of prescription, the Border warehouse will be 1-2 days slower than the overseas warehouse.

To Russia speed through the Harbin Frontier Warehouse, customers after the billing, the goods from Harbin Non-stop Jekaterinburg, the period required 5 hours. Jekaterinburg as Russia's third largest city, located between Moscow and Petersburg, sorting speed. In this way, goods shipped from Harbin to Jekaterinburg and then sorted to major cities are only extended for 1-2 days from the Russian overseas warehouses. Comprehensive cost and timeliness, the price-oriented, low customer prices are not suitable for the selection of Overseas warehouse service forms, and for the weight, high value of goods overseas warehouse will be more appropriate.