The Dream Factory of China

By scanning the QR cord on a product’s price tag, customers in CTFHOKO, a cross-border e-commerce shopping mall in Qianhai, can check the inventory and before-tax price of the product on their phones. Bonded goods will be mailed to customers after they place an order online from the shopping mall’s bonded warehouses.

“The online sales have seen a steady growth since the shopping mall opened last year,” said Zhang Daihong, CTFHOKO’s e-commerce director. The shopping mall that covers a floor area of 20,000 square meters is invested and operated by Hong Kong jewelry manufacturer Chow Tai Fook.

“It’s the first time that Chow Tai Fook has invested in a cross-border e-commerce project,” Zhang said, adding that the company saw huge development potential in the project, after a range of favorable policies were introduced by the Qianhai Authority to facilitate operations for Hong Kong firms in Qianhai.

Zhang said that most merchants in the shopping mall are from Hong Kong and are looking to expand their business on the mainland. Products delivered by merchants to Chow Tai Fook’s bonded warehouses in Hong Kong will be inspected and put on record by the customs and transported to the shopping mall’s bonded warehouses in Shekou, Shenzhen.

“Our warehouses occupy an area larger than the shopping mall,” Zhang said. After the products check into warehouses in Shekou, merchants can put the goods on shelves on the shopping mall’s website so that customers can place orders online. “The online system has reduced labor and management costs for merchants,” she said.

China has witnessed a thriving cross-border e-commerce trade in recent years, which recorded an annual growth of more than 30 percent last year despite sluggish foreign trade, according to Xinhua.

In a bid to level the playing field for e-commerce platforms and traditional retailers and importers, a new tax policy on retail sales of cross-border e-commerce traders was put into effect by the government April 8.

According to the new rules, retail goods purchased online will no longer be treated as personal postal articles but as imported goods, which carry tariffs, import value added tax and consumption tax.

“The new policy didn’t have much influence on us,” Zhang said. According to her, the complete supply-chain system and high turnover rate of warehouse goods has lowered operating costs for merchants in the shopping mall which offsets the higher taxes paid under the new policy.

Zhang admires the innovative spirit of the Qinahai Authority and favorable policies implemented in the area. She hoped that CTFHOKO will set an example for further Shenzhen-Hong Kong cooperation.