China’s new CBEC regulations a boon for cosmetics sector

According to the statement from the State Council, China plans to “expand and improve”​ the existing CBEC policies in order to “unlock the potential of consumption”​ in China.

“The Chinese market opportunities for western brands is colossal. The CBEC regulations change is great news for Chinese consumers in search for quality products,” ​said Kris Fang, Head of Europe for China Beauteville, a cosmetics hub located Huzhou.

“The government is opening the domestic market to international companies and it will definitely help boost consumption of cosmetics products [in China​].”

In an official statement Permier Li said, “Boosting cross-border e-commerce will contribute to high-level opening-up. It will promote steadygrowth in foreign trade, drive consumption and create jobs,” ​said Premier Li. “We need to take a holistic approach, exercise prudent yet accommodating regulation to fully unleash the growth potential of cross-border e-commerce.”​

Figures from the General Administration of Customs show that between January and October, retail imports of cross-border e-commerce reached 67.2bn yuan, up 53.7% year-on-year.

According to a recent study by marketing and consulting agency Westwin, cosmetics are the most-purchased category on e-commerce sites, making up 53% of sales on Tmall Global, the biggest online retailer in China.

What’s next in 2019

The implementation of this policy will be extended from 15 to 22 cities. Which include those that have just established comprehensive cross-border e-commerce pilot zones.

So far, goods included in the CBEC retail imports list have enjoyed zero tariffs within a set quota, and had their import VAT and consumer tax collected at 70% of the statutory taxable amount. These policies will be extended to another 63 tax categories of high-demand goods.

“Considering three key stipulations of the latest CBEC policies, namely the expansion of CBEC transitional policies, the addition of 63 more product categories in positive lists coupled with the increase of CBEC transaction limit, stakeholders will enjoy more benefits when entering burgeoning Chinese market,”​ said Winnie Xu of Chemlinked.​

The quota of goods eligible for the preferential policies will be raised from 2,000 yuan ($289) to 5,000 ($721) yuan per transaction, and from 20,000 yuan ($2885) to 26,000 ($3750) yuan per person annually. “Some affordable luxuries and beauty apparatus will benefit significantly from the burgeoning Chinese market,” ​said Xu.

“The continuation of transitional CBEC policies signals China's intention in loosening regulatory policy stance towards CBEC and ‘forcing’ domestic industries to speed up the process of transformation and upgrading,” ​she added.

At the same time, export tax rebate policies will be further improved in line with international practices to further boost exports via cross-border e-commerce.

Xu noted that there no specific deadline was given in the official announcement but she speculated that the new transitional policies might remain relatively stable for now.