Making the Most of Your China Cross-Border Compliance Techniques

Date: September 21, 2017

Topics: Legal / Regulatory, Logistics

A contribution from Luisella Basso, Vice President, Compliance, Pitney Bowes – part 1 of 3.

How would a 40% profit increase affect your business? That number may seem unattainable but businesses that ship and sell cross-border have reported 40% more in profits over the past four years. And that number is expected to climb. In the US, about 45% of consumers have shopped cross-border in the last year.  Globally the number jumps to 66% as a majority of shoppers enjoy shopping around the world.* (2016 Pitney Bowes Global Shopping Study)

But what exactly counts as a cross-border transaction? And, what does cross-border entail? Simply put, a cross-border sale requires understanding and managing your transaction as it moves from one country to another. A cross-border sale can fall into a variety of categories, B2B, B2C, or even C2C. If you live in the US and buy a pair of shoes from Italy, that’s obviously a cross-border sale; but ordering supplies from an international distributor or supplier also falls under the umbrella of cross-border trade.

As you can imagine, shipping a product from one country to another gets extremely complex extremely quickly. Potential pitfalls can arise at every corner. But there are opportunities your business can capitalize on to make your cross-border experience move a little more smoothly.

Explore Simplified Entry Options in the Receiving Country

Simplified entry provides you with a quicker process for clearances, or uniform taxes for shipments under a certain value threshold.  For example, if you are shipping to Mexico, check to see if your business qualifies for simplified entry as it can  expedite your process.

However, there’s a lot of complexity when it comes to shipping certain products like footwear or cosmetics into Mexico. Ship the wrong product, or too many of a product, and your simplified entry could turn into a traditional entry. Knowing your value and quantity thresholds provides an overall quick customs process — which leads to a better overall customer experience.

Investigate Pilot Gateway Opportunities

What if you could end up with a lower tax rate just by shipping your product into a different location in your country of destination? As an example, with changes that took place this year in China, you now have the option of using an “ecommerce clearance channel.”  While this may not apply to all countries, look for similar practices in your destination region. You may find that there are extra savings that you can pass on to your clients.

Look into Duty-Free Returns

Simple returns are crucial to any ecommerce business as they help with conversion and easing the minds of customers. In the 2016 Pitney Bowes Global Shopping Study, 40% of surveyed consumers said return policy concerns discourage them from making a cross-border purchase.  A clear return policy can increase customer satisfaction and encourage repeat visits.

But returns from another country may mean another round of exportation and importation, adding costs to your bottom line. There’s a simpler way to set up returns under the 2015 Trade Enforcement and Facilitation Act. If you can prove the item is being returned to the US with no change in value, you may be able to qualify for duty-free clearance.

Product exceptions do apply and you’ll need to take meticulous care to ensure all your data is accurate to take advantage of these new changes – but these savings on returns could be too good to pass up.

Know What Questions to Ask

Taking the time to learn about what you don’t know is a crucial part of making your cross-border sales endeavor profitable.  Look for resources that help you understand regulations and requirements of the country you’re shipping to. Get to know the market of the country you’re planning on entering, along with any barriers to entry, and duty and tax regimes. And make sure you build these charges into your own total costs.

Knowing is half the battle and, of course, connecting with the right partner to support you in your research, landed cost calculations, and additional technology you may need helps expedite the effort.

Thanks to our partner, Pitney Bowes

Luisella mentions: Consolidated Screening List API

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