Russian e-commerce exports to China viable only via B2B, says expert

ST. PETERSBURG, June 4. /TASS/. Expanding Russian exports to China is only possible in a B2B format, President of the Association of Internet Trade Companies Artem Sokolov told TASS on the sidelines of the St. Petersburg International Economic Forum (SPIEF).

"Russia currently has significant potential in international e-commerce. However, to quickly enter foreign markets, B2C cross-border trade is typically used, which means sending goods directly to the buyer via parcel or express freight. This approach won’t work with China. <…> Developing exports to China is only possible through B2B channels," he said.

According to current Chinese legislation, all incoming goods since 2017 have been subject to a value-added tax (VAT) of 13%, as well as a consumption tax, the rate of which varies from 13% to 50% depending on the category of goods. For example, the consumption tax rate for household goods and furniture ranges from 13% to 20%; for clothing, footwear, sporting goods, and bedding it’s 20%; and for jewelry, cosmetics, and alcohol it’s 50%. All these product categories are produced in Russia.

There is a benefit for Chinese citizens that allows them to pay 70% of the amount of taxes due (VAT + consumption tax) if the purchase amount does not exceed 5,000 yuan and goods worth no more than 26,000 yuan were purchased during the year.

"Despite the current tax exemption, sending goods to China in a B2C format is not economically feasible as the total tax burden on each shipment of goods ranges from 26% to 63%, and from 18.2% to 44.1% when the tax exemption is applied," Sokolov said.

In this regard, B2C export of cross-border trade is developing more successfully in the EAEU and CIS space, he noted.

The development of digital infrastructure, logistics, and payment solutions creates additional opportunities for the growth of e-commerce between countries, the official stressed. The industry is addressing accelerating cross-border delivery, simplifying interactions with suppliers, and developing services for entrepreneurs working with international partners, he added. "Overall, we see great potential for further cooperation in the wholesale supply of Russian goods. E-commerce is becoming one of key tools for entrepreneurs to enter international markets, while the development of partnerships between Russia and China opens up additional opportunities for this," Sokolov concluded.

The St. Petersburg International Economic Forum is taking place on June 3-6. This year’s theme is "Pragmatic Dialogue: the Path to a Stable Future." The forum program is dedicated to shaping a new model of global development amid the ongoing transformation of the world economy.

The program includes the SME Forum, the Creative Industries Forum, the Day of the Future International Youth Economic Forum, and the Ensuring Drug Security Forum. As part of the cultural program, the Petersburg Seasons festival and the traditional SPIEF Sports Games will take place. This year, Russia’s national economic development institution VEB.RF is the title partner of SPIEF.

The Roscongress Foundation is the organizer of the St. Petersburg International Economic Forum. TASS is its official general information partner.