NZ officials keep a watching brief on China e-commerce rules

The daigou, or unoffical trade channel, has been an important platform for NZ infant formula makers. Photo / File

New Zealand trade officials are keeping a close eye changes to rules that cover cross-border e-commerce (CBEC) trade into China, which has become an important plank for number of companies doing business there.

The new law, passed on August 31, creates a broad framework for e-commerce covering the domestic and cross-border trade for imports and exports.

The grace period for existing regulation runs out on December 31. The new rules were expected to become effective on January 1, although that could be pushed out to April.

The changes arises from concern from China's legislators about increasing complaints about CBEC foods, infant formulas, diapers, healthcare products and cosmetics that are not under the supervision of the authorities.

New Zealand officials are largely in the dark as to any possible ramifications for New Zealand companies.

"It is important to stress that the details of implementation and the ensuing full implications for New Zealand companies have not yet been released," a spokesman for New Zealand Trade and Enterprise (NZTE) said.

"NZTE will continue to monitor the changes and we will seek a short interpretation of the law from a regulatory specialist," he said.

"Specifically, we will seek to understand what it will mean for New Zealand companies using cross border e-commerce and what they should do to keep abreast of news, but again we have to stress that not all the practical detail is out there yet," he said.

Exports into China through the unofficial "daigou" channels or larger e-commerce platforms have formed an important pathway for infant formula and manuka honey exporters.

Manuka honey exporters should not be affected as it is treated as a food by the regulators.

NZX-listed Comvita chief executive Scott Coulter said there was no direct or indirect impact on Comvita from the rule change.

Manuka Health chief executive John Kippenberger said the authorities had been signalling regulatory changes for some time.

"From what we understand, it means that products going into China through the e-commerce cross border channels will be subject to the same regulations and processes that apply to products that go directly into the national China market," he said.

Scott Coulter, chief executive of Comvita. Photo / Greg Bowker

There are different forms of e-commerce, such as the daigou trade, and various larger-scale e-commerce platforms.

"The question that will be answered in due course is whether the new regulatory environment or framework is going to apply to those channels, or will daigou continue to trade outside this new regulation," he said.

The cross border e-market channels were an important for a lot of different companies.

"A lot of New Zealand companies are doing very well and are growing in China, but it's a market that does have its complexities," Kippenberger said.

Infant formula maker Synlait Milk, in its latest annual report, said in the case of Akara and Pure Canterbury brands, its applications for brand registration were with China's State Administration for Market Regulation.

A lot of New Zealand companies are doing very well and are growing in China, but it's a market that does have its complexities.

Synlait's team was working with regulator on its various queries.

"We anticipate these will be granted in due course and will sit alongside the registration we were issued for a2 Milk Co's infant formula in September 2017," the company said.

In a conference call following company's last result this month, Synlait Milk's chief financial officer Nigel Greenwood said the regulatory environment in China continued to tighten.

"But we consider that as being more beneficial to Synlait than not, because of the people that we partner with and the quality of our facilities," he said.

E-commerce sales in general have boomed in China - accounting for 23.8 per cent of all retail sales there in 2017. E-commerce sales are projected to reach 33.6 per cent by 2019.

Draft e-commerce law was first reviewed in December 2016. They were deliberated on last October and in June this year by the National People's Congress Standing Committee.