E-commerce and customs control in China
Article Summary
Hu, Tan, and Heijmann (2016) begins the paper by recognizing the significant progress that has occurred in e-commerce and customs control in China (p. 65). The country has implemented an integrated supply chain methodology to secure and facilitate international trade and ensure legitimate goods. Other benefits derived from this system include smooth transactions, financial services, and logistics. However, the endeavor is not without challenges that need overcome is the integrated supply system is to be a success.
China Customs has to deal with five e-commerce challenges. The first challenge is the lack of resources to control the expanding small and medium enterprises (SMEs) that lack the authorized economic operator status. Over the past decade, the number of traders has grown exponentially to reach over one million from just 100,000, and the number is anticipated to reach 5 million over the next five years. Another challenge is the lack of professional expertise and knowledge by these SMEs players about customs procedures and regulations, which leads to low compliance, and thus, high traders’ lead time and supply-chain costs. Another challenge is the high number of these players who submit false tax refund claims for non-existent goods, which is a fraud that harms the entire economy (Hu et al., 2016, p. 66). The final two challenges are concerning reliance on imports and imports declaration data that is often inaccurate, and fragmentation of information within the supply chain, which requires additional resources to harness and analyze.
After identifying the challenges, the authors proceed to propose a set of solutions that the country could adopt. By leveraging the data pipeline, the country would be able to help traders with their statutory obligations, thus streamlining e-commerce customs control. The approach would be underpinned by the principles of shared responsibilities, information integration, early risk identification and control, and compliance (Hu et al., 2016, p. 68).
Reference
Hu, R., Tan, Y, H., & Heijmann, F. (2016). A new approach to e-commerce customs control in China: integrated supply chain – a practical application towards large-scale data pipeline implementation. World Customs Journal, 10(2), 65-82.