The first pilot zone was established in Alibaba’s backyard in Hangzhou. Since then, 12 more have been established. Businesses in these zones enjoy lower tax rates than other imports, which are subject to an import, ecommerce and value added tax. The customs approval process is also expedited for these goods.
Companies selling via these zones can choose to ship items directly from their home warehouses to customers within China, a process that could take anywhere from 7 to 30 days. Or these merchants can set up a warehouse in the zone from which they can store and distribute products as they are sold, in which case, consumers receive their orders in approximately 5 days.
Through the agreement, the parties will work together on training talent on cross-border trade, working with the local government, and developing direct to consumer sales and logistics.
Ebay’s zone is in Ningbo in Zhejiang province. The city totaled $3.9 billion in cross-border ecommerce in 2016.
In 2014, cross-border trade represented 20 percent of Ebay’s total business. The online auction site has focused on growing this segment with the development of tools like its machine translation technology, which facilitates sales by breaking down language barriers.