PARADISE FOR IMPORTS

By Ji Jing

A large warehouse stocked with import- ed products， including baby formula， diapers， cereal and healthcare products， sits in the Lianglu-Cuntan Free Trade Port Area （FTPA） of west Chinas Chongqing Municipality. The warehouse provides services for major cross-border e-commerce platforms such as Tmall.com， Vip.com and Xiaohongshu.com.

“The design capacity of the warehouse is 2.5 million items but now it holds 3.5 million items because major e-commerce platforms are bracing themselves for the upcoming November 11 shopping festival，” said Zhuang Ting， General Manager of the Chongqing Gangteng Supply-Chain Management Co. Ltd.， in an interview with Beijing Review， a month ahead of the festival. The event was launched by ecommerce giant Alibaba in 2009 and has since grown into the biggest shopping day on Earth.

The busy warehouse exemplifies how cross-border e-commerce has thrived in the FTPA in the past few years and Zhuang has witnessed a dramatic transformation as a result.

A booming sector

A Chongqing native， the 31-year-old started working at the FTPA， which is part of the China （Chongqing） Pilot Free Trade Zone， in 2011 after resigning from an IT company.“At the time， the cross-border trade in the zone involved only red wine，” Zhuang recalled.

Back then， cross-border e-commerce platforms were rare in China and in order to buy products from abroad， many resorted to daigou， shopping agents who bought products overseas and sold them to domestic consumers. However， the practice was problematic since taxes were often evaded and fake and shoddy products were prevalent.

To solve the problem， the Ministry of Commerce and the General Administration of Customs selected five trial cities for cross-border e-commerce in 2012， namely Chongqing， Ningbo and Hangzhou in east Chinas Zhejiang Province， Zhengzhou in central Chinas Henan Province and Shanghai.

Since the Lianglu-Cuntan FTPA was an opening-up pioneer in Chongqing， the Chongqing FTPA Development and Management Group wanted to seize the opportunity to test the new business model， commissioning Zhuang to set up a cross-border e-commerce platform in 2013.

Zhuang established Igetmall.net with a colleague in June 2014. The platform made only 30，000 yuan （$4，300） in its first month， but as its popularity grew among locals， its revenue increased to several hundred million yuan by its fifth month.

The FTPA then set up the Chongqing Gangteng Supply-Chain Management Co. Ltd. in order to satisfy the platforms demand for warehouse space.

As major e-commerce platforms in China started to delve into the cross-border e-commerce sector in 2015， they found themselves in short supply of warehouse space and sought cooperation with the management company.

Now， the number of orders the company processes per year has almost doubled year on year since 2015， from 710，000 to an estimated 5 million this year， and the warehousing area of the company increased from 15，000 to 75，000 square meters.

This company is just one example of the thriving cross-border e-commerce trade in the area. Currently the FTPA has attracted over 30 platforms and the transaction volume of cross-border e-commerce in the area reached 1.9 billion yuan （$285 million） in the first nine months of 2018， according to statistics from the Chongqing FTPA Development and Management Group.

In January 2016， Vip.com opened a warehouse in the area which processed over 1.85 million orders in 2017， increasing by 480 percent compared to the previous year. Cainiao Networks， the logistics arm of the Alibaba Group， is the largest crossborder e-commerce platform in the FTPA， with orders that increased more than four times in 2017 compared to 2016.

Currently， Cainiao Networks is building a 60，000-square-meter warehouse in the area and Zhuangs company will run the warehouse.

“Compared to traditional modes of trade， now customers can receive the imported products they buy online just a few days after they place their orders thanks to the warehousing function of free trade port areas，” said Cao Lingyi who is in charge of cross-border e-commerce at the LiangluCuntan FTPA.

In addition to cross-border e-commerce， the area set up a center for the exhibition and trading of imported products in 2014. The center expanded to 47，000 square meters a year later.

The FTPA has special advantages for developing bonded goods exhibitions and trading since it is only 10 km from downtown Chongqing， making it convenient for local residents to shop there. As of the end of 2017， the center had attracted over 50 vendors from more than 40 countries and regions， selling products ranging from food to clothing and handbags.

Liu Xiaomin， who is in charge of the Russian pavilion， said the products sold in the center are imported directly from abroad to the FTPA， which saves costs and reduces the price of the goods by 10 to 20 percent. In addition， all the products have already gone through customs and duties have already been paid； thus consumers can take them home immediately after buying them.

More advantages

Established in 2008， the Chongqing FTPA is the first in the hinterland areas and the first encompassing both an air and river port. Currently there are 14 FTPAs in China.

The area boasts convenient transportation networks as Chongqing is the largest river port in the hinterland areas and an air transportation hub in west China. Chongqing is also connected to Europe by the China-Europe freight train—which opened in 2011—going from Chongqing to Germanys Duisburg.

Zhuang said most products from Europe are transported to Chongqing on the China-Europe cargo freight， while those from the U.S. and Australia are mainly transported by sea to Shanghai and then to Chongqing by ship on the Yangtze River. Some products from Australia are transported to Hong Kong by sea and to Chongqing by truck.

In addition to convenient transportation， the FTPAs customs clearance facilitation measures have helped boost cross-border e-commerce. A 24-hour， seven-days-a-week customs clearance system was established last year to improve efficiency.

Zhuang said he believes hinterland areas like Chongqing have great potential for opening up.