Asia: The physical side of ecommerce

Ecommerce in Asia is booming. China alone is forecast to grow to an over US $350 billion industry by 2016. While some markets may already be considered mature (Australia, for example), the growth of internet connectivity and consumer purchasing power cannot be ignored by either small-to-medium enterprises or multi-national corporations looking to reach new consumers.

Ultimately, e-commerce is likely to continue growing because it can more easily provide a wide variety of products at  lower prices and greater flexibility to customers, which in turn leads to an enhanced shopping experience.

Before a company is online and making sales, it is faced with the daunting task of setting up its web platform and deciding whether it should be hosted locally or globally. The results of this decision lead to different customs duty and indirect tax implications.

This article highlights three potential distribution models that we see emerging for ecommerce transactions in relation to delivery of physical products:

  • Sales through a global website / direct shipment
  • Sales through a global website / shipment via a bonded zone
  • Sales through a local website / shipped and imported by a legal resident entity

While the article is written with the Asian ecommerce market in mind it is a recommended reading for any company thinking of starting an online shop or expanding its ecommerce business across borders. You can find the full text of the article here.