Why 'cheap' is actually 'cheap'?

“It is the saying that always go for the products that are "cheap and best" but what if the cheap is cheating the country, will it still be best??”

 

 Claims which are very common for Chinese apps like 

·        Club Factory, Shein, Ali Express- Chinese e-commerce always evade from custom duties, GST.

·        They never played fair in the market

 

But

How can not paying custom duties affect MRP?

How they managed to evade whereas other apps like Flipkart, Amazon, shop clues cannot?

Is it so easy to escape?

What were the tricky methods they used to be on top?

 

What is Custom duty?

The word which has created so much hustle, after the expose of creepy tricks done by Shein, Club Factory, and many Chinese e-commerce. What is it? Customs duty refers to the tax imposed on goods when they are transported across international borders. In simple terms, it is the tax that is levied on the import and export of goods.

 

Flashback

Let’s go back to the time when one query led to another and the outcome raised a few eyebrows.

Scores of consumers claimed they did not receive invoices for deliveries from Chinese e-commerce platforms. 

According to the report of Localcircles’ the key findings were: -

 

-Another point to be noted was that e-commerce companies pack and ship items as gifts to individual customers, thus avoiding the duty. 

-Secondly, as a bulk purchaser, the company could mark down the value of goods sometimes by up to 300-400% - to avoid paying the full duty.

Shein and other retailers also passed off some orders as B2B orders, even though they are meant for individual customers, thus avoiding the 42.08% custom duty on imports.

 

 

 

Things could be different 

Chinese e-commerce apps should have registered entities in India and they should had transacted and made sales through that accordingly.

• Aliexpress, on the other hand, doesn’t have an Indian entity. That is why Ali express never got past 5000 orders a day (in India). But Shein and Club factory solved the pain point by importing items using a person’s name (as a gift) and then delivering through a merchant on record thus minimizing the custom duty on the name of ‘gifts’.

• Another point which bothers here is ‘Why products shipped as ‘gifts’ parcel through China post? 

Indian government doesn’t slap import duty on gifts up to Rs 5000. The provision within the place to let NRIs (Non – Resident Indians) send goods and chattels back home without the burden of the tax.

This opened the pathway for China to establish its territory free of duties in India. These loopholes came to concern after several reports registered by concerned authorities and the government took initiative to block these pathways and prohibited the duty-free import of gifts and samples. 

But there are still some loopholes that are in existence and another foreign e-commerce will take advantage of our weak laws. We need some strict laws for trade to strengthen not just the nation but our credence in the nation’s law.

 

Last but not least, in the search for “cheap and best” don’t forget to add “honesty” in your bucket list.