This year’s government work report stated: “Promote the development of cross-border e-commerce, improve the cross-border delivery logistics system and strengthen the construction of overseas warehouses.” This marks the 12th consecutive year that cross-border e-commerce has been mentioned in the government work report, highlighting China’s commitment to advancing the sector. According to data from the General Administration of Customs, China’s cross-border e-commerce imports and exports reached RMB2.63 trillion in 2024, representing a year-on-year increase of 10.8% and demonstrating strong resilience in development.
Senior Partner
Tahota Law Firm
Tel: +86 159 2855 0579
E-mail: zhiyuan.xu@tahota.com
However, significant changes in the international trade environment are presenting new challenges for the industry. On 2 May 2025, the US will terminate the tax exemption for parcels valued under USD800, imposing a 54% tariff or a fixed tariff of USD100 per parcel. On 21 May 2025, the European Union plans to introduce a EUR2 entry processing fee for each cross-border e-commerce parcel sent directly by mail and a EUR0.50 fee per parcel for goods first entering an EU warehouse before secondary distribution. This is expected to be implemented from 2028 (the plan is currently in draft form). These two policies target low-value goods and logistics models, marking a shift in regulatory focus in the US and EU from “broad-based access” to “refined governance” of cross-border e-commerce.
Against this backdrop, cross-border e-commerce export companies planning an IPO face a more complex overseas legal environment, leading to heightened compliance requirements from IPO regulators. This article analyses recent IPO review inquiries for cross-border e-commerce export companies and summarises the three core issues of regulatory concern.
Store compliance
The multi-store model and third-party authorisation model are central issues for regulators. To circumvent platform rules limiting one store per entity, many companies either register multiple entities, each operating a store, or have a single entity operate multiple stores, thus implementing a “multi-store model”. While this can increase market coverage, it also carries significant compliance risks. For example, platforms such as Amazon and eBay explicitly state on their official websites that a single entity may only operate one store. If a company registers stores under the names of employees or relatives, these may be deemed “related accounts”, triggering the risk of store closures. Regulators focus on the store operations of cross-border e-commerce export companies planning to list (issuers); the reasons for operating multiple stores and whether this violates platform rules; whether issuers have experienced store closures, account suspensions or other irregularities; and whether they have been penalised by the above-mentioned platforms.
The third-party authorisation model involves the company not having equity control over the third party, but instead using contractual control mechanisms similar to the VIE structure, signing authorisation or lease agreements with third-party companies to control the operation of third-party stores. Current regulatory attitudes do not recognise this business model and issuers are generally required to rectify such arrangements within a specified period, either by eliminating these third-party stores or bringing them under the issuer’s direct control.
Export model
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Tahota Law Firm
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E-mail: yuying.liu@tahota.com
The General Administration of Customs has established differentiated regulatory codes based on the transaction method, background and characteristics of cross-border trade. Companies must select the appropriate customs declaration method according to their business model. For cross-border e-commerce exports, the six most commonly used regulatory methods are: general trade, market procurement trade, cross-border e-commerce direct mail export (postal parcel mode should be switched to direct mail and other modes), cross-border e-commerce bonded export, cross-border e-commerce B2B direct export, and cross-border e-commerce export to overseas warehouses. The chosen export declaration method affects the submission of export documents, foreign exchange settlement and tax rebates. Failure to accurately declare information related to exported products or services may result in penalties and corresponding liabilities.
Regulators focus on the main customs declaration and destination import clearance models used by issuers; the rationale for self-declaration or delegated declaration and the reasonableness of any discrepancies; whether the issuer’s export model aligns with the substance of its transactions; the issuer’s import and export declaration responsibilities and legal liabilities for violations, such as whether there are goods or logistics deliveries that have not undergone customs procedures.
Data compliance
E-commerce companies inevitably collect consumers’ personal information (such as names, addresses and transaction records) and platform operation data (such as sales volumes and user profiles) during their operations. Failure to properly protect this data may result in data breaches and privacy violations. The PRC Data Security Law and Cybersecurity Law require companies to collect data only within the necessary scope and prohibit excessive use. Cross-border e-commerce companies must comply not only with the PRC Data Security Law and Cybersecurity Law, but also with information protection, data security and cybersecurity requirements in overseas jurisdictions.
Regulators focus on whether issuers collect data in a lawful and compliant manner and have obtained the necessary authorisations; whether the use and purpose of collected data are lawful and compliant; whether issuers have engaged in illegal or improper use of data for profit; whether there is excessive use of collected data; whether issuers have established systems to protect consumers’ personal information and ensure data security; whether there have been disputes, controversies or administrative penalties related to data security; and whether the issuer’s data processing activities comply with information protection, data security and cybersecurity requirements in overseas jurisdictions.
In summary, as regulatory systems in the US and EU undergo rapid transformation and China’s cross-border e-commerce sector continues to grow rapidly, companies should establish systematic compliance management frameworks, particularly mechanisms to address regulatory inquiries during the listing process. This will help effectively mitigate regulatory risks during the IPO process, build a legal compliance firewall for global market expansion and promote the stable and sustainable global development of the cross-border e-commerce industry.
Xu Zhiyuan is a senior partner at Tahota Law Firm. He can be contacted by phone at +86 159 2855 0579 or by email at zhiyuan.xu@tahota.com
Liu Yuying is an associate at Tahota Law Firm. She can be contacted by phone at +86 155 2113 8890 or by email at yuying.liu@tahota.com
