Friday 31 May 2019

Chinese e-tailer Club Factory sets up companies in India to sell goods to local customers

Chinese e-tailer Club Factory sets up companies in India to sell goods to local customers
Club Factory, a Chinese fashion and lifestyle e-tailer, has set up companies in Indiato import goods and sell them to local customers.

This follows a government move to crack down on Chinese e-commerce companies suspected of evading customs duties by sending goods to India masquerading as “gifts” of low value.

The entities — Globemax Technology India and Globemax Commerce India — were incorporated in September last year, regulatory filings show, around the time when Mumbai Customs started scrutinising large volumes of shipments from Chinese e-tailers.

Globemax Technology and Globemax Commerce list a certain Yun Lou as one of their directors, while their India contact person is listed as Ashwin Rastogi, who heads strategy for Club Factory here.

Vincent Yun Lou is the founder and CEO of Club Factory, and he is also listed as an additional director of Shiningkart Ecommerce, which was incorporated in April 2017.

“Since we began looking at gifts and samples, and direct imports by individuals from e-commerce websites abroad, international e-commerce sites wanted to circumvent it by showing imports by Indian entities from abroad,” said a senior official at the Mumbai courier terminal, who did not wish to be quoted by name.

A Club Factory spokesperson said the company does not comment on “rumours and false information”. The company’s “business in India complies with local regulations” and it has “strict measures in place to take action against sellers who might violate any local policy,” the spokesperson said.

Customs officials and industry sources said Club Factory was one of the few Chinese e-commerce firms to set up India entities to collate orders from customers and act as importers of goods from Chinese sellers.

“Companies such as Globemax are not bringing in goods as gifts and samples, they’re coming in as low-value consignments,” the customs official added.

India exempts items of up to Rs 5,000 from all taxes, to allow non-resident Indians (NRIs) to send gifts to their families back home. 

The Mumbai courier port blocked shipments through this channel starting November last year, but other ports in India continue to permit such parcels.

ET reported in April that courier shipments to Mumbai airport halved after authorities cracked down on Chinese e-commerce shipments.

Club Factory’s sales dropped by almost 70% after the Mumbai courier terminal blocked entry of parcels as “gifts and samples” as well as direct imports by individuals from e-commerce websites abroad, industry sources told ET. 

Monthly traffic to the website fell to a little more than 10 million in February, from 25 million in December, according to web traffic statistics from Similarweb.

Nearly 80% of the visitors to its website during May were from India, with the firm’s home country China contributing just 1.7% to its overall traffic.

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