Successfully Selling to China: What Matters in E-Commerce

A European company wants to test the Chinese market online without establishing a local subsidiary. Cross-border e-commerce (CBEC) appears attractive because it offers lower entry barriers, a faster market test, and less administrative effort.

Before launching, however, several important questions arise. Can the product actually be imported through the CBEC channel? Is it included on the relevant positive list? Who will handle customs registration and act as the responsible party vis-à-vis Chinese customs authorities? Have product labels, descriptions, and documentation been adapted to Chinese requirements?

As a result, what initially seemed like a simple market entry quickly becomes a legal and compliance project.

The first step is selecting the appropriate market entry model: a local entity, a distributor, or cross-border e-commerce.

Establishing a local company, such as a WFOE (Wholly Foreign-Owned Enterprise), offers the highest level of control. Companies retain control over pricing, branding, customer relationships, and sales channels. However, this approach involves higher costs, longer preparation periods, and extensive compliance obligations.

Working with a local distributor can simplify market entry but often reduces control over pricing, branding, customer relationships, and customer data.

Cross-border e-commerce allows foreign companies to sell into China without establishing a local entity. Nevertheless, it remains subject to product category restrictions, transaction limits, platform requirements, and limitations regarding customer data access.

Market access is often determined long before the first product is sold. Products must be correctly classified and declared for import.

The HS Code is an international customs classification system that assigns products to specific categories. It determines not only applicable duties and taxes but also whether additional requirements such as registrations, certifications, or approvals apply. In many cases, a local agent is also required.

Product labelling is another important compliance requirement. Labels must contain mandatory Chinese-language information, including product names, model specifications, applicable standards, manufacturer and importer information, and relevant warnings. Errors can lead to customs delays, rejection of goods, or platform-related issues.

Legal responsibility does not end after importation. Within China’s e-commerce ecosystem, manufacturers, importers, sellers, platforms, and sometimes even influencers may face liability. Risks may arise from product safety defects, inaccurate product information, or delayed responses to customer complaints. Responsibilities should therefore be clearly allocated through contractual arrangements.

In China, platforms serve not only as sales channels but also as compliance gatekeepers. They review merchants, product information, trademark rights, return procedures, advertising claims, and customer reviews.

Violations often result not in immediate court proceedings but in reduced visibility, product suspensions, penalty points, or even account termination.

In addition, companies must comply with strict consumer protection and after-sales requirements. Legally compliant return and refund procedures, local return options, efficient reimbursement mechanisms, and Chinese-language customer support are essential. Deficiencies in these areas can negatively affect platform ratings, account performance, and brand reputation.

A trademark registered in Europe or another jurisdiction is not automatically protected in China. Trademark protection generally arises only through registration in China. Companies that delay registration risk conflicts with third parties and may face difficulties enforcing their rights on platforms or through customs protection measures.

Advertising and product claims should also not be copied from European marketing materials without review. Product descriptions must be accurate and complete. Exaggerated statements, absolute claims, or unauthorized health-related claims can create significant legal risks.

Furthermore, e-commerce operations generate large amounts of customer, payment, logistics, and support data. If such data is transferred to Europe or integrated into global systems, additional regulatory requirements may apply. Companies should therefore review their data flows before entering the Chinese market.

China’s e-commerce market offers significant opportunities, but success requires more than simply opening a storefront on a platform.

Companies should ensure that their distribution model, import structure, compliance framework, platform strategy, consumer protection processes, advertising practices, trademark protection, data governance, and tax considerations are aligned from the outset.

ECOVIS Heidelberg supports companies in assessing the legal and tax implications of entering the Chinese market, developing suitable distribution and contractual structures, and identifying compliance risks at an early stage. Together with our international network, we assist clients throughout their China business journey, from the initial structural decisions to ongoing legal support.