Chinas 1039 Policy Eases Crossborder Ecommerce Challenges

This article reveals four major challenges faced by cross-border e-commerce sellers when implementing the 1039 policy: individual business registration and filing, lack of cooperation from logistics providers/freight forwarders, difficulties in activating entrusted agency export agreements, and bank account restrictions. It provides corresponding solutions to help sellers avoid pitfalls and successfully enjoy the policy dividends. By understanding these challenges and implementing the proposed solutions, sellers can navigate the complexities of the 1039 policy and optimize their cross-border operations.

China's Market Procurement Trade Policy (Policy 1039) was designed to solve the invoice-free procurement challenges faced by cross-border e-commerce sellers. While promising in theory, many merchants report significant implementation hurdles that make the policy difficult to utilize effectively.

Policy 1039: A Solution That Falls Short in Practice?

The policy aims to simplify export procedures for small-scale cross-border transactions by allowing market purchases without value-added tax invoices. However, operational complexities have created barriers that prevent many businesses from benefiting.

Challenge 1: Business Registration and Filing Process

The initial requirement to register as an individual business operator and complete Policy 1039 filing appears straightforward but contains hidden complexities:

Requirements vary significantly across different pilot zones
Multiple platforms must be coordinated (procurement information systems, customs clearance systems, logistics)
Service providers often lack comprehensive knowledge of the entire process

Solution: Partner with experienced service providers who understand both the policy and local implementation details across different regions.

Challenge 2: Logistics Provider Cooperation

Finding logistics partners capable of handling Policy 1039 procedures proves exceptionally difficult:

Many freight forwarders have limited understanding of the policy
Inefficient routing decisions create unnecessary costs and delays
The industry lacks professionals with practical Policy 1039 experience

Solution: Select logistics providers with proven Policy 1039 experience and verify their understanding before engagement.

Challenge 3: Export Authorization Activation

The required entrustment agreement for export authorization presents additional obstacles:

Activation through the Single Window system requires specific qualifications
Newly established companies often lack necessary credentials
Alternative activation channels increase time and cost burdens

Solution: Work with qualified agencies or industry associations that can facilitate the activation process.

Challenge 4: Banking Restrictions

Unexpected banking requirements create further complications:

Specific bank requirements vary by pilot zone (e.g., Chouzhou Bank in Yiwu)
Certain branches in Shenzhen hold exclusive authorization
Additional permissions required for account operations create barriers for new businesses

Solution: Research local banking requirements in advance and explore alternative authorization channels when necessary.

Conclusion: Navigating Policy 1039 Successfully

While implementing Policy 1039 presents multiple challenges, thorough preparation and strategic partnerships can help cross-border e-commerce sellers overcome these obstacles. Understanding the policy details and working with knowledgeable service providers remains key to accessing the benefits of this trade facilitation measure.