The municipal government in China’s southern city of Shenzhen issued a notice on August 5 that it would provide preferential subsidies worth 2 million yuan ($309,000) for individual business ventures to help cross-border e-commerce enterprises cope with Amazon’s recent suspending of accounts.
Enterprises applying for subsidies must have gone live on the platform before January 1, 2019, and ensure sound and ongoing operations. Furthermore, the average monthly sales of the firms throughout the past year (July 2020 – June 2021) must be over $300,000. Finally, enterprises should directly or indirectly hold no less than 50% of the shares of the domain name ownership of the independent sites. The notice shows that affected businesses can apply for the subsidies between August 13 and August 25.
Amazon’s blocking of merchant accounts on its platform has continued since the end of April. A large number of Chinese sellers have been affected, with leading merchants such as Patozon, Aukey, SH-ABC and Youkeshu Tech bearing the brunt. In addition, a large amount of links to products have been removed. Industry insiders expect that two to three hundred thousand sellers on the platform will be subjected to review.
According to the Shenzhen Cross-Border E-Commerce Association (SZCBEA), in the past two months, more than 50,000 Chinese stores have been closed on the Amazon platform, which has led to estimated losses over 100 billion yuan. Shenzhen, the “cross-border e-commerce capital of China,” has been hit the hardest. According to data released by Marketplace Pulse, nearly 32% of Chinese sellers on Amazon come from Shenzhen.
Wangxin, chairwoman of SZCBEA, said that most of the stores have been closed due to their violation of certain platform rules. The major cause lies in setting small cards for praises and “click farming.” She suggested that Chinese sellers should accelerate the building of sites in an all-round way. On the one hand, they can consider building their own independent sites, and on the other hand, they can open stores on overseas platforms such as AliExpress, WISH, eBay and Lazada.