Asian online stores have a significant competitive advantage at the expense of product safety

Online stores outside of the EU gain an unfair and significant competitive edge compared to Finnish stores as a result of lower postage, looser taxation and customs treatment as well as the lack of consumer protection and producer responsibility. In addition, they are passengers in terms of product safety legislation.

“Currently, Chinese online stores commonly sell to Finnish consumers products that do not meet the product safety requirements laid down by the EU,” says the Finnish Commerce Federation’s Chief Policy Adviser Janne Koivisto.

In accordance with the General Product Safety Directive, producers established in the EU, are not allowed to place on the market products that are not safe. Consumer safety legislation requires consumer goods not to pose a serious risk to the health and property of consumers. The liabilities of manufacturer, importer and distributor in terms of ensuring conformity are laid down in legislation.

“Product safety and product conformity are monitored by authorities. In Finland, actors such as the Customs and Finnish Safety and Chemicals Agency (Tukes) are practically powerless in terms of online trade conducted outside of the EU. Legislation intended for the era of brick-and-mortar stores does not recognize in cross-border e-commerce the responsible party on which requirements or coercive measures could be imposed by authorities as there is typically no manufacturer, importer or distributor based in the EU,” says Koivisto.

The Finnish Commerce Federation insists that EU regulation of product safety is applied to consumer trade conducted outside of the EU and that market surveillance should be strengthened.

The cost advantage of Asian e-commerce is considerable

If marketing platforms, such as Wish, Aliexpress or Amazon who bring cheap Chinese goods to Europe would be responsible for the goods they supply and were required to adhere to the same safety and quality standards laid down by the EU as other operators, the difference in costs compared to Finnish stores, for example, would diminish.

We asked the members of the Finnish Commerce Federation to estimate how much less, in percentage points, the purchase price of a product manufactured in China or elsewhere in Asia would be for the company if the fulfilment of European safety and quality standards, such as those related to materials, manufacturing and consumer safety, was not required and monitored. Furthermore, a company may exercise additional self-monitoring and their own standards that are stricter than those laid down by the EU.

“Based on the replies, the cost advantage related to product safety alone for Asian online trade is tens of percentage points,” says Jaana Kurjenoja, Chief Economist of the Finnish Commerce Federation.

On top of the purchase price, European companies pay customs duties for consignments where value exceeds EUR 150. Individual shipments to Finnish customers sent by Asian online stores rarely exceed the threshold of EUR 150 set for duty-free consignments.

Finns trust domestic commerce and consumer authorities

Finnish consumers are primarily accustomed to well-functioning commerce, where consumers’ rights are respected as well as to consumer authorities safeguarding the rights of consumers.

According to Consumer Conditions Scoreboard* published by the European Commission, Finns’ trust in domestic commerce and authorities is one of the highest in the EU. According to consumers, Finland ranks second in the effortlessness of resolving possible disputes related to domestic commerce.

“Could habits and trust in trade and authorities acting accordingly bring about excessive trust in foreign distance selling and online trade as well as consumer safety and turn the consumer into a careless online buyer,” Kurjenoja wonders.

Nearly three out of five Finnish consumers make their purchase decision first and foremost based on price. The more active the e-consumer, the more significant the price. The Finnish Commerce Federation is currently working on a survey on the responsibility of digital buyers, which reveals that those who buy frequently online are also more frequently careless in their attitudes towards product safety.

The majority of them also prefer purchasing from European stores rather than Asian stores because of product safety. However, more than a third of those buying frequently online say they do not pay much attention to product safety.

“Perhaps the recent tragicomic turns regarding the quality of Chinese respiratory and other protective equipment alert us to appreciate European product safety as well as our stores who adhere to regulations,” says Kurjenoja.

For more details, please contact:

Janne Koivisto, Chief Specialist, Finnish Commerce Federation, tel. +358 (0)50 321 3639, janne.koivisto@kauppa.fi

Jaana Kurjenoja, Chief Economist, Finnish Commerce Federation, tel. +358 (0)40 820 5378, jaana.kurjenoja@kauppa.fi

*Consumer Conditions Scoreboard, Consumers at home in the Single Market; European Commission, 2019.