It's not Chinese marketplaces that will ruin us, but market imbalances.

Chinese marketplaces are killing Kazakhstan's SMEs-publications with such headlines have periodically appeared in local media over the past year. In Russian, by the way, too. What is behind the information attacks on Chinese platforms, with what results does e-commerce end the year in the country, and what problems should actually be solved? Read about this in today's TAJ.report analysis.

Save us from the demons?

Urgentlyprotectlocal businesses from the invasion of "Chinese" and other foreigners (Alibaba, AliExpress, Pinduoduo, Taobao, Amazon) asked this year through the Alliance of technology companies QazTech. Kazakh companies comply with standards, pay taxes and certify products, while foreign competitors often evade taxes, bypass certification and do not follow regulatory requirements. This creates unfair competition, jeopardizing not only the competitiveness, but also the very existence of domestic businesses, entrepreneurs said in the summer.

In the fall – another wave of reports: the expansion of Chinese marketplaces is killing local businesses. Trade occupies a special place in the country's economy: the market accounts for 18.2% of total GDP, which is the highest indicator compared to other sectors.

"Secondly, the trade sector is also a leader in terms of employment — more than 16.7% of all employed people in the country work in the sector.

Third, one of the most important tasks of Kazakhstan is to move away from the raw material economy in favor of the manufacturing industry. Under these conditions, if measures are not taken, small-scale industrial production, which is emerging in the Republic of Kazakhstan, will simply disappear.

Fourth, uncontrolled foreign marketplaces carry the highest possible risks in terms of low-quality and counterfeit products. As a result, this not onlyhitsthe pockets of the population, instead of pleasing with cheapness, but also contains a high risk to the quality of life and health," the analysts noted.

They added that this is a global problem. In October, the Indonesian government decided to remove Temu from app stores. This measure was intended to protect small businesses. Vietnam did not issue a business permit to Temu and the Chinese fast fashion store Shein,The Guardianreported.

Non-competitive position

Ivan Fedyakov, CEO of INFOLine Group of Companies, believes that criticism of foreign marketplaces is justified.

"Banal logic makes us think about the current system of market regulation. Goods imported to the Republic of Kazakhstan and to the territory of the EAEU from abroad in the amount of up to 200 euros per month per person are not subject to duties and additional payments. This puts goods in a non-competitive position on the domestic market, which are subject to all taxes – VAT, excise duties on customs clearance, and so on.

If the family has a father, mother and one child, then you can split up the purchases, and it's good to buy 600 euros. And for residents of the EAEU, this amount is decent, which fits 99% of purchases, if you count in pieces," the analyst says.

He states: against the background of weak protection of the domestic market, foreign experience shows tougher restrictions on cross-border purchases - in some European countries, the limit for duty-free purchases is limited to 30-50 euros per person per month.

"But let's be realistic: an amount of up to 30 euros is unlikely to imply the purchase of goods within the framework of cross-border trade. And 200 euros can meet a large number of needs in the EAEU space. Until recently, the ceiling for duty-free import to the EAEU was 1 thousand euros, and in 2020 it was changed as part of the Russian Federation's attempt to combat the departure of foreign companies from the Russian market, but all the EAEU countries fell under the distribution. And at the beginning of 2024, the amount was returned to the value of 200 euros.

We get a situation where goods on the domestic market are subject to all taxes and fees, but goods imported from abroad are not. Moreover, in some countries there are rules, for example, in China, where when exporting goods, you can reimburse part of taxes, the same VAT.

As a maximum, there is a system that subsidizes export activities - additional payments, surcharges for exporting their products," the expert continues.

Thus, the market has a strong imbalance primarily in terms of prices: in one case, goods are sold at significantly lower prices, in the other-at full prices.

"However, the problem has arisen earlier, and has worsened in the last 5-7 years. Previously, things were not so dramatic for two reasons: the penetration rate of e-commerce was much lower, it was calculated in units of percent, and the problem, from the point of view of retailers selling mainly through physical stores, could be ignored.

In some cases, the price difference was equalized by logistics costs: goods from China or another country were cheaper, but since you paid for transportation, that's what happened," Ivan Fedyakov notes.

Zoom effect

In 2023, the share of online sales in Kazakhstan showed 12% of retail trade turnover, this year-15%. In the categories of household appliances and electronics, clothing, the share of sales is already 30-40% of total sales.

"On the other hand, the cost of logistics is falling rapidly due to economies of scale, which provides a good value for cost optimization. If earlier 10-15% of the price of goods was included in transportation, now the cost of logistics can go into units of percent, because containers, trains, and planes began to run on schedule.

Projects appear, for example, a Chinese marketplace that sells goods worth up to 10 euros. This is the Fix price on the Internet. And the model turned out to be so popular that Amazon abruptly went under it, which makes a separate online store using the same model-selling very cheap goods," the analyst emphasizes.

 

Ivan Fedyakov - CEO of INFOLine Group of Companies

The situation with online platforms dictates the problems of unfair competition, and if we extrapolate the situation for the next 3-5 years, then, according to Fedyakov, we can obviously expect a consumer flow to online channels. At the same time, the prevailing factor will be the price, that is, they will vote with their wallet, sometimes sacrificing delivery times and service components.

"And products will be cheaper in Chinese online stores. In this regard, the market needs a balance, and it is fair that retailers urge the regulator to find a solution for this, so that the interests of all participants – consumers, businesses, and, by and large, the state-are taken into account. Obviously, the product that is not subject to any fees is unprofitable from the point of view of sales for the state - you can't get taxes. And the market becomes a place of gray supplies that pass by the budget of a particular country," the head of INFOLine emphasizes.

He said that in 2023, China took the first place in terms of trade turnover with Central Asian countries for the first time in history. This is not just about consumer goods, but about the entire product range, including energy products .
As for the leaders of e-commerce, due to the current
duty-free import, it is not yet possible to track statistics, the expert added.

The burden of the single market

The problem with changing the status quo is that the EAEU is burdened with a unified system of market regulation, especially with regard to foreign trade activities.

"Apparently, it is not in the interests of the Russian Federation to lower the bar for duty-free import for personal needs-in the Russian Federation itself, this will cause some discomfort among consumers. If in Kazakhstan there is a choice between buying branded clothing abroad or within the country, then in the Russian Federation there is often no such choice.

Therefore, it will be difficult to solve the problem in the near future, taking into account the interests of the Russian Federation, but it will definitely be necessary to solve it. And it is better to start discussing this issue right now than to postpone this moment," the source believes.

Earlier, in one of the materials one-com, market participants raised the issue of selling counterfeit products through marketplaces. According to Ivan Fedyakov, there is no more counterfeit content on Chinese platforms than on Russian or any other one.

"Sellers do not sell original products, but consumers can leave reviews on marketplaces. And this mechanism, which online platforms complain about, reveals two problems: comparing the average number of purchases on AliExpress or Amazon will show a preponderance towards the first, and, therefore, the feedback system here will be more relevant.

The second point is that sellers carry the most marginal product for resale in the EAEU. This is a flea market where dealers work on the principle of buy cheaper sell more expensive. And cheaper you will buy low-quality, not the best product. And the consumer goods that are traded, for example, in the Russian Federation, are incomparably worse than consumer goods sold in China," the analyst says.

In China, local brands have long existed, for example, Xiaomi, which has built its entire business on brand management. The company is not engaged in development and production, all their activities are the sale of a logo.

"In general, this is a separate story, a unique business model of Xiaomi,
which is similar in scale neither in the United States nor in Europe. This brand is a standard of quality, you can buy a Chinese smartphone and tablet, and then Xiaomi socks and underpants, and all these products are confirmed by the quality of this brand.

Returning to the topic of our conversation, I will note that the Chinese market often sells high-quality products that are focused on a long-term strategy - to interest the consumer. To do this, companies invest in the quality of production, marketing, and promotion. All this should not be done in the EAEU space. And on Chinese marketplaces in China, you can find much more high-quality local products than in the same Russian Federation, "says Fedyakov.

 

He was in China, where he liked the positioning in the minds of Chinese people that Chinese goods are about high quality. But, unfortunately, this did not go further, and the PRC is bringing products that are not in demand by the Chinese themselves. Consumer goods from China are often unknown to the Chinese themselves.

"The average salary level in China is higher than in the EAEU countries, which
allows you to choose goods not only at a low price, although they also like to save money. And in this sense, we see the dominance of Chinese nounames in our markets," says Fedyakov.

In China, many local brands have a well-developed marketing strategy and operate in the low, medium and high price segments.

"The Chinese auto industry is not only cheap cars, but also heavy luxury cars. So, there is a demand. This can be extrapolated to any market-electronics, clothing, especially since it is more difficult to occupy the luxury segment in the automotive industry than in clothing, where production technologies are simpler.

Chinese products are highly competitive, affordable due to economies of scale, and without a system of market alignment in the domestic niche, nothing good can happen. When you have subsidized imported goods and fully taxed goods inside the market, you should not be surprised that they will lose out due to skew.

And then the question arises: at the expense of what domestic goods can win competition from the Chinese. Probably, Kazakh horse meat will not be compared with anything, it will be a local brand. In general, that's all - there is nothing else competitive in comparison with the Chinese product. And it will not happen if the market is not leveled, "the analyst believes.

Vote with your wallet

Products from the Middle Kingdom are available, but not cheap, they correspond to the optimal price-quality ratio, which is why they are so actively occupying the world market.

"The same can be repeated about Russian goods that are delivered via Ozon, Wildberries to the EAEU countries - there is no protection of the internal market. Here, the competitiveness may be weaker in comparison with Chinese goods, if we do not talk about re-export from the Russian Federation.

But if we talk about goods that are produced in the Russian Federation, it is not limited in terms of imports to Kazakhstan - at the expense of the general trade market. On the one hand, this is like an opportunity for Kazakh goods to enter the Russian market, but the latter is 10 times larger than the Kazakh one, and any economic rule indicates a scale effect that gives a competitive advantage. Therefore, goods produced in the big market are more affordable than those produced in the small ones, "the source said.

In this regard, we also have problems with uncontrolled supplies from Russia to Kazakhstan, he noted. Over the past two years, the situation has also been significantly affected by strong fluctuations in national currencies.

"The National Bank of Kazakhstan tried to keep the tenge at the level below 500 tenge per dollar, and for two years it succeeded. At this point, the ruble went over 110 per dollar, and this made Ross goods significantly cheaper.

In 2023, the Russian ruble fell in price by 25%, and this year-by another 20%.

The Russian currency actively became cheaper, and the Kazakh tenge is firmly standing on the positions, and even with other things being equal, goods from Russia are now cheaper in the market of Kazakhstan due to exchange rate differences, which also entails the flow of buyers from marketplaces," Fedyakov describes the state of affairs.

 

Russian and international brands that are traded in both Russia and Kazakhstan are 30% more expensive in Kazakhstan than in Russia. And it is more interesting to buy a product on the Russian marketplace than on the Kazakh one.

"Look at how much Sony Play Station costs on the Russian platform-it's much cheaper. Why pay too much if you can buy it in Russia? And this also makes domestic trade unprofitable.

Those goods that should be officially regulated in terms of prices (this is not about the state, but about the marketing policy of the manufacturer, like Apple and Sony, which regulate prices), are unregulated due to the flow of products, and due to the weakening of the ruble for two years, this makes importing from the Russian Federation much more profitable than buying inside countries," the analyst says.

And, although the tenge weakened to 520-530 tenge, this is incomparably less than the ruble weakened against the dollar. Therefore, it is now profitable to flood the market of Kazakhstan with goods from Russia, which are sold here with a higher margin. And this is also a big problem for domestic retailers, especially those that have their own stores, staff, and rentals.

"Imagine what the costs of companies are, and the consumer at this time goes, selects an offline product and orders it online with a price difference of 30%. It is clear why many people will opt for marketplaces.

Therefore, we have what we have, and there are no further ways to level the market, except for state intervention. This is not a question of control, but of regulation. Because all control will end up being a nightmare for white businesses, controlling networks, not servers," Ivan Fedyakov is sure.

He notes that huge quantities of gray imports imported to Kazakhstan from China, Russia, and other countries are quite easy to control.

"In the near future, an initiative will be implemented to register smartphones of the Republic of Kazakhstan by code, as it already works in Uzbekistan and Turkey. Without such a regulatory system, the market will be flooded with tax-free goods. There should be a regulatory system that will allow us to work fairly.

The second, much more difficult decision, is associated with a reduction in the level of duty-free import for domestic use. The current criterion of 200 euros is too much. In fact, consumers choose to buy abroad, and the regulatory system should level the market. Or let's introduce 200 euros of duty-free purchases for the domestic market as well.

I am not in favor of raising taxes or raising duties on the import of goods. But level the market within the country, remove unfair competition, and make uniform rules for internal and external players. Otherwise, we will continue to ruin the domestic market," the expert stressed.

Find out who benefits from it

Chinese expert Adil Kaukenov sees theattackon Chinese marketplaces
as another attempt to get into the pocket of Kazakhstanis.

"Nothing that Kazakhstanis buy on marketplaces is produced in Kazakhstan, and there is not even a prospect of creating such production facilities. The stories that things from Chinese marketplaces are particularly dangerous are simply ridiculous, because all Kazakhstan's stores are packed with them. Especially in the cheap segment.

As a matter of fact, that's the problem. Over the long years of the "Old Kazakhstan", some elitists have developed a real nose for building a business in order to be a "gasket" between the manufacturer and the consumer. That is, not to produce anything useful, but to charge a fee simply for intermediary services. And this fee is usually fabulous. A margin of less than 100% is considered ridiculous.

Therefore, information processing is currently underway so that Kazakhstanis can not buy directly, but only through intermediaries, which will naturally be a monopolist with an insane mark- up," the expert believes.

This will boost inflation and hit the poorest segments of the population. Another point about taxes.

 

Adil Kaukenov-sinologist

"Nothing that Kazakhstanis buy on marketplaces is produced in Kazakhstan, and there is not even a prospect of creating such production facilities. The stories that things from Chinese marketplaces are particularly dangerous are simply ridiculous, because all Kazakhstan's stores are packed with them. Especially in the cheap segment.

As a matter of fact, that's the problem. Over the long years of the "Old Kazakhstan", some elitists have developed a real nose for building a business in order to be a "gasket" between the manufacturer and the consumer. That is, not to produce anything useful, but to charge a fee simply for intermediary services. And this fee is usually fabulous. A margin of less than 100% is considered ridiculous.

Therefore, information processing is currently underway so that Kazakhstanis can not buy directly, but only through intermediaries, which will naturally be a monopolist with an insane mark- up," the expert believes.

In search of balance

Timur Zharkenov, Deputy Chairman of the Board of the National Chamber of Entrepreneurs "Atameken", attributes criticism of Chinese marketplaces to changes in the trade market.

"They provide consumers with a wide range of choices, competitive prices and affordability, which increases competition. Some entrepreneurs may perceive this as a threat to their business. However, it is important to understand that this is not about killing a business, but about transforming the trading environment, where the one who adapts to new conditions wins, "the source said in an interview with TAJ.report.

The emphasis on Chinese platforms is due to their popularity among the population, he continues.

"Chinese marketplaces, such as AliExpress or Temu, have become a symbol of the globalization of e-commerce around the world. They offer products at low prices due to the volume of production, advanced logistics and technological solutions. They attract attention because they account for a significant share of cross-border trade in Kazakhstan, which attracts the attention of both consumers and businesses.

Discussion of this topic can be beneficial for various parties facing competition with Chinese marketplaces, including traditional traders.It is important for all of them to protect their positions in the market.

Government agencies may seek to strengthen regulation to protect the internal market or increase tax revenues. Our task is to find a balance between the interests of all parties," says Zharkenov.

Initiating such discussions can be a signal that local businesses are trying to protect themselves in this way, and the state in this case can strengthen the provision of tax revenues to the budget and simplify administration.

"We support these goals, but it is important not to forget about the rights and needs of individuals who, thanks to marketplaces, have access to goods at reasonable prices.

State control is important, but it must be balanced. We support the fight against counterfeiting, consumer protection, and tax transparency, but excessive regulatory tightening can limit individuals ' access to affordable goods, as well as generally hinder the development of e-commerce.
This may lead to a decrease in their purchasing activity, and in the current economic conditions, it may slow down the overall development of the economy, "said the deputy chairman of the National Chamber of Entrepreneurs"Atameken".

According to the Chamber's estimates, Chinese marketplaces account for about 30-40% of cross-border e-commerce in the country. However, the share of local platforms continues to grow thanks to technological solutions and logistics.
Zharkenov himself uses both local platforms and international ones, including Chinese marketplaces.

 

Timur Zharkenov-Deputy Chairman of the Board of NCE "Atameken"

"I would like to note that international platforms provide access to a larger selection of goods, which is especially important for households who are trying to save money. The quality in most cases meets expectations, especially if we are talking about trusted sellers.

Here it is important to understand that a consumer looking for a quality product can always find it both on foreign and international marketplaces, our consumer habits inevitably lead to an increase in the experience of purchasing goods online," the source says.

For the development of e-commerce in Kazakhstan, he considers it important to develop local platforms and encourage businesses to move online, strengthen logistics infrastructure to reduce delivery times, and increase the digital literacy of entrepreneurs so that they can compete with cross-border players.

"Now the e-commerce market is regulated by the norms of tax, customs and consumer legislation. The main problems are well-known and include in some cases: counterfeit goods, unfair competition, insufficient level of digital literacy among entrepreneurs and non-adaptability to changing conditions.

We see huge potential in the development of e-commerce for both consumers and businesses. Our goal is to create conditions for fair competition and sustainable growth for all market participants," Zharkenov said.

At the same time, in his opinion, traditional trade will not completely disappear. We see examples of successful integration of online and offline formats: many entrepreneurs use marketplaces as an additional sales channel. The main trend is the mutual addition of trade formats, and not the displacement of one by another.

The National Chamber of Entrepreneurs also reported that currently almost 4 million people employed in the country's economy work in the small business sector, which makes its development a strategically important task for the country in terms of improving the level of employment and incomes of the population. The share of SMEs in the gross domestic product (GDP) of Kazakhstan in 2023 was 36.5%. The volume of products produced by SMEs in 2023 amounted to 68.7 trillion tenge, which is 16% more than in 2022. Forecasts for 2024 suggest further growth of this indicator.

According to official statistics, over the past 5 years, the dynamics in the number of small and medium-sized businesses has been positive. So, if in 2020 the total number of subjects was 1.3 million (2021 – 1.4 million, 2022 – 1.8 million, 2023 – 2 million), then, according to the results of the first half of this year, this figure has already exceeded 2 million.

The largest number of subjects works in wholesale and retail trade – 723 thousand, provision of other types of services – 298 thousand, industry – 119 thousand, real estate – 104 thousand.About 68-70% of the total number of registered entities is allocated to sole proprietors, about 18% - to small business legal entities, peasant and farm enterprises form 13%.

"As for the e-com market, according to the results of 2023, the share of sales through marketplaces amounted to 89% of the total volume of retail e-commerce in Kazakhstan. In the first half of 2024, this share increased to 90%.

NPP "Atameken" does not calculate the share of each player in the e-com market. At the same time, according to various sources, at the end of 2023, the share of Wildberries in the Kazakh market was about 15%. According to research conducted by analytical agencies, local marketplaces account for about 66% of the total volume of retail e-commerce in Kazakhstan,"Atameken National Chamber of Entrepreneurs told TAJ.report.

Why the Chinese won't win

Director of the TALAP Center for Applied Research Askar Kysykov believes that e-com in Kazakhstan is developing dynamically, although so far the share of online sales is 15% of total retail sales. In China, this figure is 40%, in the United States-50%.

"The trend is that the share of e-commerce will grow. Currently, the main share of online sales in the country is made up of local marketplaces, or rather, one-Kaspi store. According to reports of the Competition Protection Agency, it owns more than 50% of the market share due to installments. The share of Wildberries and Ozon is growing, these are three major players in our market. The share of Chinese marketplaces is low.

I don't know who is hyping up the topic of negativity about them, but their arrival is very welcome on the part of consumers. Kazakhstanis have a choice due to competition between sites. We have the option to buy the product directly from the same China or order it from the Kazakhstan marketplace, but it will be more expensive.

The issue of Chinese platforms entering our market is a matter of convenience of consumers ' interests, reducing intermediaries between them and sellers (which reduces the cost of goods), since the range of goods consumed through marketplaces and produced in Kazakhstan does not coincide to a greater extent,"the economist notes.

The share of online sales will grow, and it is important that no company monopolizes the market share, and no oligopolies are created, he emphasizes.

"Due to competition, prices will decrease. Now for many products through marketplaces, the margin of sellers exceeds 100, 200, 300%. The cost of the same product on the same marketplace can be many times higher.

Important point-KazPost cooperates with the Chinese JD.com which is going to invest in the construction of logistics centers in Kazakhstan, Wildberries is also investing, which is a big plus for us," the expert believes.

In his opinion, it is a mistake to think that electronic flea markets from China will defeat all competitors in Kazakhstan.

"Our main share is accounted for by local and Russian marketplaces. The share of Chinese platforms is unlikely to grow due to a key drawback-long delivery times.

The second is the advantage of domestic marketplaces that work with banks and offer various financial instruments, the same installment plan, and goods from China must be paid immediately.

E-commerce will not kill traditional ones either - there are categories that we are used to buying offline, especially for clothing.

In general, the optimal share of online and offline trading is 50-50. So the potential of online trading in Kazakhstan is very high," Askar Kysykov is sure.

 

Askar Kysykov - Director of the Center for Applied Research "TALAP"

He advises you to compare prices in different marketplaces and choose the best price-quality ratio. But the economist does not consider it necessary to regulate marketplaces - they work in the same environment as retail ones.

"And they must comply with the law on consumer protection, provide an opportunity to return the goods, use the guarantee. It's just a different format, but it follows all the other rules.

But what needs to be regulated is the conditions for finding and working sellers in marketplaces. Often, these sites impose such conditions on sellers that it is difficult for businesses to earn money (various commissions, acquiring), and in general, trading in marketplaces has high costs. Plus, super high competition, and to take their share, the business is forced to dump. Therefore, it is necessary to balance the interests of marketplaces in terms of their income and the interests of sellers. For the latter, there should be no enslaving conditions, "the economist believes.

New game rules

Meanwhile, as it became known recently, Kazakhstan plans to introduce mandatorydeclarationof parcels from online stores. The Ministry of National Economy posted on the portal "Open NPAs" draftamendments to the Customs Code of Kazakhstan. The innovations affect the field of electronic commerce within the framework of the Eurasian Economic Union (EAEU).

Asнапомнилиthe Ministry of National Economy reminded, today goods sent via international mail (including purchases from foreign Internet sites) are not counted in official trade statistics. They are considered as goods for personal use and are subject to declaration only if the duty - free limit of 200 euros or 31 kg is exceeded.

According to the Bureau of National Statistics, in 2023, the share of e-commerce in the total volume of retail trade was 12.7% (2.44 trillion tenge). Due to a significant increase in the volume of e-commerce goods, the state intends to tighten control.

In particular, it is planned to make the following amendments to the legislation: the entire volume of e-commerce goods will have to be declared, regardless of cost and weight; a special declaration for e-commerce goods will be introduced, which will be filled out by both operators of trading platforms and recipients themselves; for parcels exceeding the duty-free threshold, an import duty will apply (the proposed rate - 5%) and VAT according to the legislation of the Republic of Kazakhstan.

According to the initiators of the changes, such innovations will make it possible to generate complete statistics of goods purchased on foreign sites, increase the transparency of the e-commerce market and increase tax revenues to the budget.

The draft amendments to the Customs Code are open for public discussion until December 26, 2024.

Alibaba will already start paying VAT in Kazakhstan. Alibaba International, the owner of AliExpress, has agreed with the Kazakh authorities to register in the country as a VAT payer. This decision can change the e-commerce market in Kazakhstan and Russia.

"The Ministry of Finance of Kazakhstan held negotiations with representatives of Alibaba. Alibaba will register as a VAT payer in Kazakhstan.

Why is this important? ⁠Changes for the market: until now пор , cross-border parcels were not subject to VAT, which gave преимуществоAliExpress an advantage over local retailers. Buyers: for them , this may mean an increase in prices on a popular site.

Key issues and risks: the basis for calculating VAT. It is not yet clear whether VAT will be calculated only on sales within Kazakhstan or will affect cross-border deliveries. This will determine how significantly prices will change for buyers.

⁠How will this affect the market? Local retailers have long complained about unequal conditions with AliExpress. Now their competitiveness will increase.

Consumers: a possible rise in the price of goods may reduce the popularity of the site. Impact on logistics: AliExpress is one of KazPost's largest clients. The decline in orders may hit the revenues of the national postal operator," comments Ivan Fedyakov, CEO of the INFOLine Group of Companies.

Among the opportunities for retailers, he notes that ⁠VAT creates more equal conditions for competition, and local players can regain a part of the audience.

"Risks for buyers and AliExpress: rising prices - VAT may make products less affordable. Reduced demand: Buyers will look for cheaper alternatives.

Kazakhstan's decision may set a precedent for other countries where AliExpress parcels from China are not subject to VAT. Duties - yes. For example, Russia will also want VAT on parcels," the analyst believes.

The EAEU is also preparing a new agreement on electronic commerce.
The main objective of the document is to ensure that member states do not impose restrictions on sellers or marketplaces, and that marketplaces themselves do not discriminate against sellers and buyers from other EAEU countries.

"At the level of the Union, they plan to adopt a package of supranational rules, according to which they will make purchases and ensure the return of goods and money. This will be beneficial both for the consumer, who will receive a guaranteed level of service regardless of the country where they buy goods, and for sellers," the EEC believes.

One can predict how representatives of various oligarchs who would like to put their companies"gaskets" between buyers from the EAEU and manufacturers in China will now try to torpedo this document, Chinese expert Adil Kaukenov said.