Amazon prioritises American companies for their cross-border e-commerce

American companies as a priority

The rapid development of the cross-border e-commerce industry has not only promoted the continuous expansion of the scale of related companies and the continuous increase in demand for employees, but also enabled the industry to have sustainable development. At the same time, many cross-border e-commerce companies have full confidence in the industry development trend in 2021. According to the current situation, in the next 5 to 10 years, global trade will drive China’s cross-border e-commerce to achieve yet another big leap.

The outbreak of cross-border e-commerce has made Chinese sellers more popular internationally due to their competitive pricing. It has also simultaneously led to the transformation and upgrading of related industrial chains.  Opening a store on Amazon’s website is the first step for many Chinese sellers. As the world’s largest cross-border e-commerce platform, Amazon’s advantage is that it has less sellers than buyers, hence less competition and more to be made by the Chinese sellers. Amazon is considered one of the best choices for merchants who are looking to seize a greater market share in developed countries and regions as it has high consumption levels, which is beyond comparable.

Advantages of U.S. companies being a merchant on Amazon 

Corporate sellers on Amazon are entitled to more perks and benefits on the platform. Hence, in a longer-term perspective, we recommend registering a U.S. company, which has no foreign exchange controls and lower taxation. For instance, by registering a U.S.  company, you can obtain a U.S. bank account and start operations, while obtaining the U.S. federal tax number EIN to complete subsequent tax declarations concurrently.

In other words, there are a few advantages to incorporate an American company before listing as a merchant on Amazon, mainly:

  1. American companies are trusted by the local consumers, hence they would have an overall higher online store ranking which helps to increase sales;
  2. Amazon takes greater care of local companies and will take more care in store closures, promotions, etc.;
  3. The closing rate of stores with U.S. companies as the main body is less than 1%; the closing rate of stores with Hong Kong companies or mainland companies is high as 30%;
  4. China and Hong Kong companies be requested to go through a lot of auditing during Amazon registration and may be more subjected to store closures. On the contrary, American companies need not go through much auditing, and the listed merchant account can be sold upon store closures.
  5. There are more merchant categories for American companies.

How to register a U.S. company and which state to apply for?

The 50 states in the United States are run by state laws with varying registration time and tax rates. Therefore, it is necessary to choose the suitable state to register according to actual needs. 

Popular states for e-commerce platforms:

  1. Delaware

The main industries in Delaware are retail, manufacturing, food processing and service industries. Delaware has the reputation of being tax-free, no sales tax, personal property tax, inventory tax, intangible property tax, etc. If there is no substantial transaction, it is not required to pay income tax to the state government.

  1. New York

New York’s finance, commerce, industry, art, clothing and such occupy a leading position in every state in the United States. The New York metropolitan area is one of the largest urban areas in the world. Therefore, registering a company in New York is highly attractive.

  1. California

California is the state with the most Chinese in the United States and the second largest international financial centre in the United States. It has a large concentration of banks and other financial institutions. It is also the state with the largest number of Chinese-funded banks. This provides greater convenience to set up a US company and bank account.

  1. Florida

Florida’s tourism industry is very developed. As an “American Innovation Centre”, Florida, with its industrial and commercial services, high-quality professionals, good customer service environment, concise trading methods, and many trade opportunities with other regions, fuelled it with ample room for development and turned it into one of the key places for America’s economic development.

Bank Account Opening

Whether it is listing as a merchant on Amazon, conducting import and export trade with the United States or going to the United States to start your business operations, it is essential to open a bank account in U.S. This can improve the company’s reputation, credibility and market competitiveness. Many enquire about opening a U.S. bank account but failed to do so since they do not understand the U.S. banking system.

If you are interested in opening a bank account in the United States. Feel free to speak to one of our bank account opening specialist. A remote bank account opening is possible, and the process generally takes 1 – 2 months.

Should you wish to register a company overseas, it would be best to speak to Desfran before doing so, we can assist to analyse which state would be more suitable for your company incorporation, and effectively avoid any potential drawbacks you may face.

With over a decade of experience, we constantly keep abreast of the ongoing market trends and provide customised solutions to help your business grow globally. Contact us to speak to one of our company formation specialists.

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