Over 780 Chinese sellers changed their Amazon legal entity to Hong Kong in November 2025 alone – a dramatic response to Beijing’s first-ever mandate requiring platforms to report quarterly seller revenue data. The exodus represents a significant shift for sellers whose pricing advantages have long frustrated domestic competitors. For American Amazon sellers who have called for a level playing field, this enforcement may finally deliver the tax parity they’ve sought.
The timing is unmistakable. Legal entity changes remained remarkably consistent throughout 2024, with Marketplace Pulse data showing single-digit monthly relocations as the norm. Then September 2025 brought 117 changes to Hong Kong, October saw 381, and November exploded to 780 – accounting for the vast majority of the 894 total entity relocations that month.
While still representing less than 1% of the roughly 300,000 Chinese sellers active on Amazon.com, the accelerating trend signals a fundamental shift in regulatory pressure. The catalyst is almost certainly China’s State Council Order No. 810, signed in June 2025, which compelled platforms, including Amazon, to submit seller identity, transaction, revenue, and fee data quarterly. The first mandatory submission covering third-quarter data was due October 31, 2025 – precisely when the exodus accelerated.
Hong Kong’s appeal is straightforward. Where mainland China taxes resident enterprises on worldwide income at a 25% corporate rate, Hong Kong offers a territorial system that taxes only locally sourced profits at 8.25% on the first HKD 2 million, then 16.5% thereafter – with no VAT, no sales tax, and no capital gains tax. For cross-border sellers, the differential is substantial. According to Marketplace Pulse estimates, 75% of relocating sellers generate less than $1 million annually, with 19% in the $1-5 million range – precisely the cohort most vulnerable to margin compression from sudden tax enforcement.
The reality, though, is that Hong Kong registration may not provide the protection these relocations suggest. China’s regulations target “China-based sellers” regardless of registration location, and under the Chinese tax law’s “Place of Effective Management” principle, authorities can potentially claim tax jurisdiction over Hong Kong companies whose actual operations or controllers remain in mainland China. Bloomberg reported that Chinese sellers commonly route goods through a mainland firm to a Hong Kong company to sidestep corporate taxes. Information barriers between jurisdictions are eroding under the Common Reporting Standard, allowing Chinese tax authorities to access Hong Kong company bank account data for Chinese tax residents.
The enforcement represents a notable shift in Beijing’s fiscal priorities. Bloomberg observed that “China’s need for fiscal revenue overpowers its desire to support smaller exporters who have been roiled by Donald Trump’s new tariffs.” For decades, China treated its international entrepreneurs with leniency as a means to grow global market share – the explosive rise in Chinese sellers to over 50% of Amazon’s active seller base was enabled partly by this support. Whether this signals a permanent recalibration or a temporary revenue grab remains to be seen, but the data shows a clear and immediate impact on Chinese sellers.
For domestic sellers who have watched Chinese competitors leverage structural advantages from tax benefits to regulatory arbitrage, this enforcement should help reshape competitive dynamics. The pricing flexibility that Chinese sellers maintain through shorter supply chains and lower baselines becomes less decisive when they face the same corporate tax burden as domestic operations. Bloomberg reported that sellers amending filings to match platform data could face back taxes that “wipe out profit margins.” American sellers have long advocated for a level playing field – tax parity may finally deliver it, though through Beijing’s revenue needs rather than Washington’s trade policy.
