As soon as the platform’s transaction volume was reported, why did the SAIWEI Model 2.0 suddenly catch the attention of business owners?

Recently, more and more cross-border business owners have begun re-examining the “Saiwei Model 2.0.” This isn’t because the model has suddenly become popular, but because many sellers have realized that, after platform transaction volumes are reported, the business practices they previously relied on—such as receiving payments through Hong Kong companies, operating multiple stores to spread out revenue, and underreporting income in mainland China—are becoming increasingly difficult to justify. In the past, businesses could focus solely on the actual amount credited to their bank accounts: they would simply record whatever amount remained after the platform deducted commissions, advertising fees, refunds, and service charges. But now, the information reported by platforms goes beyond just the final payment amount. Under current regulations, internet platform companies are required to report the identity and revenue information of merchants operating on their platforms on a quarterly basis; the reported data includes total revenue, refund amounts, net revenue, and order volume. More importantly, total revenue, in principle,No platform commissions, service fees, or other charges will be deducted. This means that the sales figures reported by the platform, the net payments received by the bank, and the revenue reported by the domestic company may all be three different numbers. Here’s the real question: Can you clearly explain the discrepancy between these three figures?

I. What the platform submits is far more than just a string of “transaction records”

Many business owners believe that a platform’s reporting of tax-related information simply involves the platform reporting the monthly payments made to sellers to the tax authorities. In reality, the scope of reporting is more detailed than one might imagine. In addition to information such as the business operator’s name, Unified Social Credit Code, and store name, it also includes the store’s unique identifier, total revenue, refund amounts, net revenue, and the number of orders. If a single business operator opens multiple stores on the same platform, the platform must also combine the operator’s information with each store’s unique identifier to report the relevant identity and revenue information separately. () In other words, the common practices of the past—such as a single entity operating multiple stores; different stores linked to different payment accounts; platform revenue dispersed across multiple entities; and temporary collection through the business owner’s personal account— and consolidating funds through a Hong Kong-registered company—are no longer treated as merely a few unrelated transactions under the new reporting logic. Instead, this will gradually form a more comprehensive operational map: who opened the store, how much was sold, how much was refunded, how many orders were generated, and who ultimately received the payment. Furthermore, the policy not only covers domestic online merchandise sales platforms but also clarifies the reporting arrangements for overseas internet platform companies: if an overseas platform has an operating entity within China, the corresponding domestic entity is responsible for reporting; if there is no domestic operating entity, the platform must designate a domestic agent to fulfill the reporting obligations. () Therefore, for cross-border sellers, what they should truly be wary of is not “whether a particular platform will report,” but rather that the transparency of platform business data has become a clear regulatory direction. II. What Hurts Business Owners the Most Is Not That Their Sales Figures Are Exposed

There’s nothing inherently scary about sales figures being disclosed. Businesses that operate normally and file tax returns in accordance with the law don’t need to panic excessively just because the platform reports their data. What truly poses a risk is when the platform’s data doesn’t match the company’s existing financial records at all. For example, consider a cross-border business: the platform reports annual sales of 30 million yuan; refunds and platform fees total 5 million yuan; actual cash receipts of 25 million yuan; these funds were deposited into a Hong Kong company; and the domestic company reported only 6 million yuan in service revenue. The owner’s previous understanding was: “The domestic company only earns service fees; the rest of the money belongs to the Hong Kong company.” But further questioning may reveal problems: Who developed the products? Who negotiated with suppliers? Who paid for procurement? Who recruited the domestic team? Who placed the advertisements? Who managed warehousing and logistics? Who handled after-sales service? Who bears the business risks? If the domestic company handles nearly all of these tasks, yet the majority of the profits are consistently retained by a Hong Kong company that has no staff, no record of actual decision-making, and is solely responsible for collecting payments, then the hardest thing to explain isn’t the cash flow. It’s this: On what grounds does the Hong Kong company take the vast majority of the profits? This is also the real reason why, after the platform’s revenue reports were submitted, many business owners suddenly turned their attention to the “Saiwei Model 2.0.” They began to realize that whereas before they only needed to figure out “how to collect the money,” now they must address: who is actually conducting the business, to whom the revenue belongs, and where the profits should remain.

III. The Most Dangerous Aspects of Savi 1.0 Are Now Coming to Light

First, let me clarify one point: “Saiwei Model 1.0 and 2.0” are not official models released by tax authorities, but rather colloquial terms used in the cross-border industry to refer to different business structures. What is commonly referred to as “Saiwei 1.0” typically has several characteristics: a domestic company handles procurement, operations, and the supply chain; a Hong Kong company manages platform payments; overseas profits are retained long-term; tax declarations in China are based on lower amounts; and evidence of contracts, pricing, and deliveries between the entities is relatively weak. The reason this structure was able to function in the past often depended on several conditions: insufficient transparency of platform information; fragmented relationships between stores and business entities; a lack of unified reconciliation of domestic and overseas cash flows; and the fact that companies were relatively small, so historical issues had not yet accumulated to a significant extent. However, now that platforms have begun submitting reports on a quarterly basis, several of the weakest links in the 1.0 model are becoming increasingly apparent. 1. Discrepancies Between Platform Sales and Bank Receipts The total revenue reported by the platform does not represent the net proceeds ultimately received by sellers. Expenses such as commissions, service fees, and advertising costs are typically not directly deducted from the reported total revenue; refunds, on the other hand, are reported separately. Consequently, companies may face a very real problem: the platform reports sales of 30 million yuan, but only 24 million yuan is credited to the bank account. What accounts for the missing 6 million yuan? Is it refunds? Platform commissions? Advertising fees? Warehousing fees? Event service fees? Or was it withheld by another entity? Without backend invoices, settlement reports, and expense vouchers, it is difficult for a business to provide a clear explanation based solely on bank statements. 2. Discrepancy Between the Store Entity and the Reporting Entity The store is registered under Company A, but the actual recipient of payments is Hong Kong-based Company B; purchase invoices are issued by domestic Company C, and customs clearance for exports is conducted under the name of Company D. In the past, business owners viewed this as “flexible operations.” However, after the platform submits the data, the most frequently asked question is: Which company should actually recognize this revenue? If each of the four companies is responsible for only one segment of the process, yet there are no contracts or business records linking them together, then this seemingly complex structure actually fails to form a complete chain of evidence. 3. Heavy Domestic Costs but Chronically Low Profits Domestic companies bear substantial employee salaries, office expenses, procurement costs, operational expenses, and advertising expenditures, yet they operate at a loss or with minimal profit year after year. Meanwhile, the Hong Kong company, with no actual staff or business operations, consistently generates high profits. As platform revenue becomes more transparent, this profit distribution will become increasingly conspicuous. It is not that Hong Kong companies cannot make money; rather, the profits they earn must correspond to the functions, assets, and risks they actually bear. 4. Having multiple stores does not mean revenue disappears. Current reporting rules require platforms to submit data by combining merchant information, store names, and unique store identification codes. Therefore, simply opening multiple stores, frequently changing payment accounts, or splitting business entities cannot fundamentally resolve issues regarding revenue attribution and the authenticity of business operations. () The more business entities there are, the greater the need to prove: why these entities exist; what relationships exist between them; what specific tasks each entity performs; and why they receive corresponding revenue and profits.

IV. Why Are Business Owners Starting to Switch to Savi 2.0?

This is because many sellers have finally realized that Saiwei 2.0 is not a “scheme to pay less tax,” but rather a business model that makes the data easy to understand. Version 1.0 addressed the following issues: how Hong Kong companies receive payments; how to retain profits overseas; and how to temporarily file tax returns in mainland China.
Version 2.0 aims to address the following issues: Who is entitled to the platform’s revenue; how responsibilities are divided between the mainland and Hong Kong companies; who is responsible for purchasing and exporting goods; who bears the costs; how transactions between companies are conducted; why profits are allocated in this manner; and how funds will be used in compliance with regulations in the future.
Simply put: Version 1.0 is more like a payment collection structure. Version 2.0 must be a business operations structure. A true Version 2.0 isn’t about registering two more companies or replacing the original payment collection accounts. Rather, it’s about ensuring that every entity has a clear, authentic business role that can be documented.

V. Suntech Model 2.0: What Exactly Has Been Upgraded?

First, the role of the domestic company has become clearer. The domestic company can handle: product R&D; supplier development; procurement management; quality control; domestic operations team; advertising and content support; and export and logistics coordination. However, these tasks cannot exist solely as verbal descriptions from the boss. Corresponding evidence must also be documented: employee and payroll records; procurement contracts and invoices; service delivery records; system data and work deliverables; and export, logistics, and warehousing documentation. Second, the Hong Kong company cannot be reduced to merely a payment collection function. The Hong Kong company can handle: overseas platform operations; signing overseas contracts; overseas customer management; overseas fund settlement; management of overseas warehouses and service providers; and overseas brand or market investments.
However, the higher the profits a Hong Kong company generates, the more it needs to demonstrate that it has indeed assumed the corresponding functions and risks. It is not necessary to rent a luxury office or hire dozens of employees. However, the company should at least maintain the following, commensurate with the scale of its operations: contracts; accounting records; audit reports; minutes of meetings; records of the use of bank funds; and information on service providers and business operations.
Third, transactions between companies can no longer be decided on a “whim at the end of the month.” In the past, many companies would look at how much their Hong Kong subsidiary earned at year-end and then work backward to determine how much the domestic company should charge in service fees. This easily leads to profit allocation lacking a sound basis. Version 2.0 places greater emphasis on: defining roles and responsibilities before business begins; signing contracts based on actual transactions; clearly defining the goods sold or services provided; preparing a reasonable basis for pricing; retaining evidence of actual delivery; and ensuring that funds, accounting records, and contracts correspond with one another. Fourth, upgrade from “focusing solely on revenue” to “managing both revenue and costs together.” Once platform transaction flows become transparent, revenue is only the first issue. The second issue—one that is even more likely to cause companies to suffer losses—is the inability to substantiate costs. There are no invoices for platform advertising fees; logistics costs are advanced by individuals; there are no compliant supporting documents for procurement; overseas warehouse fees are paid on behalf of the company by other entities; records of refunds and compensation are not retained; and there are long-standing arrangements for collection and payment on behalf of multiple parties. Ultimately, companies may end up with overstated reported profits not because they lack actual costs, but because they cannot substantiate them.

VI. Reporting platform transaction volumes does not mean that taxes are levied directly based on those volumes.

It’s also important to remind business owners that just because a platform reports sales figures doesn’t mean the tax authorities will automatically treat the platform’s transaction volume as the company’s taxable profit. Sales, taxable income, accounting revenue, and profit are distinct concepts. Actual costs and expenses—such as platform commissions, advertising fees, logistics, procurement, and refunds—still need to be accounted for in accordance with the nature of the business and tax laws. The problem, however, is that in the past, many sellers failed to keep complete records in advance. Only after the platform’s sales figures were reported did they begin scrambling to locate contracts, invoices, settlement statements, logistics records, advertising bills, and refund records.
At this point, the company’s vulnerability becomes very apparent. It’s not the platform’s reporting that’s the problem. The real problem is that while the platform has reported its revenue in great detail, the company cannot provide equally detailed cost and operational data.

VII. When tax audits truly look beyond the surface, they examine more than just the platform’s numbers

Under current regulations, when tax authorities conduct inspections in accordance with the law or identify tax-related risks, they may require internet platform companies and relevant payment institutions to provide tax-related information such as contracts, order details, transaction records, financial accounts, and logistics data. This means that subsequent risk assessments may no longer be limited to questions such as “How much did the platform sell in a year?” but will instead delve deeper to examine: whether the goods are genuine; whether the procurement is genuine; who owns the goods; who is responsible for export; where the funds ultimately go; whether there are genuine transactions between companies; how overseas profits are generated; and whether costs and expenses were actually incurred.
So what many business owners are truly worried about now isn’t how much revenue was overstated in a single quarter. Rather, it’s whether the business operations that have built up over the years will, when taken as a whole and cross-checked, paint a complete and plausible picture.

VIII. These types of sellers can no longer afford to delay

If any of the following situations arise, we recommend conducting an architectural and historical risk assessment as soon as possible: the platform’s annual sales have exceeded 10 million yuan; multiple stores and multiple sites are being operated simultaneously; the store entity, payment recipient, and tax filing entity do not match; a Hong Kong company is solely responsible for receiving payments but has not maintained accounting records or undergone audits for an extended period; a mainland company bears significant costs yet has been operating at a loss for a long time; there are significant discrepancies between platform sales figures and mainland tax filings; large amounts of payment for goods, advertising fees, or logistics costs pass through personal accounts; the use of third-party payment processing for exports or opaque export agents has been ongoing; frequent collection and disbursement on behalf of multiple companies; or preparations are underway for financing, bringing in shareholders, or selling the business. The larger the sales volume, the less feasible it is to continue using the same practices employed during the “small seller” phase. This is because a turnover of 1 million yuan is difficult to account for and may simply be attributed to disorganized financial management. When turnover reaches 30 million yuan, 50 million yuan, or even higher, the same issues may simultaneously impact: tax compliance; bank accounts; export channels; overseas funds; corporate valuation; and the owner’s personal risk.

IX. Three Areas Where Business Owners Most Often Misunderstand Saiwei 2.0

Misconception 1: Registering a Hong Kong company automatically makes it “2.0.” Not true. If a Hong Kong company still only has a bank account for receiving payments, with no actual business operations, accounting records, or supporting evidence, it’s merely a “1.0” model in a different shell. Misconception 2: The more companies you have, the easier it is to spread out cash flow. However, the more companies there are, the more complex the relationships between contracts, accounting, funds, and profit distribution become. Without a genuine division of business functions, having more entities does not necessarily reduce risk; on the contrary, it may make the structure harder to justify. Misconception 3: “Version 2.0” means keeping all profits in Hong Kong. This is also incorrect. Profits should be allocated reasonably based on the actual functions and risks undertaken, rather than predetermining which company must retain them and then retroactively adjusting business records to fit that decision.

X. What businesses should focus on most right now is not immediately registering a new company

The correct sequence should be: first, organize your existing platforms and stores; then, reconcile platform sales with actual cash receipts; next, review the division of labor between domestic and overseas entities; then, verify the procurement, export, and logistics processes; followed by organizing costs such as advertising, warehousing, and refunds; and finally, determine whether structural adjustments are needed. The biggest risk is rushing to add new domestic and Hong Kong companies without first resolving existing issues. This can result in the situation going from two chaotic entities to four chaotic entities. The core of the Saiwei Model 2.0 has never been about “opening more companies.” Rather, it is about ensuring that stores, contracts, goods, funds, invoices, accounting, and profit attribution all align correctly.

put at the end

After the submission of platform transaction records, cross-border business owners suddenly set their sights on the Saiwei Model 2.0—not because a new “tax-saving tool” had emerged in the industry, but because the old way of doing business—where a Hong Kong company handled collections, a mainland company handled operations, platform transaction records were not fully accounted for, and there was no clear division of labor among the entities—is becoming increasingly difficult to sustain. The true “Saiwei 2.0” isn’t about hiding revenue. Rather, as a business scales up, it’s about ensuring every revenue stream and profit can be accounted for: who sold it; who produced it; who bears the costs; who bears the risks; and why this particular company is making the profit. As platform data becomes increasingly transparent, businesses must operate with ever-greater clarity. This is not a matter of choice. For cross-border sellers with annual sales exceeding 10 million, this is an essential corporate upgrade that must be completed.
Sellers who are currently using a Hong Kong company to receive payments, operate multiple stores, handle export invoicing, or whose platform transaction volumes differ significantly from their domestic tax filings can reply with “2.0” in the backend and include the following information: platform and annual sales; store registration entity; payment account; procurement and export methods; details of domestic and Hong Kong companies; and status of existing cost documentation. We can first help you analyze your current business processes to determine whether the primary risks lie in revenue, costs, exports, payment collection, or the division of responsibilities among entities. Based on this assessment, we will decide whether to supplement documentation, adjust business operations, or redesign the operational structure involving your mainland and Hong Kong companies.
Don’t wait until the platform data has been fully reconciled while your company’s internal accounts are still based on figures from several years ago.