China Customs expertise and logistics consulting

• the Customs collect duties and taxes, import VAT, consumption tax and tonnage taxes on cargo ships. A recent activity report shows the annual collection of more than 1.5 trillion RMB (CNY), increasing from 1.5% to 2% per year.

• Since 2010, the Chinese Customs also declare the average import tariff level has been adjusted to below 10% against more than 15% before China's accession to the WTO (December 2001). in 2023, it is said to reach 7.3% in average.
  

 

a. A customs rating system for import export companies

Any international trade company established in China must register with an Office of International Trade Operators. Then, distinctly register with the supervisory Chinese Customs Office. Customs assigns them a rating that reflects their status, scope and declarative behavior. The rating applies to all Chinese-invested enterprises, 100% foreign invested subsidiaries (WOFE) and joint ventures. The treatment and efficiency of the customs services differs according to the rating.

b. An importer or exporter must be authorized and may face restrictions

Companies established in China have a business scope shown on their Business License. The business scope defines a perimeter of authorized activities (import export only or assembly, assembly or industrial production) which concerns one or more families of the products mentioned. Thus, a company which has been granted the import rights for cosmetic products, for example, could not freely import electrical equipment or machines. International trading companies that export from China may be required, depending on the nature of their products, to request additional licenses, special permits or quotas. Importers or manufacturing companies may also need to obtain special permits. The certificate on the left is an example of an additional special permit that must be obtained by any company that sells and installs elevators in China.

c. The situation of customs inspections with contradictory conclusions

• A company that imports products in several Chinese entry ports may be inspected at the same time by several different customs offices. The possible zeal of officers in the Inspection Department can lead to conclusions diametrically opposed to those of their colleagues in other regions. In these cases, some (long) contradictory procedures will have to be initiated because the preliminary conclusions of customs inspections have no binding force at the national level.

• Not all Chinese customs offices allow official classification of products according to their Chinese tariff heading or HS (customs) codes. This can be problematic to apply uniform customs clearance procedures at multiple entry points in China. Current regulations allow the Customs to retroactively sanction customs declarations. Depending on their findings severity, the retroactivity timing can range from 3 to 10 years.

• Litigation files are transferred to a specialized Customs department. It is the "Customs anti-smuggling department" and has police powers.

  
  
  

d. Chinese customs classification and tariff codes different from European HS codes

• China adopted the 10 digits HS code system in 1992. Since 2018, the Chinese HS code system has migrated to 13 digits codes. These 3 digits extensions are specifically used for the inspection and quarantine services.

  Although the terminology HS (Harmonized System) suggests a similarity of customs codes in the world, the tariff classification and customs codes adopted by China often differ, from its first 8 digits, from the European customs codes of the Integrated Tariff of the European Union for example.

• A well informed importer or exporter will mind to conduct the relevant customs codes preliminary check. this, both for declarative and tax considerations than to ensure the import regulations and cargo release conditions into the Chinese market.
  

Example (header) of import declaration submitted to the Chinese customs

e. Composition and calculation of import duties and taxes in China

• Determination of customs value : the latest regulation in force is from December 2013. It confirms that Chinese customs officials determine it based on the transaction value of similar products imported into China at the same time as the goods to be assessed. As in all other countries, customs officials reserve the right to re-evaluate the value of import declarations that they find suspicious.

• The duties and taxes to be paid when importing into China consist of :
  
  
  • customs duties
  • VAT (value added tax) at a variable rate depending on the nature of the goods
  • a consumption tax on certain products (equivalent to excise duties in western countries)
    
    
    
• Depending on the country of origin of the imported goods, the applicable customs duty rates are not the same. Overall, a distinction is made between general rates (without customs agreement) and preferential MFN rates (most favored nation agreements). Then there are interim rates (preferential or punitive) and preferential rates applicable to so-called least developed countries. The percentage of import duties in China therefore varies according to the agreements in force with certain countries or regions. For example, in November 2020, China signed a free trade agreement called RCEP with a group of 15 countries, including 10 from ASEAN. Since 2021, tariffs are specifically applicable to goods produced in RCEP member countries. They are lower or equivalent to MFN rates.
  
  
• Below is a practical example applicable. It highlights wide disparities in customs duties levied in China depending on the customs origin of production of a bottle of ordinary grape wine.
  
  
  

  Description	Fresh grape wine in a container of 2 liters or less
  European Customs HS Code	2204.2109	(the first 8 digits out of 10)
  Chinese customs HS code	2204.2100	(according to the nomenclature in China)
  China import General rate	180 %	(rate applicable if no customs agreement)
  MFN (most favored nation) rate	14 %	(applicable to Europe for example)
  2023 rate for a USA origin	from 29% to 54%	(temporary trade retaliatory measures)
  Conventional rate negotiated with certain countries or regions	11.2 %	Pakistan origin
  	2,8 %	Korea origin
  	1,9 %	Peru origin
  	1,4 %	Swiss origin
  	0 %	Chile, Singapore, Island, Géorgia
  	0 %	Hongkong, Taiwan, Macao
  RCEP members rate	0 %	ASEAN + Australia + New Zealand
  	12.7 %	Japan
  Consumption tax	+ 10 %	(applicable on ordinary wine)
  Value added tax (VAT)	+ 13 %	here the ordinary rate of 13% applies

  
  
• Calculation formula for China import duty = duty rate x CIF value of Chinese port
• VAT calculation base = (CIF value + customs duty + consumption tax) x VAT rate.

f. Denouncement is encouraged and paid for by the Chinese authorities

• In their continued fight against corruption, the authorities have largely involved consumers in these measures. They encourage denunciation with dedicated hotlines phone number made available to complainants.

• These provisions affect first of all aspects of current consumption (counterfeits, forged products, expired consumption date, etc). They also have a strong impact on import export operators. A complaint or denunciation file often comes from a competitor, a customer, or a unhappy employee. Whether justified or not, the denunciations remain a problem that leads to dedicated inspections. The control offices, including those of the Chinese Customs, have the obligation to send conclusions in writing to the complainant.

• Apart from administrative and criminal sanctions (fines, penalties and directors' liability), it is the company's reputation that is damaged in China. Thus, administrative convictions, fines and past offenses are listed in the public registry of official information.

• The Chinese social credit system (社会 信用 体系) initiated in 2014 aims to assess and regulate not only the individuals behavior but also the companies reputation.
  

g. Chinese standards and formalities for product qualification and approval

• As a non-tariff barrier tool that is developing as China has become a key player in international trade, the authorities have developed a specific system of standards and certification. Throughout China, port and airport Customs offices are one of the import checkpoints.

• The CNCA (China and Accreditation Administration) controls the system of Chinese standards GB (Guo biao standing for national standard). They constitute the only standard of normative tests to be conducted to certify a product sold in China. Without a GB standard, a CCC (China Compulsory Certification) certificate is not required. On the other hand, the Chinese customs do not recognize an American or European Certificate of Approval. They do not recognize either a test report, certificate and compliance markings associated with the UL, GS, or NF standards for example.

• China sale approvals are also required for food products, cosmetics, pharmaceutical products and medical devices. Qualification and checks are conducted by the NMPA and CFDA, the administrations dedicated to health and food safety in China.
  
  
  

3. Special customs procedures for trade with China

In addition of from the regular import procedure subject to customs duties and taxes, there are 3 special customs regimes. They are the temporary admission, warehousing, RPA (inward processing) and RPP (outward processing) regimes. All may suspend the duties payment and here is a summary :

a. The temporary admission regime

It is intended for the temporary importation of goods that will be re-exported as is and without processing or modification. Their use is therefore predefined. The most frequent situation concerns products presented during a fair or an exhibition. The organizers of international trade fairs in China do have special agreements with dedicated and usually imposed service providers.

Some exhibition organizers allow exhibition products to be sold, consumed or destroyed on site. In this case, the customs regime will change. Other fairs or exhibitions are organized in such a way that the products must leave the Chinese territory. For temporary exports, China has, since the late 90's, accepted ATA carnets only for use at fairs and exhibitions. Since January 2019, Chinese customs also accept ATA carnets for commercial samples and professional equipment. However, prior declarative procedures must be well prepared in advance, as simply presenting the carnet upon arrival will not be enough.

 

b. The customs (bonded) warehousing regime

The bonded warehousing regime allows for the storage of unprocessed goods pending their assignment. Thus, they can either be imported into China (definitive import regime) or re-exported from China. For some situations, China's 21 Free Trade Zones (FTZ) present a convenient option of a logistics base. Compare with other types of zones. .

c. The 2 refinement regimes inward and outward processing

Inward processing : It is intended to import products from China, process them in a European Union (EU) country and re-export them to China. The processing consists of a modification of goods (for assembly, repair, update of components, etc). These operations are possible between China and Europe. However, this type of project deserves a good preparation and follow-up with the customs authorities of both countries (declared value and transfer price, added value breakdown, tax consideration, etc.).

Outward processing : It allows the export of a product that will be processed in China (modification, repair, upgrade, etc.) before returning to the country of origin. Depending on the status of the consginee who will conduct the modification in China, duties and taxes may or may not be levied by the Chinese authorities. It is recommended to work on this aspect carefully. On this kind of subject, the local customs may approve only on a case by case basis any application files submitted to them. China not being an EU country, the customs officers do not handle a customs processing status (and possible tax exemption) with the same logic.

 

4. Export food and register at the Chinese Customs (GACC)

On April 12, 2021, the Customs Administration published 2 decrees that come into force starting Jan 1, 2022.

• The first decree is the "Regulation on Registration and Administration of Foreign Producers of Food Imported to China" (GACC Decree 248). It requires that foreign food manufacturers and storage sites that export to China must register with Chinese customs. The decree also stipulates that food products are divided into two categories.
  
  
  • Category 1 products (registration procedure) : They are so-called high-risk products. They are meats, seafood, dairy products, honey, eggs, pasta, cereals, nuts and beans, dried fruits, fresh and dried vegetables, tobacco, dietetic and health products. Manufacturers or processors must first be inspected by the authorities of the exporting country and then recommended to the GACC. Then their products can be registered with customs in China. For western companies already exporting food products to China, the risk should be low. These additional formalities illustrate the Chinese authorities' desire to also involve producers and exporters in a global chain of responsibility for food products as a whole.
    
    
  • Category 2 products (declaration procedure) : They are other products families considered to be low risk as well as the wines and spirits. Overseas based Food manufacturing or processing centers can register directly with the GACC, with no inspection required. The registration formalities with the GACC can be done directly on the Chinese Customs online platform. European or American exporters may seek help from their import agent for this registration. Or request the assistance of a third party familiar with these matters.
    
    

    Filing with Chinese customs is done through an online registry. Please note there are 2 separate platforms : the "ire.customs.gov.cn" website for a registration as an exporting trader the "single window" platform for a GACC registration as a producer (manufacturer, farm, winery, processing site, etc). Producers and exporters can carry out these formalities themselves or request the services of an independent service provider. Following the registration procedure, the applicant is issued a GACC Certificate of Registration by the Chinese Customs (example opposite). Valid for 5 years. It attests that the complete file is approved. The applicant is registered as an operator authorized to export to China. He will have to make sure that the mandatory markings in Chinese respect the rules of labeling, including the number of the GACC Certificate.

    [ contact us ]

    
    
    
    
• The second GACC decree is the “Administrative Measures on Food Security in Import and Export of China” (Decree 249). It covers a wide range of requirements for exporting food products to China. It includes the registration of overseas production manufacturers, the processing records traceability by importers and exporters, quarantine & inspection matters and food labeling guidelines.

 

5. China's exports to the rest of the world are tightly controlled

• Except in special cases, a regular shipment from Europe or USA is not subject to a strong customs control when being exported. In China, fairly heavy export customs clearance procedures exist for almost all shipments. The procedures to export may be as demanding and time consuming as they are for importation. Why ?

  • First because the export value of each shipment from China is subject to a VAT (tax) refund to the exporter. This refund is a part of the VAT paid on domestic purchases and services contracted during the assembly. In past years, there have been many abuses in the declaration of exported value.

  • Also, the authorities wish, from China, to address the problem of fake and counterfeits products. this issue tarnishes its international reputation. The Chinese government signed cooperation agreements with the Customs of many countries so as to take an active part in control campaigns. This practice aims to detect and stop fraudulent, counterfeit or non-compliant products with the essential safety rules of the destination country.
    
    
    

  • Herebelow is the header of an export clearance notice issued by Chinese customs.

 

6. What to do when you have a parcel or sample blocked at customs ?

• As an answer to a frequent asked question from individual overseas buyers

  • Chinese Customs do not provide any tracking service for your blocked shipments. They also can not receive information, a request or any documents directly from you. Typical situation example : you have returned a product to China for reimbursement. The package is stopped at Customs. A document is missing (invoice, description, indication of value) or the package is damaged upon arrival.

    Only the consignee in China of your return package can contact the corresponding domestic agent of the express courier company you used. This agent only may contact the Chinese Customs if necessary. The Chinese Post and affiliated quick delivery services EMS and SF-EXPRESS are agents of many overseas Post Offices.

  • Before returning a parcel from your country to a seller in China, make sure you have oserverd all the necessary shipping instructions. This applies for the markings and labeling as well as for the packaging quality if a product value refund or an item replacement is involved.

• For companies that send samples to Chinese supplier or customer

  • Be careful with "sample" shipments even if they show "no commercial value". There is a lot of abuse of this process for products that are not actually samples. The Chinese Customs can stop, return or destroy the package if its content do not meet the required standards! The Customs also reserves the right to collect customs duties + VAT, according to a value and tax reckoning base of their choice.

    It is advised to check with your supplier or prospect in China for specific declaration statements and other points of attention before sending or returning a product to them.

  • Beware of under-declarations of value or fraudulent declarations of content intended to avoid or skip the need for a certification or testing upon arrival.
  
  

• Bencmarking of transport services providers (air, sea, rail, road) on specific projects, freight forwarders monitoring and calls for bid.

• Optimization of costs and logistics process : implementation of import and export customs clearance procedures, optimization of import export flows, LCL/LCL, LCL/FCL grouping consolidation. Consulting and Standard Operating Procedures (SOP) service for Customs declaration formalities.

• Advice and preparation of specific projects and temporary imports : regulations and practice of ATA carnets in China, imports for processing and re-export.

• Cross-border eCommerce : comparison of Chinese cross-border import solutions for B2C export sales of exported products sold to the Chinese customers.

• Preparation of health compliance files for food, health, hygiene, beauty and medicine products. Chinese market health watch service.

• Standards, Certificate of Approval and certification in China : preparatory files for CCC conformity marking and compared solutions from authorized laboratories.

• Export to China of machinery and industrial equipment : these files deserve special attention. We take care of the preparation of the import file with Chinese Customs so as to facilitate the import process by your China subsidiary or agent.

• Implementation of storage, delivery and distribution solutions by product category. Dry items, temperature-controlled or regulated products, etc.

• Projects negotiation and assistance during disputes with the Chinese administrations (Customs office, AQSIQ, CIQ, port authorities, Free Trade Zones (FTZ), bonded logistics zones).

• Customs regulatory watch & advisory : laws and regulations, HS codes classification in China, negotiation and assistance during inspections.

• Import files advice and follow-up. Qualification and manufacturing SOP for dangerous or sensitive products

• Consultant in managing the logistics function within the scope of a larger sourcing project, qualification or relocation of Chinese suppliers and distributors.
  
  

[ Contact us about Customs and Logistics matters in China ]

é

	Our added value for China business services
• Our experience in administrative, registration and licensing matters in China • A managing resident for 30 years in the Chinese world • The complementarity of a Western and Chinese multicultural team • Our network with the Chinese authorities and administrations • An extensive knowledge of business practices and cultural codes