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• Helping you do business with China - Importers Guide April 2007
Business with China
Over the last 25 years China has seen sustained growth in its economy. and has seen huge increases in foreign trade. Entry into the WTO in December 2001 has further enabled China to enter the global economy and encouraged a standardisation in trade laws. Accession into the WTO has allowed the China market to open up further to the outside world.
Authorities in charge of imports and exports in China include the Ministry of Commerce (MOFCOM), the General Administration of Customs, the State Administration of Foreign Exchange (SAFE), the State Exit and Entrance Inspection and Quarantine Bureau (SEEIQB) and the Administration of Quality Supervision and Inspection and Quarantine (AQSIC).
Only enterprises authorised by MOFCOM can engage in Import and Export trade. Wholly Chinese-funded companies intending to deal in import and export activities are required to apply to MOFCOM in advance for import and export rights.
China prohibits the export of certain goods and technologies on the grounds of public policy or in order to comply with international treaties or agreements. Some of the goods reserved for state trading include corn, cotton, rice, silver, coal and silk. Goods reserved for trading by specially designated traders only include tea (oolong tea, green tea) and certain steel cuts.
China encourages the export of most commodities and most products are duty free, although there are 84 products that carry duty. These include tungsten ore, ferrosilicon and some aluminium products.
China's manufacturing industry is now very advanced and it is easy to find companies that operate to all the conventional standards such as ISO9002, TUV, CCEE, UL, etc.
Anti-dumping tariffs
When the sale of imported goods threatens the domestic market by being priced lower than the domestic price, or the price of domestic manufacturing, it is known as dumping. Products made cheaply in China and sold cheaply in the UK may be liable for anti-dumping duties. The WTO uses anti-dumping laws to protect markets from alleged unfair competition.
Chinese exporters have historically been a main target for anti-dumping actions by both the EU and the US. For further details on anti-dumping, please go to "Trade Defence" on the DTI's website. It has links to the European Commission sites as well: www.dti.gov.uk/ewt/antidump.htm.
The HM Revenue & Customs tariff will also indicate all current anti dumping and tariff quotas.
VAT
Normally only suppliers for international purchase projects (tender projects financed by international financial institutions such as the World Bank or foreign government’s aids) are eligible to reclaim VAT but not every eligible exporter or supplier can reclaim the 17%. This depends on what products they supply or export. Only those who export or supply those under government labelled categories can reclaim the full 17% from the Chinese tax authorities. Most exportable products can only reclaim 15%. Products such as coal can only reclaim 9% while for cereals like soybeans, road beans etc, only 3% can be reclaimed.
Import procedures
Import licence
Many countries (including the UK) aim to limit the quantity of imports on certain categories of goods. This can be achieved through the imposition of import licences, quotas, duties or levies. In the UK, import licensing is administered by H.M Revenue and at ports and airports. HM Revenue and Customs is also responsible for the collection of revenues.
Most goods can be imported without the need to apply for an import licence. However the goods may be restricted or prohibited for a number or reasons and by various Government departments.
For example the Import Licensing Branch (ILB) of the Department of Trade and Industry currently restrict the following when originating in China: clothing and textiles, iron and steel, firearms and nuclear material. ILB issues either quota import licences or surveillance import licences depending on the regime.
Export administered textile quotas are managed by China by the issuing of export licences that are exchanged for an import licence up to the quota limit. Surveillance import licences are freely available on application as the level and price of imports are only being monitored.
For futher details contact the Import Licensing Branch (ILB) :
Import Licensing Branch, Queensway House, West Precinct, Billingham
TS23 2NF
Tel: 01642 364333/334, Fax: 01642 533557
E-mail: enquiries.ilb@dti.gsi.gov.uk
Minicom for hard of hearing: 01642 364227
Web address: www.dti.gov.uk/ewt/ilb.htm
There is a full list of import prohibitions and restrictions in the HM Revenue and Customs Integrated Tariff volume 1. Copies of the tariff should be available for reference at most Customs entry processing units and also at business reference libraries. Most import regimes are EU wide and so what is restricted on one Member State will be restricted in another. The EU's equivalent of the tariff is the Taric and that is available on line and free of charge:
http://europa.eu.int/comm/taxation_customs/dds/en/tarhome.htm
Importation
When trading outside the EU, all goods imported must be declared to HM Customs and Excise for the assessment of duties and other levies. You are liable for VAT, duty levies and surcharges which must be paid for or deferred before imported goods are released by Customs.
Country of Origin
Generally, origin is conferred on goods if they are wholly obtained or produced in a country, or if the last substantial process or operation that is economically justified is carried out in that country.
It is essential to establish the correct country of origin for the goods which will be imported. There are two basic types of rule that govern the determination of origin:
1) Non-preferential origin rules which are used for trade with no preferential trade agreements with the EU.
2) Stricter preferential origin rules apply to those countries that have concluded preferential trade agreements with the EC.
The authorities of the country of origin are responsible for the issue of any additional export certificates or similar documentation. The authorities must provide documentation relating to preferential origin. For non-preferential purposes, an authorised body such as the Chamber of Commerce usually provides proof of origin. Documentary proof of point of origin often has to be provided for Customs and Excise at the time of importation, this can take the form of a certificate of origin or other documentation.
Details and further information on EC rules of origin are available from:
Europe and World Trade Directorate (EWT3a), Bay 4141, 1 Victoria Street, London SW1H OET
Colin Wray. Tel: 020 7215 5059. Fax: 020 7215 2234. E-mail colin.wray@dti.gsi.gov.uk
Robert Box. Tel: 020 7215 5057. Fax: 020 7215 2234. E-mail robert.box@dti.gsi.gov.uk
China Customs Tariffs
Customs Tariffs of China (CTC) provides comprehensive information about China's tariffs and non-tariff control on importation and exportation. The contents of CTC are arranged into a directory tree, which includes 21 sections, 97 chapters and about 1240 categories, listing China's customs tariffs and non-tariffs control for about 7000 items. It includes comprehensive, up to date lists of import duty rates, VAT rates, consumption tax rates, licensing, quota, inspection etc.
Web address: www.chinavista.com/database/cides/index.phtml
The CCPIT (China Council for the Promotion of International Trade) also has an online directory of tariff information. It enables you to search the latest tariff rate of goods its tariff item, commodity name or commodity classification.
Web address: www.ccpit.org
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Useful B2B sites for China importers
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B2B web sites are still in their infancy in China but with the opening up of the
domestic market, global B2B sites have started to cover the Chinese market, joined also by local start-ups. The sites below comprise the main B2B web sites covering China. There is a large split between sites with a comprehensive list of companies in the sector and those sites relying on voluntary postings.
While most of the sites listed have an English language version, it is probably worth bearing in mind that these companies are Chinese and their addresses and names are originally in Chinese. CBBC’s bilingual staff are available for short periods of desk research. Please contact Leo Liu on leo.liu@cbbc.org or on 020 7802 2000.
• Alibaba
www.alibaba.com
A global sourcing company that lists a wide range of finished products such as home appliances, apparel, health and beauty supplies, stationary and computer hard/software, as well as listing suppliers to the chemical, construction, real estate and telecommunications industries as well. Lists thousands of suppliers from around the globe but the search engine allows you to narrow your search by world region. Easy to use and provides photographs of each product. Once you have selected a product you can inquire directly to the supplier named sales manager via email from Alibaba.
Regional headquarters: Hong Kong
Tel: + (852) 2215 5100
Fax: + (852) 2215 5200
• China Sources
www.chinasources.com
Asia coverage with facilities to search by product, supplier or province. Additional information on Asia trade fairs and cargo / freight issues. This site is part of Globalsources.com, reviewed below.
• China TexNet
www.chinatexnet.com/
Directory of suppliers, distributors, consultants and other textile related services. Contains other international companies not just Chinese.
• China Trade Manufacturers Directory
www.manufacturers.com.tw
Chinese and Taiwanese manufacturers, exporters, suppliers and contract manufacturing companies. Covers most product categories from agriculture
and food to construction materials, electronics, plumbing products, kitchenware, household products, clothing etc.
Tel: + 886 (0)4 22350378
Fax: + 886 (0)4 22308479
• Global Sources
www.globalsources.com
Professional with a reasonably large database of companies. The search engine is good and it also rates sites. It uses the same 'shopping' method as alibaba, allowing you to select multiple companies to send your enquiry form to. The enquiry form is good.
Tel: + (66) 6547 2800
Fax: + (66) 6547 2888
• Meet China
www.Meetchina.com
Clear interface. Companies are rated, and given a 'Meetworld stamp of approval'. Fairly large number of companies listed. There is the option to chat with companies via the Internet if they are on-line. You can keep a list of suppliers you are interested in, but you can only make enquiries one at a time. There is an English website at www.meetworldtrade.com where you can search for products by country, but currently is under maintenance.
• Trade Sources
www.tradesources.com
Lists thousands of products, all of which are photographed. This site is particularly strong on fashion accessories, gifts and premium goods, hardware and machinery, lighting and sport/fitness equipment and sports wear (excluding sports shoes). Although the product list is extensive, products are sourced from fewer suppliers. This suggests that Trade sources may have a closer relationship with its suppliers than some of the larger global sites. Details of each supplier found on this site are comprehensive. They include the name and contact details of the supplier sales manager, an introduction to the supplier background and a list of other products stocked by the supplier.
Tel: + (852) 2397 6666
Fax: + (852) 2394 6386
• Global Market
www.globalmarket.com
Covers twenty major manufacturing cities in China and provides a global manufacturers’ market development services for a fee. This site lists products sensibly and has, on average, fifty suppliers per product group. It is particularly good for those who want to avoid searching hundreds of suppliers when sourcing finished goods. Good selection of home appliances, audio and video electronics, furniture, lighting and computer hard/software. Not geared for industrial machinery but is good for plumbing, electrical and household maintenance products.
• China Commodity Net
ccn.mofcom.gov.cn
Part of the government funded China Business Guide (CBG). Lists industrial supplies as well as finished goods such as live animal products, raw hides/leather, wood products, prepared foodstuff/beverages and tobacco, textiles, ceramics and fresh water pearls. There are thousands of suppliers listed. Difficult to determine what this site specialises in. However, the search engine is detailed, allowing you to search according to the business type, operating rights vis a vis import and export and region. The site also provides names, addresses and contact details and year of establishment of each supplier.
Tel: + (86) 10 6525 3868
• Asia Net Best Products
bestproducts.asianet.com
Best Products lists suppliers from both mainland China and Taiwan. Lists finished products such as electrical machinery, appliances and parts, DIY materials, footwear, furniture and apparel. However, the site also lists items for which it does not have suppliers, which is a little frustrating. Nevertheless, having on average 3-10 suppliers per item, this site will appeal to those who desire a closer relationship with their suppliers.
Tel: + (86) 21 64854830
Fax: + (86) 21 64854831
• Hong Kong Trade Development Council
Assist people / companies wishing to source products from Hong Kong and China, via their large database of companies. The only prerequisite is that all companies on their database must have offices in HK, but this is increasingly including mainland Chinese companies with an office in HK. You can search the database yourself by going to their website: www.tdctrade.com. Go to 'Sourcing Guide' (under TDC Cyber Marketplace) where you will need to register (for free), and then you can search the whole database, by product and region.
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Contacts - Sourcing Agents
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For details of companies/agents who can help you identify suitable suppliers and set up sourcing arrangements please go to CBBC’s ‘Online Service Providers’ Directory (www.cbbc.org/directory) and search under ‘Managed Outsourcing’.
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Managed Outsourcers
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Managed outsourcers provide another route for sourcing and procuring products from China. They can work from a company’s individual specifications (drawings, pictures etc.) to identify suitable manufacturers, negotiate prices, and oversee assembly, quality control, shipment and delivery. Generally these companies have a base in the UK or Europe as well as in China, and therefore can overcome a lot of the difficulties of dealing with an unfamiliar culture, language and business environment.
Most managed outsourcers do not charge any upfront fees, but add a margin based on the final cost of the product. .
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For details of managed outsourcers please go to CBBC’s ‘Online Service Providers’ Directory (www.cbbc.org/directory) and search under ‘Managed Outsourcing’.
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Inspection Companies
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Most of the big international inspection companies have operations in China offering a full range of inspection services including:
• Independent certification of management systems and products;
• Product testing services;
• Auditing
• Safety evaluation
• Quality assurance and inspection
• Management systems training
• Information on standards and international trade.
For details of companies who provide inspection services in China please refer to CBBC’s ‘Online Service Providers’ Directory (http://www.cbbc.org/directory/?dir=3) and search under ‘Inspection, Quality Control and Certification’.
Whereas every effort has been made to ensure that the information given in this report is accurate, China Britain Business Council accept no responsibility for any errors, omissions or misleading statements in that information and no responsibility is accepted as to the standing of any firm, company or individual mentioned.
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