agap conference 2012 importing goods into china - caroline berube, hjm asia law llc alliott group

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Importing Goods into China

Alliott Asia Pacific Conference – Bali 2012

Caroline BerubeManaging Partner

Guangzhou Shanghai Singapore www.hjmasialaw.com

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CHINA

• China is trying to restructure its economy to be one driven more by imports rather than predominately exports.

• To do so they are adopting a “buy more but not sell less” tactic.

• China’s rapidly expanding consumer base make it an attractive new market for foreign enterprises to sell their products and services.

06-10 avg. 2011 2012 2013• Import growth 38.6% 26.6% 11.7% 13.1%

• Main imports E&E equipment (24%) & Industrial M&E (21%)


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REGISTRATIONS


• Companies seeking to engage in import trade in China need to register with the Ministry of Commerce (MOFCOM) or its authorized local offices.

• The importation of some goods requires an import license as listed in the Catalogue of Goods subject to Import Licenses.

• For certain goods the purpose of the license is to track imports more accurately and the license is issued automatically e.g. machinery and electrical goods.

• Non-automatic licenses apply to dangerous goods and goods subject to tariff quotas.

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TAXES AND DUTIES


• VAT Applicable to imports

Import VAT is levied on almost all goods.

A rate of 13% applies to grains, edible vegetable oils, tap water, heating, air conditioning, hot water, coal gas, liquefied petroleum gas, natural gas, methane gas, coal/charcoal products for household use, books, newspapers, magazines, feeds, chemical fertilizer, agricultural chemicals, agricultural machinery, plastic film for farming purposes, and other goods prescribed by the State Council.

Remaining products are usually subject to a rate of 17%.

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TAXES AND DUTIES


• Import duties applicable

Regulations of the PRC on Import and Export Duties

Article 2 - Customs shall collect import duties on all goods permitted by the PRC to be imported into the Customs territory and all inward articles, unless otherwise provided for in law.

China uses the Harmonizes Commodity Coding System (HD code) to

determine tariffs, taxes and other regulatory measures in imports.

The General Administration of Customs of China publishes an annual tariff schedule.

Customs duties are generally assessed on the CIF (cost, insurance and freight) value.

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TAXES AND DUTIES


• When is Income tax applicable?

Corporate Income Tax (CIT) usually applies to foreign investors in the following circumstances:

Foreign Invested Enterprises (FIEs) in China eg. WOFE, JV Foreign entities that have a ‘permanent residence’ in China (usually

requires a physical presence in China) Foreign entities without a ‘permanent residence’ in China but who

import into China through a business agent arrangement are generally seen as an equivalent to ‘permanent resident’ and therefore subject to CIT

• Other taxes and duties

Import consumption taxes are charged on a limited number of consumer goods (‘luxury goods’) such as: tobacco, liquor, cosmetics, rubber tyres, jewellery, automobiles, high-end watches, and golf clubs and balls.

The rate varies from 1% to 40%.

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CUSTOMS REQUIREMENTS

• Customs Law the PRC

Article 24 - The importer must make an accurate declaration within 14 days of the declaration of the arrival of the means of transport and submit the import licensing documents and relevant papers to Customs for examination.

Article 28 - All imports are subject to Customs examination. While the examination is being carried out, the importer (or agent) must be present and responsible for moving the goods and opening and restoring the package. Customs is entitled to examine or re-examine the goods or take samples from them without the presence of the importer whenever it considers this necessary. Goods may be exempt from examination if an application has been made by the importer and approved by the Customs General Administration.

Article 29 - Unless specially approved by Customs, imported goods will be released upon Customs endorsement only after the payment of duties and taxes or the provision of security by the importer.


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• Article 56 - Duty reduction or exemption shall be granted to the following imported goods and inward articles: advertising items and trade samples of no commercial value; materials presented free of charge by foreign governments and

international organizations; goods to which damage or loss has occurred prior to Customs release; articles of a quantity or value within the fixed limit; other goods and articles specified by law as items subject to duty

reduction or exemption; and goods and articles specified as items for duty reduction or exemption

by international treaties to which China is either a contracting party or an acceding party.

• Article 57 - Duty reduction or exemption may be granted to imported goods of specific areas, specific enterprises or for specific purposes. The State Council shall define the scope and formulate the rules for such reduction and exemption. E.g. Free Trade Zones


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• The Certification and Accreditation Administration of China (CNCA) requires certain goods to be inspected and certified to ensure compliance with compulsory standards. Once a quality certificate is issued, a safety label can be affixed.

• China Compulsory Certification (CCC) is a compulsory product certification system covering over 150 types of products in the following categories:

electrical wires and cables switches for circuits, protective

installation & connective devices low-voltage electrical equipment small power motors electric tools; welding machines household and similar electrical

appliances audio and video equipment (excluding

acoustics equipment for broadcasting service)

information technology equipment lighting electrical appliances telecommunication terminal equipment

motor vehicles and safety parts motor vehicle tires safety glasses agricultural machinery latex products medical devices fire-fighting equipment safety precaution products wireless LAN (local area network)

products decoration and fitting products toys

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• There are 5 key steps when applying for the CCC mark:

1. Submission of an application and supporting materials;

2. Type testing - A CNCA-designated test laboratory in China will test product samples;

3. Initial factory inspection - A CNCA-designated certification body will send representatives to inspect the manufacturing facilities;

4. Evaluation of certification results and approval (or failure or retesting); and

5. Follow-up factory inspection - The certification body will re-inspect the product and the manufacturing facilities on a regular basis. The frequency of follow-up inspection depends on the security level and quality stability of the product and the record of the manufacturer.

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PROHIBITED AND RESTRICTED GOODS


• According to the “Catalogue of Commodities Which are Restricted or Prohibited from Importing for Use in the Processing Trade” goods are classified into 3 categories:

1. Prohibited goodse.g. used garments; used publications with licentious content; radioactive or harmful industrial waste; arms, ammunition, and explosives of all kinds; counterfeit currencies and counterfeit negotiable securities; printed matter, magnetic media, films, or photographs which are deemed to be detrimental to the political, economic, cultural and moral interests of China.

2. Restricted goods (licenses required or certain quotas may apply)e.g. raw materials for plastics, polyester sections, raw materials for chemical fibers, cotton, cotton yarn, cotton cloth, and some steel products.

3. Freely traded goodsThose not categorised as prohibited or restricted

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QUARANTINE REQUIREMENTS


• Law of the PRC on the Entry and Exit Animal and Plant Quarantine

Article 10 - Whoever imports animals, animal products, plant seeds, seedlings or other propagating materials must submit an application in advance and go through the formalities for examination and approval of quarantine inspection.

Article 12 - Application must be made to the port animal and plant quarantine office at the port of entry for quarantine inspection of the animals and plants, their products or other quarantine objects, before or on entry, on the strength of documents such as the quarantine certificates issued by the exporting country or region and the trade contracts.

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QUARANTINE REQUIREMENTS


• Regulations on Implementation of the Law of the PRC on Entry and Exit Animal and Plant Quarantine

Article 2 - provides that the following objects are subject to quarantine inspection:

1. Animals and plants, their products or other quarantine objects;2. Container, packages and bedding used for carrying animals and

plants, their products or other quarantine objects;3. Means of transport from animal or plant epidemic or infected

areas;4. Old and disused vessels entering China for disassembling

purposes; or5. Other goods or objects in accordance with relevant laws, int.

treaties etc.

Article 10 - provides that import permits will only be issued if the following requirements are met:

1. Export country is free from serious animal or plant epidemic;2. To be in conformity with Chinese laws, regulations on animal/plant

quarantine; and3. To be in conformity with relevant bilateral quarantine agreements

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LABELLING


• Generally, all products must be labelled in Chinese before they enter China, and

for some products both Chinese and English is required.

• The Chinese label must be printed or fixed on the package prior to arrival in

China.

Food and beverages – label should be affixed to the packaging and include

list of ingredients, exact volume of each ingredient, net weight and volume,

name and address of manufacturer and local agent or distributor and

quality grade.

Cosmetic products – label can be affixed to the packaging or included in a

separate booklet and must include name and address of manufacturer,

sales agent and ingredients list. All cosmetics imported into China are

required to obtain pre-market approval or notification from the Chinese

State Food and Drug Administration (SFDA).

Electronic appliances – generally subject to CCC certification requirements

as well as energy label and Chinese RoHS labelling requirements.

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LABELLING


• The Chinese energy efficiency label is a mandatory

requirement applying to home appliances, office

equipment's, lighting, consumer electronics and other

industrial equipment, and is based on self-declaration by

the manufacturer/importer.

• China RoHS is a measure Restricting the use of

Hazardous Substances (RoHS) in electronic information

products. The Chinese Ministry of Industry and

Information Technology (MIIT) maintains a catalogue of

products subject to the China RoHS label containing more

than 1800 products, ranging from household electronic

products to industrial components, circuits, batteries, etc.

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LABELLING

• Pre-approval and pre-examination is generally not required.

• Upon arrival at a Chinese port, the Chinese Entry-Exit Quarantine and

Inspection (CIQ) bureau will verify compliance with the labelling

requirements as part of the quarantine inspection.

• If there is no Chinese label, or the label does not meet the requirements,

the shipment will be demarcated as unqualified and sent to a warehouse

under the supervision of General Administration of Quality Supervision,

Inspections and Quarantine of PRC (AQSIQ) for correction.


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ASSISTANCE FOR IMPORTERS


• Numerous international and Chinese consultants and agents who assist companies in importing goods

• Local Consulates , Chamber of Commerce and Trade Commissioners

• Chinese Importers Databank - This search engine will guide you through over 60000 active Chinese buyers of a variety of products.http://win.mofcom.gov.cn/en/sell/importers/

http://win.mofcom.gov.cn/en/sell/importers/

http://win.mofcom.gov.cn/en/sell/importers/

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WHERE TO FIND MORE INFORMATION


• http://english.mofcom.gov.cn/• http://www.cnca.gov.cn/• http://en.cnis.gov.cn/zyyhj/nxbs/• http://en.ciqcid.com/Laws/Administrative/zjxzfg/45951.htm• http://english.customs.gov.cn/publish/portal191/

http://www.fmprc.gov.cn/eng/wjb/zzjg/jks/jkxw/t208625.htm• http://www.sac.gov.cn/sac_en/• http://

guangzhou.customs.gov.cn/publish/portal31/tab5944/module16826/info27042.htm• http://www.asianlii.org/cn/legis/cen/laws/motaoailog634/

http://www.cnca.gov.cn/




http://en.cnis.gov.cn/zyyhj/nxbs/

http://en.cnis.gov.cn/zyyhj/nxbs/

http://en.ciqcid.com/Laws/Administrative/zjxzfg/45951.htm



http://english.customs.gov.cn/publish/portal191/

http://english.customs.gov.cn/publish/portal191/

http://www.fmprc.gov.cn/eng/wjb/zzjg/jks/jkxw/t208625.htm



http://www.sac.gov.cn/sac_en/



http://guangzhou.customs.gov.cn/publish/portal31/tab5944/module16826/info27042.htm



http://www.asianlii.org/cn/legis/cen/laws/motaoailog634/

http://www.asianlii.org/cn/legis/cen/laws/motaoailog634/

Guangzhou Shanghai Singapore www.hjmasialaw.comApril 7, 2023

Question and Answers Session-------

Thanks for your attention

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HJM Asia Law & Co LLC

Caroline Berube46, Office 104, Shamian Main Street, LiWan District,Guangzhou China 510075

Tel: +8620 8121 6605 ext. 808DID: +8620 8121 6418 Fax: +8620 8121 6505 Cell: +86 135 000 278 [email protected]


http://www.hjmasialaw.com/

agap conference 2012 importing goods into china - caroline berube, hjm asia law llc alliott group

Education

general administration

state council

plant quarantine

raw materials

plant epidemic

chinese label

quarantine

manufacturing