Chapter 3: China Customs Clearance Procedure
Let me make this point clear;
Each country has its guiding principles concerning customs clearance.
And of course, China is not an exception.
In fact, as the leading export country in the world, China has put in place some of the stringent clearance measures at all her ports.
You know this is vital because, in a significant way, it helps to curb any incidents of sneaking goods inside and outside the country.
So mostly, the intention for all the rules and regulations for Chinese customs clearance is to create order and mitigate unwarranted loopholes.
In this section, we want to look at all the undertakings revolving around the clearance procedure when importing from China.
3.1. Full Fill China Customs Shipping Regulations
As an importer, you must ensure that you abide by all the shipping regulations that the Chinese customs authority stipulates.
If you want to pass through the customs clearance swiftly, you must make sure to confirm what certifications and standards you need to meet.
China shipping lane
Incidentally, the trick for attaining this is preparing all the necessary documents.
You must also keep in mind that your importer must manage most of the customs clearance.
But you need to prepare all other documents in case the officials ask for them.
Make sure you communicate openly with your importer and manage customs clearance together to avoid time-consuming issues.
Before shipping, ensure you have the essential documents for facilitating shipping.
Actually, later on in this section, I’ll list some of these documents below to enable you to have an idea.
So just continue reading on.
But before that let’s see some of the elements surrounding full filling the customs shipping regulations in China
· Product Certification
The typical Chinese quality certificates include CCC (Compulsory China Certification) and CFDA.
CFDA is used for health food and baby formula for example.
If needed, you should get your products certified and provide certifications documents, for the customs to review when your product arrives in China.
· HS Codes
HS simply mean harmonized codes.
These codes are applicable worldwide for classifying goods traded in the country.
One of the biggest issues exporters confront is that the customs have the difficulties in specifying the HS codes to apply for your products.
Essentially, it means that they are not precisely capable of determining what kind of products you export.
Therefore, you wouldn’t know the kind of standards and regulations you need to follow.
It is crucial if you can classify your products with the correct HS codes.
Vitally, it helps so that the customs understand what kind of customs, regulations, and certifications applicable to your products.
And, I know you are possibly asking yourself:
What is Harmonized Custom Tariff Numbers (HS Codes)?
Well, this refers to the international nomenclature used for classifying products.
It enables classification of all countries taking part by the items traded on a frequent basis for customs purposes.
In general, the HS codes determine the GB standards which you need to meet.
For that reason, it is imperative if you can classify your product with the right HS codes.
It actually helps the customs to comprehend specific regulations and certifications applicable to your products.
· GB Standards
Typically, it is the HS codes that determine the GB standards you need to meet.
Well, the GB standards are unique for every aspect surrounding packaging, labeling and food products among others.
So, you mainly need to provide test reports showing that your products comply with the required GB standards for such items.
Incidentally, should any certification or test reports miss, you’ll need to provide the missing documents or a CIQdeclaration.
· Import License
This is also another document that you’ll have to avail as part of full filling Chinese customs policies.
While we’re on the subject, if an import license is a requirement, you must provide it.
As a Chinese importer, it becomes necessary to apply for an import license.
Some of the other important documents that you might require to clear your goods include the following:
i. Bill of lading
iii. Packing list
iv. Customs invoice
v. Insurance policy
vi. Trading contract
vii. Quality certificates
viii. Inspection certificate/license
ix. Import quota certificate
x. Cargo manifest
xi. Handbook of processing trade
xii. Authorization and entrustment agreement for clearance customs
But then again, the particular documents which you’ll require at a specific time depends on the type of product you’re importing from China.
Qatar Airways Cargo
And for that reason, you may realize that you will not necessarily need some of these documents when shipping some products and vice versa.
· Taxes and Tariffs
It is vital to know the costs involved to pay for different tariffs and import taxes when exporting to China.
And again, it is also fundamental that you have basic knowledge of how to calculate taxable amount.
It is primarily to protect you from losing your hard-earned money fraudulently in the hands of con officials.
For that reason, I’m going to review the different tariffs and import taxes that are applicable in this situation.
Tariffs are dividedinto6 different categories; namely
- Tariff quota rates
- General rates
- Preferential rates
- MFN rates (most favored nations)
- Agreement rates
- Provisional rates
MFN is mostly applicable in countries and members of the WTO (World Trade Organization)
b) Import taxes
It is also another form of tax that you have to pay as an importer.
Import tax revolves around several elements.
So let’s look at some of this type of taxes you’ll probably pay for as an importer;
It’s the same for domestically produced products and stretches up to 17 % depending on the products. The VAT is paid on product tariffs mentioned above.
This type of tax essentially applies to limited products.
What I mean here is that it a form of duty paid specifically for some kinds of products.
In any case, such products are exclusive, and you may find that they’re merely designed to meet secondary needs of a specific group of people.
For instance, tobacco and alcoholic drinks are some of the products that attract excise duty.
· Customs Valuation
It’s important to provide documentation stating the CIF price (cost insurance and freight).
The CIF price includes the reasonable amount with the following items added;
- Packing list
- Freight costs
- Insurance costs
- Commissions for the seller
Expectedly, the Chinese customs have a database where they can check your CIF price.
This enables them to confirm if it’s in line with local rates and tariffs.
Surprisingly, if the difference in price is relatively big, you’ll have to incur additional charges.
· China Custom Declaration Form
Apparently, this is one of the documents that many people who import from China rarely know more of what it entails.
Previously, H833 was the conventional system for customs declaration.
Currently, H2000 is what traders use for notifications.
Again, you also need to know that nowadays such declarations are managed electronically.
The Chinese customs have put across an extensive guide explaining how different systems work and how to fill out the forms.
· CR Number
This refers to the number that you obtain immediately after you register at the Chinese customs website as an importer.
It primarily refers to Customs Registration Code, which is a requirement in China both for importers and exporters.
To prevent unnecessary inconveniences and delays at the customs clearance, always ensure that your CR code is stated in the customs declarations.
· China Customs Tracking
This is also the other element still on the aspect of accomplishing Chinese customs regulations.
Remember that it is possible to check the status of your shipment on the customs website.
Excitingly all you need is to provide a declaration number and verification code to fast-track the status.
In some instances, you’ll realize that failure to provide these codes will make it somehow impossible for you to determine your shipment’s status.
Arguably, the first section of the customs clearance procedure is quite demanding and detailed.
What I mean is that it requires a lot of knowledge and proper documentation of all import details.
3.2. Prepare the Necessary China Custom Clearance Documentation
Of course, you have to prepare all the necessary documentation for facilitating customs clearance in China.
The Chinese clearance documents are the regular correspondence you need to prepare when importing products from any local manufacturer.
Of course the moment you order your goods from China you expect them to arrive on time.
And this should happen without any unanticipated interruptions both at the departure port in China and at the destination port in your country.
So how do you ensure that you achieve this?
Simple, in fact, I’m emphasizing this for the umpteenth time;
Make sure that you prepare all the relevant Chinese customs documents accurately and promptly.
When you do this, it becomes easy to ensure that your goods pass through customs without any unnecessary interruptions.
Some of the items that you need to consider
- A purchase order from Buyer
- Sales Invoice
- Packing List
- Shipping bill
- Bill of Lading or air waybill
- Certificate of Origin
- Proper certifications (please explain these CFDA, CCC, CIQ, CCIC & CEL)
- Harmonized Custom Tariff Numbers (HS Codes)
i. A Purchase Order from the Buyer
This is one of the vitally important documents you require for import customs clearance.
A purchase order gives a reflection of all the terms and conditions surrounding the sale contract.
And it is also what allows the officials at the customs desk to verify value assessment.
At the time a valuable consignment could be under a letter of credit basis.
In that case, you can present a copy of the letter of credit alongside other documents for import clearance.
ii. Sales Invoice
This document contains overall information regarding the transaction.
Some of the details that this document contains include:
- Unit cost
- Products’ description
- Delivery conditions
It is thus apparent that a sales invoice is a significant document for both importers and exporters.
Therefore, the sales invoice plays a fundamental role for both the importers and exporters.
Also, in most instances, use of a proforma invoice is unacceptable for shipping. Instead, a sales invoice is often necessary.
Broadly, it’s because it provides the basis upon which the trade is completed in regards to bookkeeping, accounts and tariff calculation.
iii. Packing List
Ordinarily, this is a document is more or less similar to sales invoice only that it doesn’t include pricing.
However, it incorporates more information details about the contents of the shipment, such as the weight and measurement.
In general, this document is necessary as a supporting document in the commercial invoice.
iv. Shipping Bill
This is arguably one of the fundamental documents you need for efficient import customs clearance.
It indicates the total outward transmittal of a nation which is under the control of the reserve bank and customs department.
It is necessary to fill the shipping bill within a month of the consignment arriving at the customs location.
Filling of the shipping bill with the necessary custom clearance documents and assessments of goods by customs officials follow suit.
Upon completion of import customs formalities, you’ll obtain a pass order under such bill of shipping.
After receiving the pass order, the goods you’re importing can now move out of the customs area.
What now remains at this stage is payment for all the necessary import charges to the respective carrier of goods.
Upon making this payment, the cargo then moves out of the customs area to your place.
v. Bill of Lading or Airwave Bill
Apparently, it is the shipping company that issues this document to you as a consignment receipt.
Most of the Chinese companies always provide you with this particular document together with a copy at some point of the shipment.
They vary from one freight company to the other hence may easily confuse as you may think they are different documents.
But specifically, this document shows the name of the freight company.
It also indicates a text “bill of lading” at its top.
vi. Certificate of Origin
Mainly, this document shows the specific point where the cargo comes from.
In this instance, it will clearly show that the shipment comes from China.
In some cases, it would also provide the specific city or town in China.
So in China, you’ll find out that its only two particular bodies that typically issue this document;
- China Council for promotion of international trade (CCPIT)
- China entry-exit inspection and quarantine bureau (CIQ)
vii. Proper certifications (CFDA, CCC, CIQ, CCIC, CEL)
In China, customs clearance is a fundamental aspect within trading borders.
Most foreign importers always regarding the missing links in Chinese customs and clearance requirements and procedures.
Some companies often assume that they do not need certification for their products.
Again, they believe that there are some exceptions on their goods hence anticipate to clear with customs without hindrances.
Unfortunately, Chinese customs authority always confiscate shipment frequently as a result of missing CCC, CFDA, CIQ, CCIC or CIQ certifications.
In other cases, such shipments could also be having such certifications but fail to correspond to the HS codes as necessary.
You can prevent such problems from arising by ensuring that these points are in place before shipping;
i. Determining whether or not a license or certification is a compulsory requirement in China for shipping.
ii. Whether it will it be necessary for you to provide certification or CIQ declaration should a certificate go missing.
iii. You also need to note that products are usually detained and charged for storage until you provide the necessary documents.
iv. Should the customs inspection team request for certification it’s imperative to verify, CEL, or CFDA for the specific products.
v. A single code of the HS code is never enough for determining the particular requirements.
vi. In instances where certification is not necessary, Chinese accreditation can offer assistance in customs clearing by obtaining a CIQ declaration.
It is the only way of providing official authentication that certification is not a requirement for clearance.
Incidentally, you’ll find that customs authorities maintain that a product certificate is mandatory.
In such instances, you need to confirm if certification is economically justifiable.
The reason behind this is that at times there is always a window period required for certification in China.
And therefore, chances for exemptions could also be high.
On the same note, you also have to be aware that exemption policies also safeguard you as the importer from hefty penalties.
Essentially, some allow importation of particular products without a CCC certificate or any other type of documentation that’s deemed necessary.
To know that such exemption regulations only apply to a few products including the following;
- Re-exported products
- Products manufactured in China
- Products imported in low volumes
But you should also take note of the fact that in most cases the customs clearance deny issuance of such exemptions even when you apply.
Port of Shanghai
So what I suggest here is that in as much as seeking such exemptions could be advisable, you don’t really need to consider it deeply.
It is also because other options could prove to be cheaper and relatively fast.
Such reasons make it reasonable to seek services of a customs broker with expertise in this field for pertinent assistance in the whole clearing process.
Chinese certification has a vast experience in this area.
What’s the bottom line here?
In many instances, the process could be overwhelming to you as an importer, your experience and knowledge not withstanding.
It is for this reason that I always recommend you seek services of a professional freight forwarder.