Are your China operations suffering from business disruptions due to customs clearance hurdles? Can you clear customs 24/7 with a lead-time of less than a day? Having problems with products and equipment stuck in customs due to incorrect or incomplete documentation and certificates? Does your organization really know what is required to improve and mitigate the trade compliance risks of your supply chain in China?
Many foreign companies with operations in China are facing increasing and uncertain trade regulations. To be able to maneuver in a “jungle” of changing regulations, it is extremely important that any manufacturer operating in China be aware of and continuously updated on the main areas of regulations applied to their line of business. For companies established in China this would include issues like taxation and customs regulations.
Companies not only need to be knowledgeable about regulatory compliance, but they also need to have access to the right and trustworthy sources of information. Such sources can be governmental agencies, consultants, related suppliers, and business partners. Partner management and transparency are the keys to success, since in many instances companies may even be required to ensure compliance of its 3rd parties.
Geographical differences also must be considered since “one China” can vary significantly in infrastructure and how rules and regulations are applied to business and operations. It should not to be forgotten that the geographical positioning of your business partners, and the potentially poor infrastructure of roads, airports, and waterways, can challenge and increase risks in the supply chain. Additionally, local taxation policies, customs code classifications, and subsidies may be applied very differently depending on the location of the business.
China’s development in Trade Compliance policies
Over the last 10 years many regulatory compliance matters have developed and improved. However, in some areas, such as in the importation of production equipment and RMA (repair) processes, there has not been fast-paced development. It can also be noted that during the last few years compliance has become stricter in China due to the results of increased transparency, intensifying safety, security, and anti-corruption efforts. A practical example of this is that a change in mind-set can be seen in local officials in terms of what that means to building relations between individuals and companies. It can also to be recognized that China is harmonizing its customs processes by enforcing the AEO (Authorized Economic Operator) program, and some safety and security measures, such as the 3C (China Compulsory Certificate), are now required for specific products for the Chinese market.
Trade Compliance as a Business Opportunity?
Many companies have been successful in China due to their ability to manage regulatory compliance and by promoting the uncompromised ethical conduct of their business. Some companies have been known to achieve cost savings and to gain short-term monetary benefits. An example could be avoiding or minimizing employee social insurance payments to the Government or using incorrect customs codes when importing goods. These practices can put their business at risk from audits which are continuously performed by the tax authority, CIQ (China Inspection and Quarantine) and the customs authorities. We do propose everyone to follow the rules and regulations to full extent and do not condone any ill doing.
Sound knowledge and process management in regulatory compliance are necessary factors for doing business in China. The company must be aware of how to apply and embed various simplification rules into their operations in China. For example, applying rules to simplify customs procedures as part of import and export operations will decrease supply chain lead-times as well as reduce the costs and risks of business disruptions due to unexpected audits or changes in regulations. One opportunity for companies is to aim for AEO certification (formerly known as AA-class customs license). Certified companies have an inspection rate of <2% of imported goods and the ability to clear customs 24/7.
Enics has been operating in China for more than 15 years and has factories in 2 regions. Customers benefit greatly from skilled resources that are fully focused on customs and trade compliance. Enics operates under AEO status in Beijing and performs bonded manufacturing in Suzhou, which enables import duty savings for exported products. Enics has achieved a recognized status among local authorities.
For more information on trade opportunities and how your company can benefit, please contact our Supply Chain (For OEMs only) at email@example.com.