Customs Considerations When Exporting to China

Mufaddal K.

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Manufacturers looking to export their products abroad need to consider various factors when evaluating export markets.  One of those factors is the customs clearance infrastructure and processes within a given country.  This article presents an overview of the time and cost it takes for a local partner to clear imported products through customs in China.  This overview, along with a regional comparison, should help you better qualify China as an export market for your products.



Country Overview


China is located within the East Asia & Pacific region.  It is a very populous country with roughly 1.4 billion people as of 2018.  58% of the population lives in urban areas.  The World Bank categorizes it as an upper middle income country with a GDP per capita (PPP) of USD $16,600 per person.



Regional Comparison


The "World Bank's Doing Business project" publishes an evaluation of countries based on their efficiency of cross border trade.  When assessing import efficiency within a country it primarily reviews four factors:


1.  The time for border compliance (imports):  Compliance time associated with the country's customs regulations, inspections and handling that takes place at its port or border.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.


2.  The cost of border compliance (imports):  Compliance cost associated with the country's customs regulations, inspections and handling that takes place at its port or border.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.


3.  The time for document compliance (imports):  The time for obtaining documents, preparing documents, processing documents, presenting documents and submitting documents.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.


4.  The cost of document compliance (imports):  The cost for obtaining documents, preparing documents, processing documents, presenting documents and submitting documents.  Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.



When evaluating border compliance time and cost amongst major regional economies, China ranks 11th regionally in terms of border compliance time and 10th regionally in terms of border compliance cost.  A US$50,000 imported shipment of auto parts would take 72 hours to clear border customs and cost roughly US$790.


Country     Border Compliance Time (Hours)     Border Compliance Cost (USD)    
Singapore 33 $220
Thailand 50 $233
Hong Kong 19 $266
Japan 48 $275
South Korea 6 $315
Malaysia 69 $321
New Zealand 25 $367
Vietnam 56 $373
Australia 39 $525
Philippines 72 $580
China 72 $790
Taiwan 141 $828


When evaluating document compliance time and cost amongst major regional economies, China ranks 10th regionally in terms of document compliance time and 9th regionally in terms of document compliance cost.  A US$50,000 imported shipment of auto parts would take 54 hours in China to have documents prepared & cleared and would cost roughly US$150.


Country     Document Compliance Time (Hours)     Document Compliance Cost (USD)    
South Korea 1 $27
Singapore 3 $40
Thailand 4 $43
Philippines 96 $50
Hong Kong 1 $57
Malaysia 10 $60
New Zealand 1 $80
Australia 4 $100
Japan 3 $107
China 54 $150
Vietnam 76 $183
Taiwan 149 $742


Differences Between Major Cities in China


The World Bank analyzed two major cities in China as part of their analysis.  As seen below, the time taken for both border compliance and document compliance is lower in Shanghai vs. Beijing.  However the cost of border compliance is lower in Beijing vs. Shanghai and the cost of document compliance is slightly higher in Beijing vs. Shanghai.


Major City     Border Compliance Time (Hours)     Border Compliance Cost (USD)     Document Compliance Time (Hours)     Document Compliance Cost (USD)    
Shanghai 72 $790 54 $150
Beijing

117 $690 80 $196


Detail for Border Compliance Time and Cost


Border compliance time and cost are calculated as a function of three driving factors: the time/cost related to working with customs authorities, the time/cost related to working with other agencies and finally border handling time/cost.  For Shanghai the border compliance time is roughly equal for both working with customs authorities and border handling but cost is higher on the border handling side.  For Beijing the border compliance time and cost is high for border handling vs. working with customs authorities.


Shanghai Overview:


Detail Type     Time (Hours)     Cost (USD)    
Working with Custom Authorities 72 $354
Working with Other Agencies

0 $0
Border Handling

72 $436


Beijing Overview:


Detail Type     Time (Hours)     Cost (USD)    
Working with Custom Authorities 75 $250
Working with Other Agencies

0 $0
Border Handling

117 $440


Detail of Document Compliance Time and Cost


Document compliance time and cost is a function of the various documents required by the country when importing goods.  For China, the documents required when importing goods from abroad include a bill of lading, telex release, packing list, commercial invoice, contract, custom import declaration, inspection declaration, certificate of origin, import license and SOLAS certificate.



Transportation Costs


Another factor that influences import trade efficiency is transportation costs.  For Shanghai, the port where goods would most likely land would be Shanghai port.  When calculating transportation cost for the US$50,000 auto parts shipment, the World Bank calculates that the shipment that would land at Shanghai port would need to be transported 31 km with an average travel time of 6 hours.  This brings the delivery transportation cost for the shipment to roughly US$219.



For Beijing, the transportation cost is higher.  The World Bank calculates that the US$50,000 auto parts shipment that would most likely land at Tianjin Port would need to be transported 182 km with an average travel time of 8 hours.  This brings the delivery transportation cost for the shipment to roughly US$395.



Infrastructure Digitization


Greater use of technology within the customs clearance process helps improve efficiency and lower time and cost associated with customs clearance.  Today many countries use digital systems to streamline the customs clearance process.  Many of these customs systems are known as EDI or Electronic Data Interchange systems.  More recently however, there has been a push to develop even more integrated customs clearance systems known as SW or single window systems.  These systems provide greater integration within a given country and between multiple countries when managing customs clearance.



China does have an EDI system known as e-Customs.  It is also developing a SW system known as International Trade Single Window.  As of the beginning of 2018 this SW system was not operational for electronic customs processing but more information about this new system can be found at http://www.singlewindow.tj.cn/.