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| Business
- Import & Export |
Import &
Export Activities (December 2008)
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Introduction
This page is written mainly for the inexperienced trader,
although some more seasoned operators may find some
parts of interest
As with all International trade, each country has its
own Import and Export taxes, plus Customs clearances,
and special rules or charges for certain items, and
you may need a special licence for things such as live
animals and plants etc. If you are unsure it is best
to check with Import / Export Agents both at home and
in China.
Total charges including shipping will be your major
considerations when formulating a business plan, which
should also cover your operating costs as applicable
at home, and allow you a profit. Don't forget to include
leeway for currency fluctuations, and realise that in
general over the years, the Chinese RMB is rising against
the US Dollar - the standard currency for International
trade.
Location is also important, as if you are sourcing from
rural areas there may not be suitable roads, or the
time taken may be counted in weeks. Inland waterways
are commonly used in China, and shallow draft container
vessels are quite common. Normally this is not a major
consideration.
Exports
The majority of readers will be more interested in Exports,
so we will begin here
You will normally be quoted prices in US Dollars, and
these are usually either ex-works or CIF. There are
a thousand other formats, but we will stick with these
main two for now.
Ex-works means the price to you at
the factory gate. You are then responsible for arranging
all transportation, customs clearances and shipping
yourself. In reality this normally applies to small
quantities of goods that are to go in a mixed container
being loaded elsewhere. Normally the factory will deliver
these goods for free, or charge you a few hundred RMB.
By default, containers are loaded at the factory which
is supplying the largest volume, although you can vary
this with good reason (Multiple destinations in UK being
one example).
CIF - When a price is quoted CIF, it
means that the selling price includes the cost of the
goods, the freight or transport costs, and also the
cost of marine insurance. This will be the very basic
insurance, and you should pay a little extra for 'All-risks'
insurance costing around 0.25% on 110% product value
per container
Tips:
1. Chinese packaging is not always
suitable for spending weeks at sea, despite factory
promises to the contrary. Smaller operators may never
have sent goods for export before.
2. Chinese factories do not like mixed
containers at all, and may charge you for loading other
peoples goods
3. They will not use their export licence
to help you get other produce exported - it is against
Chinese law. Therefore mixed containers should normally
be exported using and Export Agent
4. Container loading starts at 8am
sharp, and the container may arrive before 7am. If you
are foolish enough to try and delay container loading
by a few hours, or book it for say 10am, then it will
probably arrive at 7pm, which causes all sorts of problems
re labour etc
5. If you are exporting bulky items
that have a lot of inherent space - lets take bathtubs
for instance - then in mixed containers it makes sense
for you to fill the baths with other suitable products.
Factories really hate you doing this, to the point of
not wanting your business. The alternative is to ship
lots of fresh air of course.
6. China Expats have done this in
reality, and once managed to exceed the total container
CBM with product CBM. It took some clever explaining
to officials!
7. Do not expect to get near the total
container CBM unless you have experts loading it for
you. A 40'HQ container has an internal volume of just
over 71 CBM. A good factory will manage to get about
60 CBM into it. Your own loaders will probably average
nearer 65 CBM. China Expats once managed 74 CBM by
product volume! Until you are sure of your exact product
sizes and loading pattern, it may be best to use the
standard 60 CBM as your guide, and have extra product
ready for loading if there is space left for it.
8. Factory quoted dimensions for packaged
goods are normally estimated, not factual, and they
may forget to include the wooden or steel framework
(If applicable), or pallet feet
9. Chinese do not usually use pallets
for loading products, preferring to use cheap labour
to do it all physically. This can create off-loading
problems in UK where labour is very expensive. Here
you need to balance CBM lost for palletisation vs convenience
and labour costs, + container fumigation charges.
10. If you do not have a container
off-loading dock, then it is always very useful to have
the last product loaded set on pallets, so it is easy
to forklift off and get onboard
11. You should allow for cartons being
larger than quoted, and make a note of how big each
one actually is - especially for regular repeat orders
12. Anything with an outer wooded crate
for protection will require the container being fumigated
prior to loading on ship. This cost is around $80 per
container, regardless of size, and is always an extra
charge.
13. Always be present for container
loading, it does make a difference. Remember to take
pictures during loading, and upon opening in your home
country
14. Another trick (Which Chinese factories
find incomprehensible), is to lay out heavy goods like
marble on the container floor, and then cover them with
floorboards or plywood sheeting (Doors even). This then
gives you a false container bottom to place other goods
on top. Left unsupervised, most Factories will put the
computer screens on the bottom, and use the heavy marble
to fill the gaps at the top = disaster!
15. Printing in China is incredibly
cheap, and the quality rages from excellent to superb.
However, Paper is very heavy, so a 13' container may
be most advisable for a single cargo of product. Now,
if you need a few thousand brochures or similar, it
does make economic sense to print them in China (Eco-friendly
and recycled paper is available), and put a few boxes
inside a bathtub. DHL prices make this untenable - So
this only works financially if you are using them to
fill gaps during container loading.
16. Normally Chinese printers will
put your A4 size brochures into the first available
box they have, which won't be seaworthy. It is worth
paying an extra ¥1 RMB or so to have these put into
half reams (?) - The things standard 500 sheets of A4
come in anyway. Then put these inside a plastic bag
and tape. These are ideal for filling small gaps inside
containers. For Customs clearance, stick one copy on
the outside so they know what it is and don't open it
17. Printing large Posters, then expect
Chinese manufacturers (or container loaders) to fold
them. You must ask for them to be put in a tube specifically
Professional Container Loading
The best way to do this is to do it yourself, and with
your own regular team of experienced labourers. China
Expats now has a warehouse specifically dedicated to
making product ready for shipping, and loading containers.
We hire local professional loaders as required, and
they charge a set price per container = a few hundred
RMB. Local trucks with driver and crew cost about the
same for a journey of a few hours, plus off-loading
and loading as applicable
Advantages:
* You remain in control of container loading at all
times.
* You can load product for multiple drops in destination
country.
* Given delivery of products from various suppliers
is a few days in advance, you have time to check all
packaging and ensure it is suitable for shipping
* You have the option to inspect the quality of all
products, which is very useful for odd items from new
or irregular suppliers
* You can palletise goods, and use specially made pallets
(Cost peanuts) to maximise container usage
* You can open large products and place smaller products
inside. Be careful here, as authorities frown upon this
practice and immediately think you may be smuggling
items. Document everything in each package, and even
stick a list on the outside of each box. This not only
calms any official inspection teams, but makes it easier
for receivers in the destination country. However, the
savings in CBM can be very significant! If you exceed
68 CBM for a 40'HQ container, then Customs may take
interest, so your documentation needs to show the actual
CBM, not the Total Goods CBM. There are ways to do this
Disadvantages are that until they know
you, UK Customs may x-ray your containers a lot, and
as often as 50%
Other Notes on Exports:
Customs: Some Customs Clearance Centres
in China are cheaper, quicker, or less officious than
others; whilst time or direct export may be more over-riding
factors for you?
Documents: Having precise paperwork
is more important when goods reach your home country,
especially for containers carrying mixed goods, different
tax thresh-holds, and attractive items. Until you are
established (Several years), expect UK Customs to X-Ray
50% of your containers at a cost to you of £900
per time = Their Pleasure! Sounds like an unofficial
Tax to us, but it also means you wait several days for
the pleasure of paying them the money to do this for
you, before they release your goods.
Chinese Quoted Factory Prices
These are normally in US Dollars, and larger companies
will set these for the coming year in advance. The price
goes up as the RMB rises against the Dollar,often every
month, thus making a coherent purchasing plan difficult.
You can also pay in most other leading currencies such
as British Pounds and Euro's. Prices quoted this way
may include conversion to US Dollars first, and then
into the specified currency, beware!
One way around this is to pay in RMB, where the price
will remain static for the whole year (Or term of agreement).
This allows you to have confidence in your sales strategy.
It is very difficult to do unless you have a WOFE type
company or similar in China. A Representative Office
cannot make payments to Factories!
Here's what you do:- Make a new company in UK, whose
only operation is to transfer money into your Chinese
Bank Account, which you open with The Bank of China
(only!). Or you can do this via a Hong Kong registered
company, which is probably far easier and has many other
benefits for you. In both instances you will not suffer
horrendous bank charges for the currency conversion
and transfers, especially if you use the same International
Bank.
HSBC is of course from Hong Kong, and whilst it may
or may not be the best, it is very accommodating regards
these transactions. So you transfer X thousand pounds
into your HK bank account, and then transfer this directly
in RMB to your Bank of China account - or transfer XX
thousand RMB directly from your new UK company account
into your Bank of China account. Both work in practice,
but maintaining a UK company costs a lot, a HK one does
not
Either way, you now have the facility to pay for Chinese
goods in RMB, and via a simple Bank Transfer, most of
which can be done online. It beats having to come to
China physically, and spend a week or more drawing 10,
000 RMB per day out of ATM's!
If you prefer to pay in cash, then allow an extra day
or so for withdrawals, as UK banks have a propensity
to forget you rang them to say you would be in China,
and consequently decline your card - because it is being
used in China! Barclays are consistently bad at this,
so bring your card hotline number with you also, and
their opening hours in UK
Export Taxes
The standard rate of Export Tax in China is 6%, although
some goods have different taxes. This is the tax a Chinese
registered company pays the Government
Exports conducted using Export Agencies attract an Export
Tax of 17%. They then claim 11% tax back = 6%. Normally
they pass this export tax rebate back to you within
the export process, and charge you only a commission,
which is roughly 1 point added to the exchange rate,
per value of goods, if they handle the factory transaction
personally, or in the order of $300 on a cargo value
of $30, 000
Unscrupulous Agents will keep the tax rebate for themselves,
and still charge you for the exportation of goods. Be
Warned - although it happens very infrequently, it does
happen.
Shipping
This is mainly out of your control, although you can
specify: fast, standard, or slow ships + port of departure
and arrival. In our experience a fast ship can make
the trip from Hong Kong or Shenzhen to Felixstowe in
20 days under perfect conditions. They always quote
21 days, and it normally takes 26 days. A standard ship
should take about 29 days, and this is fairly accurate.
A slow ship is quoted as taking at least 31 days, although
some specify 40 days or more! Most slow ships make the
journey in around 30 days. All of these will be severely
hampered if there is a strong storm or Typhoon in the
South China Sea (Quite common)
Of course, these ships are price banded, and the extra
you pay for a fast ship is usually not worth it. If
you don't specify the ship's speed, then your goods
will probably go on a fast ship anyway.
Pay attention to your Countries International container
Ports, and do some independent research. UK for instance
has many container destination ports, some inland like
Birmingham. In general, Only Felixstowe and Southampton
offer reasonable port charges, and special regulations
only apply to Felixstowe. All other destinations will
be at least twice as expensive, and Scotland more so.
You need to balance the UK road transportation charges
against the port charges and special incentives - this
is a tricky one, and it is your call! If you are even
slightly unsure, then name Felixstowe - as you have
to know exactly what you are doing for all the other
options
Once your ship is in UK you will be excited, but expect
there to be several days delay before your container
is 'officially unloaded'. From this unloading date you
normally have 7 days free storage, which does not include
UK Customs clearances. This is a factor if they deem
your container is to be queued for X-ray inspection
(3-days nominal time). You usually learn about this
after the event.
This impacts greatly on your off-loading schedule, especially
for small operators. It is also likely that if you delay
container arrival at your depot until say, Saturday
(When extra bodies are available to help), you may exceed
the 7-day free port storage period, and pay horrendous
charges. Again, this is your call!
Our advice is to not plan offloading anything until
UK Customs release your container, as then you are working
with facts and not well intentioned guesstimates.
China Expats also employs the services of an extremely
good and efficient Chinese Export Agent. During 2008
we sourced and organised the export of dozens of containers.
Several were very complex (Mixed goods, differing tax
bands, over 30 major product categories, with hundreds
of sub-categories). Our Agent was unfazed, and UK Agents
wrote to compliment us on our extremely good paperwork.
We are happy to help you also, or simply take our advice
above and do it yourself - it is free and our pleasure
Imports to China
Since the Policy of "Openness" some 30 years
ago, imports to China have largely been rare and of
specific technological value to China as a whole. Perhaps
this actually started a little earlier, with exports
of massive electricity generating turbines for dam projects
from my home town in UK.
Other Chinese imports of the time included lathes and
similar machinery. These were copied, and subsequent
orders disappeared. Instead the Chinese opened plants
to make these themselves. They subsequently improved
the designs and functions. This is now history, although
Chinese Universities still offer Masters Degree level
courses in 'Reverse Engineering', so be careful here
if this sort of thing is in your bag-baby?
Today in modern China we are largely past this, and
German machines are regarded as the best. Most of the
world at large actually concurs, especially for printing
presses and similar technology. Nowadays Chinese do
not copy the machines, they buy them and also buy the
technicians who understand them. They then learn and
jump ahead
All these factors have tended to hinder general Chinese
Imports, and made the Chinese market hard to crack.
This changed dramatically and irreversibly in (2003?)
when China joined the WTO. Chinese are a curious people,
and like new and different products. Hence there is
a small and dynamically growing Import sector.
China Expats also imports small quantities of goods
into China, so we know the potential is huge. The timing
is also about right, but usually your product must have
'Face' = Very high esteem. It should also be totally
Western, and backed by a marketing campaign. You will
probably need to be in partnership with a Chinese company
to pull this one off for large and immediate profits,
so consider a Joint Venture Company as default criteria
in most instances
China does have import tariffs, and they are very diligent
on inspections of anything that may contravene regulations
or be deemed as contraband goods. This is where your
partnership comes into its own, as having the right
contacts means a smooth passage into China
Summary
This web page turned out to be far longer than I initially
imagined, but I hope it gave facts and answered many
questions for those of you that are new at this. There
is an awful lot I did not write about also, so please
email us if you require specific information. Please
use our contact page in first instance (Spammer protection),
and state subject matter in the Subject line. Thank
you and good fortune in China |
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| This
information is as supplied by the Chinese Embassy in
UK, as dated 20th June 2008, and/or other reliable sources.
Please check this information yourself as it may alter
without notice, and whilst we try our best to ensure
it is correct, please do not hold us responsible for
any errors - this is intended as a simple guide only |
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