Eastern Gate of Export Ppportunities

12/13/2019

The market of the PRC is becoming one of the main markets for Russian companies participating in foreign trade. At the same time, those of them who seek to enter the premium Chinese market should take one important aspect into account – Chinese legislation strictly controls the import of goods from foreign countries.  Also, China imposes very strict requirements to the customs clearance of exports to China. In order to comply with them, Russian exporting companies need actual nuances tested by practice, not only knowledge of the legislation.

Восточные ворота экспортных возможностей

How to cut a window into China?

As you know, in the global world of digital opportunities, rules tend to unify. The customs clearance procedure in Russia is largely followed in line with the overall trend. With the expansion of the Eurasian integration processes within the EEU, the Declaration of goods for export has been scaled up with the help of the Customs code to the entire territory of the Customs Union. Goods sent for export from Russia are subject to customs clearance at customs posts, in the departments of customs clearance and control department of the region where the consignor is located. Under certain circumstances and with the acceptance of the customs authority you can carry out the procedure of registration in other places, but then you need to pay higher fees. In general, customs clearance of exports involves the sequence of sustained actions: handing the goods to customs control authorities, declaration and mandatory payments. Each stage is performed according to the rules in accordance with the Customs Code of the Customs Union. If the exporter does not have sufficient knowledge or capabilities for self-registration, he has the right to apply to the customs representative-broker, which under the contract with the exporter provides services for customs representation, payment of fees, filling in the declaration and the organization of transportation. The preliminary operation, which precedes the main procedure of registration, is to notify the customs authority of the goods arrival. It takes half an hour. And if the goods arrived outside working hours, then no more than 30 minutes from the moment of the next working day. After this procedure, the cargo is temporarily under customs control. But even before he leaves the territory of the Customs Union, the exporter must make a customs declaration, which contains information about the goods, foreign trade operations, the owner and recipient of the goods. Simultaneously with the adoption of the customs Declaration, mandatory payments are made. These include export customs duties and customs charges.

Восточные ворота экспортных возможностей

Since 2017 China has established as Russia's main export counterparty. Against the background of two transcontinental initiatives’ integration – the creation of a single economic space within the EEU and the "Silk Road Economic Belt" – a favorable external environment and the efforts of specialized agencies to reduce administrative barriers to international trade are positive to Russian exporters and transport companies. REC activities change the territory of Russian exports. Therefore, the number of participants of foreign trade activities focused on the Eastern direction will only grow, which is supported by statistics. According to expert estimates, the share of China, the leader in the traditional three partners of the Russian Federation in exports (China, the Netherlands, Germany), will be able to exceed the level of 12% at the end of the year with an increase of more than 4% to the same indicators in 2018.

Восточные ворота экспортных возможностей

On the other side of the border, the dynamics of interaction are also taken into account. Control of the goods import from foreign countries is carried out by the General administration of Quality Supervision, inspection and Quarantine of the people's Republic of China (AQSIQ). Management involves 19 agencies, including AQSIQ service center, AQSIQ information center, research center of technical regulation and standardization, Bureau of standards development, the Academy of inspection and quarantine, the National Institute for standardization (CNIS), National Institute of Metrology (NIM), Center for Quality and Certification (CQC), the National Service for Accreditation and Conformity Assessment (CSEI), a training center for training specialists, press center, news center for quality and standardization, inspection and quarantine, publishing center for Metrology.

Мирослав Золотарев Miroslav Zolotarev, Board Director of the First Worldwide Logistics Alliance ACEX, head of the center for multimodal logistics at the Russian-Chinese Chamber: "Exporting products to China, Russian manufacturers must be certified of their product and submit samples for examination, which shows the degree of compliance of the product produced with Chinese standards. For example, if you want to make a customs payment directly from Russia to the Chinese customs, you are unlikely to succeed. There is a system similar to that in Russia. It provides for the presence of a local importer of your products. Import duties in China are different, there are several VAT rates. The new company has certain preferences and benefits, in particular, it pays reduced VAT, then rates increase. A country as vast as China, with many provinces and the nuances of their economic activities, has many different rules. Therefore, initially it is almost impossible to plan a customs payment from Russia to China and calculate it. It would be best to work with affiliated companies with access to contracts with local companies."

Китай

For example, importing medical equipment, it is necessary to pass registration and certification in the state administration of the PRC for food and drug administration (China Food and Drug Administration – CFDA), which is associated with the classification of medical devices according to the degree of risk.

As for the export of non-food products, since August 1, 2002 in China the new system of compulsory certification of products CCC (China Compulsory Certification) entered into force, and since August 1, 2003 it became compulsory for all participants in foreign economic activity. The presence of the certificate is compulsory for the following types of products:

  • Electrical wires and cables
  • Switches for electric networks, other devices for installation, protection of electric networks
  • Low-voltage (low-frequency) electric units
  • Motors
  • Power tool
  • Welding equipment
  • Consumer electronics
  • Audio / video equipment (excluding transmitters and automotive equipment)
  • Lighting products
  • Terminal telecommunication equipment
  • Cars, their components and spare parts
  • Automobile tire
  • Agricultural mechanical equipment
  • Latex products
  • Medical equipment
  • Firefighting equipment.

Evgeny Fadeev Evgeny Fadeev, Сommercial Director of ACEX Group: "Despite the compulsory certification of a number of non-food products, Russian companies are quite successful in bringing their products to the China markets. In the first eight months of 2019 the Russian capital region delivered more than $854 million worth of mechanical equipment, computers, electrical appliances, electronics and other goods to China. During this period, the volume of non-oil non-energy exports of Moscow to China increased by almost 65% compared to the same period last year ($519 million), which indicates a large commercial potential of this market segment." 

Procedure for entering the Chinese market

Scheme

Do not make a mistake in choosing!

It is difficult for a new company seeking to enter the dynamically developing Chinese market to understand all the details and nuances of both Chinese legislation and Eastern mentality. The set of documents required when placing exported goods under the customs procedure, has at least a dozen positions, including foreign trade contract, invoice, CMR, TIR Carnet book, as well as documents: permits, establishing property rights to the goods, confirming its origin, information and technical, cargo insurance, prepayment under the contract, acts of expertise on the condition and value of the goods... and this is not counting professional translations and certified copies. All documents must be drawn up and filled in perfectly, so that at the post of the Customs Union there will not be any fines or refusal to move cargo abroad. In such a situation, it is almost impossible to do without the expert assistance of customs representatives.

Швырев Андрей Andrey Shvyrev, Customs Clearance Department Head of ACEX Group: "Only companies included in the Register of customs representatives can act as an intermediary in customs clearance of goods for export. The list of such companies is formed by the Federal customs service. Bringing a new product to the Chinese market is not an easy task. The process of customs clearance of exports to China takes quite a long time and requires a large number of permits. But this procedure is worth it and has far-reaching prospects."

5 steps to success: how to promote consumer products to the Chinese market (ACEX recommendations)

1. The analysis of your own product

  • Calculation of the cost of goods in China (goods, delivery, import, storage).
  • Determination of competitive advantages of this product (price, quality, composition).
  • Assessment of shelf life, the possibility of increasing it (at least 12 months).
  • Assessment of production capacity: quantity and delivery time of goods.

2. Market research

  • Clarification of the import conditions of this product into China, identification of administrative barriers
  • Analysis of the average market price.
  • Research of the main competitors in the market, identification of their advantages.
  • Research of the audience of potential buyers (Analytics of search queries, focus groups, etc.).

Восточные ворота экспортных возможностей

3. Assessment of opportunities

  • Whether the goods meet the standards and requirements of the PRC, whether there are restrictions for import.
  • Whether the price meets the average market criteria.
  • Whether the product meets the focus group's taste and visual preferences.
  • Assessment of competitive and other obstacles to the sale of goods.
  • Create a business plan to promote the product, assess their own financial capabilities and expected profits.

4. Preparing for sales

  • Preparation of commercial documents (contract, price list, etc.) and advertising materials.
  • Preparation of the base for Internet promotion (website, online ads, contextual advertising in China).
  • Creating a promotion plan, including participation in exhibitions, Internet promotion, business missions, gathering a database of potential customers for calling, etc.

5. Beginning of sales

  • Creation of pages for Internet promotion.
  • Participation in exhibitions, forums and business missions.
  • Trips and meetings with potential clients.
  • Summarizing after the first steps, summary of errors and shortcomings, adjusting the content of the product (composition, packaging, advertising), active sales on the established customer base (calls, meetings, correspondence, including through the WeChat program).

Восточные ворота экспортных возможностей

The set of documents required when placing exported goods under the customs procedure, has at least a dozen positions, including foreign trade contract, invoice, CMR, TIR Carnet book, as well as documents: permits, establishing property rights to the goods, confirming its origin, information and technical, cargo insurance, prepayment under the contract, acts of expertise on the condition and value of the goods... and this is not counting professional translations and certified copies. All documents must be drawn up and filled in perfectly, so that at the post of the Customs Union there will not be any fines or refusal to move cargo abroad. In such a situation, it is almost impossible to do without the expert assistance of customs representatives.

For any inquiry please kindly contact our sea freight experts: corporate@acex.net.