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China investment guide

China Import and Export Procedures

China have freedom in undertaking all the import and export activities including international trade, with the exception of those forbidden by state laws and regulations.
Some of the import and export procedures are open to choice. Whether these procedures are necessary is solely decided by the kinds of import and export and the category of the import and export commodities.

Chapter:  I   1 2 3 4 5 6 7 8    II

I. China Import Procedures

Most of the import businesses in China are transacted in FOB prices. Only a very small minority of the import commodities are transacted on CIF terms. The majority of means of payment are in letter of credit (L/C).

The commodity import include a series of steps from signing a contract to making the payment. The general import procedures transacted under the terms of FOB include: writing down an effective contract, writing L/C, booking space, pushing for shipment, insurance, checking documents, making payment, customs declaration, receiving the shipment, inspection, goods delivery and claiming import indemnity.

1. The establishment of an effective import contract

A contract comes into effect once the price quoted based on a written agreement, or the contract between a Chinese import enterprise and a foreign supply businessmen is accepted or the price quoted by the foreign supply businessmen is accepted.

Though China has greatly opened its import business, its import business is controlled and regulated by a series of laws and regulations such as the "Foreign Trade Law" and "the Customs Law". Therefore businesspersons must consult with various laws and regulations issued by the Chinese government before importing commodities from overseas.

All products, if no limit is set, can be imported freely while ways of trade and payment which run contradictory with laws and regulations are generally forbidden.

2. The writing of a Letter of Credit (L/C)

Buyers must fill in an application according to regulations in the contract so as to write out a letter of credit once the import contract is signed. The content of the L/C must conform with the articles in the contract.

The time decided in the L/C must also fit for the regulations in the contract.

After the L/C is written, buyers can apply for correction in the Bank of China.

3. Booking space and pushing for shipment

The buyers are responsible for booking space if the import contract is signed under the FOB price terms. At present, the space booking of China 's import trade is generally entrusted to China National Foreign Trade Transportation Corporation. After the shipment matters are settled, buyers should inform sellers the time and name of the ship so that the seller can make preparations and be ready for loading. In the meantime, buyers should push for the shipment so that the transportation company can load on time.

4. Insurance

The insurance of import contract under FOB and CFR terms is on the purchasing side. At present, the insurance of import goods carried through ocean shipping is entrusted to China National Foreign Trade Transportation Corporation, which is responsible for signing preliminary insurance contract with the People's Insurance Company of China (PICC).

5. Checking documents and making payment

The Bank of China will check the number of documents and contents by referring to the regulations in the Letter of Credit after receiving bank drafts and documents. If they are found correct, the Bank of China will make the payment to the overseas enterprises. The import enterprises can buy money orders from the Bank of China with Renminbi according to the announced foreign exchange rate. If something is found wrong, the bank can inform the other side to make the correction or stop making the payment.

6. Customs declaration and receiving shipment

Import enterprises, after retiring documents, should prepare for receiving the imported products. Once the product reached the port of arrival, they should start customs declaration and receiving the import articles.

The customs declaration and goods receiving are usually done by China National Foreign Trade Transportation Corporation instead of import enterprises.

7. Checking, receiving, and goods delivery

Imported goods must be inspected by commodity inspection organizations. If the import goods are found missing, damaged or in short, import enterprises can claim an indemnity with proof from commodity inspection organizations.

After the above documents are completed, import and export enterprises must entrust the foreign trade transportation company to pick up goods and deliver them to ordering enterprises.

8. Claiming an indemnity

Claiming for an indemnity often happens in cases in which foreign sales parties cannot deliver products, or cannot deliver them on time or the quality, packaging, amount cannot fit those prescribed in the contract.

The target of claiming for an indemnity is concentrated on the commodity supply parties, shipping corporations or insurance companies in line with different degrees in economic losses.

II. China Export Procedures

In China 's export business, BOF terms apply only in a small number of countries and regions which have signed agreements with China on the same delivery terms. The majority of countries do business on CIF or CFR terms and get paid in letter of credits. This kind of export contracts involve many links with complicated procedures and are associated with many aspects and departments.

Export procedures usually include: the establishment of an export contract, preparing export commodities, push for documents, checking and changing documents, booking space, customs declaration, commodity inspection, insurance, loading, writing documents and settlement of exchange. Among them, the four procedures such as goods (preparing for export goods), documents ( push for documents, checking and changing documents), ships (booking space), payment ( writing a document and settlement of exchange) are the most important.


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