China is evolving and one of the biggest changes has been how China has greatly tightened up its enforcement of its laws, particularly against foreign companies; certain things that were “no big deal” five years ago are a big...
China is evolving and one of the biggest changes has been how China has greatly tightened up its enforcement of its laws, particularly against foreign companies; certain things that were “no big deal” five years ago are a big deal now. Dealing with China customs law is a prime example of that. If you are a foreign company doing business in China that involves importing products into China (or exporting, but less so), it behooves you now more than ever to get things right.
This is part three of a four part series of posts by Shawn Mahoney designed to help you avoid China customs problems. Go here for Part I, China Importation 101, which dealt mostly with the core concepts related to importing product into China. Go here for China Importation 101. Part II, which mostly discussed China’s Harmonized Tariff Schedule and the similarities between China customs laws and US and EU customs laws.
This and the next post will examine the most effective ways to communicate and interact with China’s main importation enforcement agencies, GACC (the General Administration of Customs) and AQSIQ (The General Administration of Quality Supervision, Inspection and Quarantine). Here is part III of Shawn’s series:
The core to any interaction with GACC and AQSIQ is relationship building. My good friend Professor John Osburg writes, “Information in China flows through personal relationships. These relationships are best viewed as communication channels which equal resources for assistance.” It is vitally important to the success of your ongoing China importations to create communication channels with both GACC and AQSIQ in a legal and legitimate manner.
One of the complaints I consistently hear is about the capriciousness and unpredictability of Chinese customs officials. The reality is China’s system is no less capricious than in the US. Both countries provide ample flexibility for customs enforcement of ambiguously written laws. In the end, dealing with China customs is a person-to-person interaction and there are some people, regardless of country, that are harder to deal with than others.
In many ways, dealing with China Customs is no different from dealing with US customs. They are not your friends, but if you take the time to treat them as humans and to create a relationship, they typically will not make your life any harder than it has to be as an importer. No one likes it, government official, vendor or customer, when you only talk with them when you have a problem that needs to be solved. In our experience if you follow three simple rules, your interactions with GACC should be greatly improved.
Understand the laws and regulations as they pertain to your specific product. Whether you are acting as the importer of record (IOR), or another organization is the IOR, it is your responsibility to make sure all documentation is accurate and correct. There is no faster way to get on a custom official’s bad side than by you or your IOR importing goods incorrectly, especially if you are not using accurate information that is basic to any importation in China. Guanxi, or relationships, will not excuse you or your importer from failing to import goods under the laws and regulations of the PRC. In the end, it is your product and your brand name that will be negatively impacted by importing goods incorrectly.
All the knowledge in the world only goes so far when dealing with an individual government official. Someone in the importation chain must have a working relationship with China customs. Whether you are importing for yourself, using a broker, or relying on your customer to import, it is vital to build a legitimate relationship with your local GACC office. The best way to do this is via the Enterprise Classification Management (MCME) system, which I will discuss below. We always advise to maintain a wide breadth of contacts at your local customs office, as part of your ongoing transactions and for maintaining or imp