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Guide for Exporting to China Enhancing Export Capacities of Least Developed Countries in Asia for Intra- Regional Trade

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GUIDE FOR EXPORTING TO CHINA ENHANCING EXPORT CAPACITIES OF LEAST DEVELOPED COUNTRIES IN ASIA FOR INTRA- REGIONAL TRADE GUIDE FOR EXPORTING TO CHINA Acknowledgements This document was prepared by Lei Zhang, Dean of School of WTO Research and Education, Shanghai University of International Business and Economics (SUIBE), Qing Yun Jiang, Associate Professor at SUIBE and Lifeng Tao, Associate Professor at SUIBE, Joost van der Kooij and Onno Roukens, ITC international consultants, Sylvie Bétemps Cochin, ITC Trade Promotion Officer and Mihoko Saito, ITC Junior Professional Officer, under the supervision of Xuejun Jiang, ITC Chief of the Office for Asia and the Pacific. Further thanks go to a wider group of colleagues at ITC, notably Gultekin Ozaltinordu, Project Manager for Enterprise Competitiveness and Mohamed Es Fih, eSolutions for Business Adviser for their feedback and comments. This guide was prepared as a part of the project “Enhancing Export Capacities of Asian LDCs for Intra- regional Trade” supported by the Ministry of Commerce of the People’s Republic of China. The goal of the project is to increase exports of SMEs from 6 Asian LDCs – Afghanistan, Bangladesh, Cambodia, Laos, Myanmar and Nepal – to China, to take advantage of Asia's largest and most dynamic import market, as a stimulus to boost intraregional trade in target sectors. Views expressed in this paper are those of consultants and do not necessarily coincide with those of the International Trade Centre. The designations employed and the presentation of material in this paper do not imply the expression of any opinion whatsoever on the part of ITC concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Mention of firms, products and product brands does not imply the endorsement of ITC. This guide has not been formally edited by the International Trade Centre. © International Trade Centre 2016 i GUIDE FOR EXPORTING TO CHINA Acronyms and Abbreviations This page should contain the list of abbreviations within the document. It can be named either Note or Acronyms or Abbreviations. The following sentence should be used if dollars or metric tons are mentioned in the document. Unless otherwise specified, all references to dollars ($) are to United States dollars, and all references to tons are to metric tons. The following abbreviations are used: APTA Pacific Trade Agreement AQSIQ General Administration of Quality Supervision, Inspection and Quarantine ASEAN Association of South-East Asian Nations B/L Bill of Lading B2B Business to Business B2C Business to Customer C2C Customer to Customer CAEXPO China – ASEAN Expo CCC China Compulsory Certificate CCOI China Chamber of International Commerce CFDA China Food and Drug Administration CFR Cost and Freight CIETAC Chine International Economic and Trade Arbitration Commission CIF Cost, Insurance and Freight CIFIT China International Fair of Investment & Trade CIQ China Inspection and Quarantine Service CISMEF China International SME Fair CITES Convention on International Trade in Endangered Species CTL China Textile Leader CNCA Certification and Accreditation Administration CQC China Quality Certification Centre CSSN China Social Sciences Net D/A Documents against Acceptance D/C Documentary Collection D/P Documents against Payments EXW Ex-Works FIE Foreign Invested Enterprise FOW Free on Board FTA Free Trade Agreement FTZ Free Trade Zones GB Guobiao standards GSP General System of Preferences ICC International Chamber of Commerce IP Intellectual Property ISO International Organization for Standardization ITC International Trade Centre ITFCEW Invest and Trade Forum for Co-operation between East and West China (ITFCEW) ii GUIDE FOR EXPORTING TO CHINA JV Joint Ventures L/C Letter of Credit LDC Least Developed Countries MFN Most favoured nation MOFCOM China’s Ministry of Commerce SMEs Small and Medium-sizes Enterprises SAC Standardization Administration of the People’s Republic of China SAIC State Administration of Industry and Commerce SAR Special Administrative Region SEO Search Engine Optimisation T/T Telegraph Transfer UKTI UK Trade & Investment UNCTAD United Nations Conference on Trade and Development VAT Value-Added Taxes WFOE Wholly Foreign-Owned Enterprises WTO World Trade Organization GUIDE FOR EXPORTING TO CHINA Contents Acknowledgements i Acronyms and Abbreviations ii Chapter 1. Why China? Finding your opportunities 1 1. Why China? The big picture 2 1.1. Introduction to the Chinese market 2 1.2. Top 3 reasons for Asian LDC SMEs to enter the Chinese market 2 1.2.1. Fast growing consumer market 2 1.2.2. Increasing purchasing power 3 1.2.3. Trade opportunities for ASEAN member states 3 1.3. Opportunities for SMEs from Asian LDCs 4 2. Opportunities in key sectors 5 2.1. Food sector 5 2.2. Textiles and apparel sector 6 2.3. Wood 7 3. Choosing the right location in Mainland China 7 3.1. Regions with a promising market for Asian LDC SMEs 7 3.2. Where to start 9 3.3. Expectations for the coming 2 years 10 3.4. Mapping your opportunities: doing market research on China 10 Chapter 2: Five steps to successful market access 13 1. Accessing the Chinese Market 14 2. Step 1: Determine your product category 14 2.1. Free Imports 14 2.2. Restricted Imports 15 2.2.1. Import licence 15 2.2.2. Import quota 15 2.2.3. Tariff quota 15 2.3. Prohibited Imports 15 2.4. China Compulsory Certification 15 3. Step 2: Make sure your product meets the relevant standards 17 3.1. Standard levels in China 17 3.1.1. National standards 17 3.1.2. Professional standards 17 3.1.3. Local standards 17 3.1.4. Enterprise standards 17 iv GUIDE FOR EXPORTING TO CHINA 3.2. Food sector highlights 18 3.2.1. Green and organic food 18 3.2.2. Food Safety and Import Regulation 18 3.3. Textile and garment sector highlights 18 4. Step 3: Make sure your product meets all labelling and packaging requirements 19 4.1. Packing and packing list 19 4.2. Shipping mark on the package 19 4.3. List with labelling requirements 20 4.4. Sector specific labelling highlights 21 4.4.1. Textile and apparel 21 4.4.2. Food 21 5. Step 4: Provide required paperwork to Chinese customs 21 6. Step 5: Pay relevant customs taxes and fees 21 6.1. Custom duty tariffs 22 6.2. Special tariff arrangements between China and Asian LDCs 22 6.2.1. Agreement on trade in goods of the framework agreement on comprehensive economic co-operation between China and ASEAN 22 6.2.2. Asia-Pacific Trade Agreement 22 Chapter 3 Distribution channels: finding the right partner 27 1. Export channels and distribution 28 1.1. Fragmented market 28 1.2. Working with a company that has the right to operate import activities 28 1.3. State-owned enterprises 28 1.4. Distribution channels for export 28 1.5. Partnerships 29 1.6. How to find a partner 30 1.7. Criteria for selecting a good and trustworthy partner 31 1.8. Exporting through online channels 31 2. Other modes of market entry 32 2.1. Directly investing: Wholly foreign-owned Enterprises and Joint Ventures 32 2.2. Branches and representative offices 33 2.3. Free trade zones 33 2.4. Using Hong Kong as entry to Mainland China 33 3. Sector specific distribution highlights 34 3.1. Food sector 34 3.2. Textiles & garment sector 34 Chapter 4. Marketing: essential for long-term success 37 GUIDE FOR EXPORTING TO CHINA 1. Introduction 38 2. Product 38 2.1. Market research 38 2.2. Understanding your market 38 2.3. Regional differences 39 2.4. Intellectual property rights 39 2.5. Brand or product name 39 3. Place 40 3.1. Focus your efforts 40 3.2. 1st, 2nd and 3rd Tier cities 40 3.3. Clusters 41 4. Price 41 4.1. Pricing strategy 41 4.2. Pressure on cost price 41 4.3. Incoterms 41 4.4. Export price calculation 43 5. Promotion 44 5.1. Promotion in China 44 5.1.1. Influencers and opinion leaders 44 5.1.2. The Chinese calendar 44 5.2. B2B promotion 45 5.3. Online marketing and promotion 45 5.4. Promotional events 47 5.4.1. Successful participation in trade fairs 48 5.5. Hospitality 49 6. Promotion through missions and associations 49 7. Advertisement 50 8. Setting up follow up and after sales service 50 8.1. After sales service 50 8.2. Chinese-speaking staff 50 9. Relationship building 50 Chapter 5 Tips on commercial practices 52 1. Ordering procedures 53 2. Payment methods 53 2.1. Bank transfer (telegraph transfer or T/T) 54 2.2. Documentary Collection (D/C) 54 2.3. Letter of Credit (L/C) 54 3. Managing risks by using a contract 55 vi GUIDE FOR EXPORTING TO CHINA 3.1. Different viewpoints on contract 55 3.2. Hiring a lawyer to draw up your contract 56 4. How to solve contract disputes 56 4.1. Arbitration 56 4.2. Dispute resolution clause in your contract 56 Chapter 6 Tips on export logistics and documentation 58 1. Ways of getting your goods to your Chinese customer 59 1.1. Shipping methods 59 1.1.1. Transport by sea 59 1.1.2. Transport over land 59 1.1.3. Transport by air 60 1.2. Logistics providers 60 2. Border controls and inspections procedures 60 2.1. Border Controls and Inspection 60 2.2. Customs 61 2.2.1. Entry-exit commodity inspection 61 2.2.2. Customs clearance 62 2.3. Time limit and charges 63 3. Practical tips per document 63 3.1. Import cargo declaration form 63 3.2.
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