Do You Know about Import-Export Taxes and Duties in China?

2021-10-31

插图1.jpgImporting goods from China necessitates the completion of a checklist of different items that, if not completed correctly, could result in shipment delays and fines. So, why not engage with a registered customs broker to make the process of import duty from China to USA go as smoothly as possible?

China is one of the most important commercial partners of the United States, accounting for more than 20% of the total imports. Despite fragile relations between the two countries, this tendency has remained consistent over time.

High-volume trade between the two countries will continue for years to come. After all, finding new sources for almost half a trillion dollars in commodities isn't easy, so importers will need to be well-versed in the rules for import duty from China.

The real scenario of trade between the US and China

Currently, the US-China trade connection supports around 2.6 million employees in the USA across a variety of industries, including jobs created in America by Chinese enterprises. And, if the middle-class population of China continues to grow rapidly over the next decade then this number will surpass the total population of the US.

Companies in the United States have a huge opportunity to tap into a certain new and lucrative client base, which might help promote employment and economic growth. Different economic data shows that countries with close economic relations to China outperform others with less integrated trade bindings, and this trend is expected to continue.

A few examples of various benefits to the economy of the USA from trade with China are as follows:

  1. In 2015, China bought $165 billion worth of goods/services from the US, accounting for 7.3% of total US exports and almost 1% of the total economic output of the US.

  2. Although the trade deficit has resulted in the loss of certain manufacturing jobs in the US, high-value products such as cars, trucks, construction equipment, and electronics are sold to China, supporting jobs. Business and financial services were also exported by US companies, totalling in 2014, $6.7 billion and in 2015, $7.1 billion. We estimate that US exports to China will exceed $520 billion by 2030.

  3. Because China has become such an important element of the supply chain of global manufacturing, many of its exports are made up of foreign-made components that are sent to China for final assembly. When the value of all these imported components is deducted from the exports of China, the trade deficit of the US with China is cut in half, to about 1% of GDP—roughly the same as the trade deficit of the US with the EU.

  4. China has evolved in 2000 from being America's 11th-largest export market to the third-largest target for various American goods and services. In 2015, direct and indirect US exports to China produced 1.8 million new employments and $165 billion in the US GDP. When the economic benefits of investment made by the US in China and also Chinese investment in the USA are added together, the result is 2.6 million jobs and $216 billion in GDP in the United States.

  5. China is anticipated to remain one of the world's fastest-growing major economies, providing chances for American businesses, if the country continues to implement economic reforms that remove lingering market access hurdles in many areas.

  6. Chinese manufacturing also cut consumer goods prices in the US, lowering inflation and putting more money in Americans' pockets. Because of cheaper Chinese imports, US consumer costs are 1 percent to 1.5 percent lower on average. In 2015, the average American household earned $56,500, therefore trading with China saved all these families almost up to $850.

  7. Manufacturing productivity growth in the United States has surpassed that of most advanced economies since 2003. According to Oxford Economics, manufacturing productivity in the United States improved by 40%, or 2.5 percent per year, from 2003 to 2016, compared to 23% in Germany.

Meanwhile, Chinese employees are less cost-competitive as compared to their American counterparts due to fast-growing factory wages and also a rising yuan.

Manufacturing in the United States is still 90% more productive than in China. These tendencies may result in some manufacturing jobs being "re-shored" or remaining in the United States.

Few challenges while importing from China

Along with the numerous advantages of sourcing outside of the USA, such as lower production costs, a successful supply chain requires the efficient management of several difficulties. Finding a bargain in China is not difficult, but doing it while avoiding issues like timing, distance, quality, and language can be difficult.

The following are a few challenges while dealing with China imports.

1. Defects and quality levels

Defects and quality levels Because manufacturing processes aren't perfect, the industry usually accepts a certain degree of product quality. Any manufacturing process involves complexity and variability, and unknown sources may not adhere to recognised defect levels in the United States.

Choosing any non-US-based sourcing firm can raise issues and disagreements regarding who is responsible for higher-than-normal defect percentages.

2. Time zones.

Even with the 13-hour time difference between the USA and Asia, some U.S. corporations have problems dealing with such companies on the opposite side of the globe.

When a critical situation develops, waking and working hours may not coincide, which can always be a challenge. For firms that are striving to run nimble operations, waiting one day to answer a product query or make a process change is frequently simply too long.

插图3.jpg3. Long-range logistics

It's simple to buy products at a delivered price, but the delivery may be delayed. Ignoring the complexities of long-range logistics, whether it's a production hold-up or a transit issue, can be dangerous.

4. Accountability and compliance

When it comes to global sourcing, companies should think about social compliance. They must do their homework on child labour, suitable working conditions, forced labour, and fair compensation procedures.

However, until local employees are hired, there is no definite way to assure social conformity from around the world. The risk is significant brand damage as a result of unethical or illegal acts that may come to light.

5. Delays

It is critical to have firm dates of completion and shipment timelines to get on-time product delivery. Globally sourced items, on the other hand, are frequently merely a component of a total bill of materials, which must be present for product completion.

Delays originating outside the United States can stalemate production and raise associated costs.

6. Language barriers

Although global partners provide competitive pricing edge and efficiencies, however, day-to-day business is generally conducted in a foreign language. Managers will most likely communicate in English, but their instructions must be communicated to line employees, and your own words may be lost in translation.

When communications aren't precisely translated and interpreted, mistakes are sure to occur.

These six elements pose significant dangers, yet they are not insurmountable obstacles. Companies interested in leveraging global sourcing prospects can either establish their own teams in the US or work with skilled partners to manage and eliminate these risks.

When done correctly, sourcing from outside the USA can have a lot of advantages.

Import-export taxes and duties of 2021 in China

China has issued a set of regulations aimed at lowering China import taxes and levies to promote greater openness and domestic consumption. All these changes may have an impact on businesses that import and export various taxable products and services to and from China.

A core list of general guidelines for foreign corporations to follow governs this complex structure. We explain the 3 types of import duty from China that apply to enterprises importing or exporting items to China:

1. Value-added tax (VAT)

All Imported items are subject to a value-added tax. According to the announcement made by the State Taxation Administration of this VAT, China import duty rates on imported goods were reduced to either 9% or 13% as of April 1, 2019. This is down from 10% or 16% previously.

Certain goods, primarily agricultural and utility items, are subject to the 9% tax, whereas other goods that will be subjected to the VAT, such as manufactured goods, are subject to the 13 percent tax.

2. Consumption tax (CT)

Companies and organisations that manufacture and import various taxable products, will process taxable products on consignment, or will sell taxable products are subject to China's consumption tax (CT).

Imported products that are taxable under the consumption tax of China include cigarettes and alcohol, luxury goods such as jewellery and cosmetics, and a few high-end products like passenger vehicles and motorcycles.

The consumption tax rate for imported goods varies based on the product type to be brought into the country.

3. Customs charges

China import taxes and export duties include the following different rates of duties:

  • Most-favoured-nation

  • Special preferential

  • Conventional duty

  • Tariff rate quota (TRQ)

  • General duty rates

  • Provisional duty rates

One type of customs tax rate is set for exports. However, there may be provisional duty rates meant for exports that will be enforced for a limited time period.

How to import any wholesale products from China?

A few questions you should ask yourself if you're contemplating while importing any wholesale products to the United States from China.

  • Are my Chinese imports marketable and simple to sell?

  • Do my Chinese imports have a profit margin?

  • Do my Chinese imports have or add quality to the market?

  • Is it simple to work with and communicate with my suppliers?

Answering these questions can assist you in locating products. When looking for products for importing from China, there is a simple formula you need to follow called MAPS. MAPS stands for:

  • Marketable

  • Affordable

  • Profitable

  • Sellable.

You must keep MAPS in mind when looking for suppliers.

Marketable

  • What will make my importing from China unique?

  • Will my imports from China be sustainable?

  • What are the benefits of products and economical properties?

Affordable

  • How much will it cost if produced in the U.S.?

  • Does any specific supplier specialize in similar products?

  • Can I make request for multiple pricing quotes from different suppliers?

Profitable

  • What will be my landed cost/unit?

  • What will I import from China that can be sold in the USA?

  • What will be the ROI?

  • What will be the profit margin/unit?

Sellable

  • What demographic will I be pursuing?

  • Where will my Imported items from China sell the most?

  • Why will my imported product be successful?

  • Is my imported item from China competitive?

A large number of importers visit China to meet with various Chinese suppliers. Many Chinese regions specialise in the production and distribution of specialised items. Furniture or toys imported from each have their own markets and rates of import duty from China to USA.

You may choose to deal with a sourcing agent if you cannot travel to China to meet your suppliers. Any sourcing agent from a certain trade company may contact suppliers and Chinese companies that will manufacture the goods that you want to import on your behalf.

For those importing from China, online global sourcing is also becoming a rising business. Alibaba.com and other similar websites make ordering goods from Chinese suppliers straightforward.

When buying from China, you may need to be careful of minimum order quantities. For modest purchases, certain wholesalers and manufacturers have very low MOQ, but for larger orders, they have a high MOQ.

It's time to start your process of getting the goods across your border and through customs after you've found the items you want to import. This necessitates a significant amount of research and planning.

Incoterms are another issue to know about when dealing with international trade. The International Chamber of Commerce invented Incoterms, which are defined commercial regulations (ICC). Incoterms are a set of rules that govern international trade.

Many commercial transactions and also the procurement process use Incoterms. Both trade councils and international courts advocate the use of certain incoterms to streamline and simplify the procedure for import duty from China.

Do I need any permit for importing from China?

Importing products from China does not require general import permission. Certain Chinese goods, on the other hand, may require a permit from a government agency. Imported products are overseen by different government authorities, and the standards can change.

As an importer, you need to guarantee that your imported goods comply with all federal regulations, which may include permits and also paying China import taxes.

Agencies that will oversee common imports include:

  1. FDA is the U.S. Food and Drug Administration. Food, medication, some housewares, cosmetics, health equipment, and food-related items or any other items are all regulated by the FDA. All imported food goods must be given prior notification, according to the FDA.

  2. EPA is the United States Environmental Protection Agency (EPA). The Environmental Protection Agency (EPA) regulates many chemicals imported into the United States.

  3. Transportation Department (DOT). Cars and motor vehicles are among the imports that are regulated by the DOT, according to CBP data. Consumer Product

  4. The Commission on Safety (CPSC). The CPSC regulates imports of toys and children's products.

  5. The Federal Trade Commission (FTC) is a government agency (FTC). The FTC is in charge of several aspects of the import process, that includes product labelling and other aspects.

  6. USDA (United States Department of Agriculture) (USDA). Plants, plant products, wood, animals, and other items are all regulated by the USDA. Permits and more are frequently required by the USDA.

  7. Trade and Taxation of Alcohol and Tobacco (TTB). Importers of alcohol and tobacco goods must get authorization from the TTB.

  8. The Federal Basic Permit, the Certification of Label Approval, the Natural Wine Certificate, and the Certification of Origin and Age are all TTB permits. When importing alcohol, certain permits are required.

Importers must be aware of a slew of Partner Government Agencies (PGAs) and China import duty rates to remain compliant. Any customs broker can assist you in understanding all of the rules that relate to your shipment and also can contact all of the relevant PGAs on your behalf.

200314360 2.jpgChina import consulting through a licensed customs broker

When importing from China, any Licensed Customs Broker can always be extremely beneficial. They will ensure that your imported items traverse borders efficiently and arrive at your port of entry on time.

They may also assist you in ensuring that your cargo of imported goods adheres to all customs norms and guidelines when entering the country. Also, they will guide you through the procedure step by step to ensure that the import proceeds successfully and quickly.

When importing from China, your Licensed Customs Broker can assist you with a range of services. Among the services available are:

  1. Arrange for customs clearance at your port of entry for imported goods.

  2. Prepare for the arrival of imported Chinese products.

  3. Ensure that imported items and goods enter the country smoothly.

  4. Assist CBP in making sure that all government responsibilities, taxes, and also fees are paid on time.

  5. Determine whether permits are required for the importation of your items and assist you in getting them.

  6. Guide the import process, including assessing entry possibilities for your goods, steering free-trade agreements, and obtaining tax or tariff deferment.

It's a smart move to use China Import Consulting service through certain USA Customs Clearance. Licensed Customs Brokers will review all of the pertinent facts for your shipment and guarantee that it complies with CBP and other requirements. 

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