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The requirements and vocabulary regarding China foreign trade documentation can be more than a little confusing. This is because in many cases Chinese companies exporting products require three different types of documentation – Foreign Trade Registration, China Customs Registration and an Export License – and unfortunately many people mix these terms up or use them interchangeably.
Simply put, a Chinese organisation must have China foreign trade registration in order to directly engage in foreign trade. This registration lasts several years and is one document. Then, if they want to do customs declaration by themselves instead of customs brokers, they are required to obtain customs registration. For certain categories of goods, each import / export consignment also requires an individual import / export license.
The first step a Chinese company needs to go through is to get registered for foreign trade. Here's the introduction of a China Foreign Trade Registration Certificate. This is done through the Ministry of Commerce (MOFCOM) and is required for all China foreign trade operations regardless of product category.
To get the MOFCOM registration, the Chinese company has to simultaneously obtain or demonstrate various registrations and approvals from customs, inspections, quarantine, foreign exchange and tax authorities. They have a thirty day time-frame to complete this in.
Holding China foreign trade registration status also requires that the company has a valid, registered business licence. If they lose their business license or fail to renew it, their foreign trade status is automatically revoked as well.
China foreign trade status only applies to one company, and they are forbidden to attempt to resell or lease it to others. This doesn’t include trade companies, of course, who trade goods under their own name. What’s more important is that no company can attempt to charge for any foreign trade registration or set up, so any such claims or excuses from trading partners should be viewed with suspicion.
Once a company has China foreign trade registration, they’ll have a "Registered Import and Export Enterprise Code" which is tied to their business license registration number. This code will be specified on their China Foreign Trade Registration Certificate which looks like this:
Once a company has attained China foreign trade registration their next step is to get registered with China Customs through their local customs branch.
In practice, not all Chinese foreign trade companies have this registration because many smaller business companies use brokers to assist with the import and export process.
Once a company has obtained the above registrations, it will also need to obtain an individual import or export license for each consignment of goods it wishes to trade.
China’s Ministry of Commerce has a classification system which determines the type of license required. There are three categories: Permitted goods, Restricted goods and Prohibited goods
The least restricted category of goods are ‘permitted goods’. This category is described as ‘automatically licensed’, which means that a license is required but it will be granted automatically on application. The automatic license is valid for six months, and may have up to six batches of goods on it.
After permitted goods, the next category is ‘restricted goods’. These may be imported / exported, but are controlled by either license approval or yearly quotas.
The categories requiring licenses are used (i.e. second-hand) mechanical and electrical goods, and substances that deplete the o-zone layer. These may be imported and exported, but only with the proper approval. This approval lasts for one year.
Various crops and natural raw materials fall under trade quotas. Note that the quota can be exceeded; staying within the quota simply results in a lower tariff. Companies wishing to engage in trade of products categories with quotas must apply for the allocation of quota between October 15 and October 30 each year.
Products falling under the category of prohibited goods are absolutely banned and can never be traded by Chinese companies. There are several catalogs of such goods which are issued by various authorities including MOFCOM. In general, prohibited goods are things like dangerous waste products and toxic chemicals.
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