China is an attractive market full of opportunities and challenges. It can offer you great revenues but also great risks. If you want to start an export / import business in China, this guide is for you!
1. Define the Business Scope.
In China companies cannot do business beyond their business scope, or they will be fined. The categories of the goods you are going to trade be specified in the business scope, for example wholesale and export of textile, electronic products, furniture etc.
2. Check the import/export policies.
Make sure the goods you are planning to trade are allowed for import or export and check whether there is a quota on the quantity of these goods. Animal and plant products, used equipment, fertilizers and other goods are tightly controlled or restricted for import. The list of the goods restricted or prohibited by China is here.
3. Find a suitable business model.
You can choose to sell your products through agents or distributors and that doesn’t require you to set up a company in China.
If you are planning a serious business, you want to hire staff, issue invoices for your customers and protect you intellectual property, you might consider establishing a company in China to have more control over your business. See how to set up a company in China here.
4. Apply for the license.
If you decided to set up a trading company, you will have to apply for an import/ export license. For trading certain goods you need to obtain a special license as well, e.g. for alcohol, food, medical devices etc. Ask us to make sure what license is needed for your goods.
5. Consider the special trade zones.
There are many special trade zones in China (e.g. bonded zones, economic development zones etc.). These special zones make usual customs procedures faster and more convenient and allow for preferential tariff and tax treatment. Check the benefits of Free Trade Zones here.
6. Make sure your product has been sold in China before.
If your product is completely new to China and has never been sold there before, you will have to send the samples first to get your product registered and approved for the import by the customs.
7. Check Chinese labeling/packaging requirements.
China has a range of labeling and packaging requirements that are particularly important for consumer goods. Goods that do not meet these requirements might be refused to enter China.
8. Consider the taxes.
If you are in an import/export business, you will have to consider three kinds of taxes: VAT, consumption tax and customs duties. Retrieving VAT can help you save quite some money; however, not all the companies can retrieve VAT in China. Here you can see why.
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