Ten Checks for China Trade Compliance

In today’s global business environment, it has become increasingly challenging for companies to manage compliance within many different countries. In particular, general trade management and trade processing (e.g. under China’s bonded zone operations) in China have become very difficult.

There are many government agencies within China that create their own unique challenges for importers, including:

• Customs
• Commerce (MOFCOM)
• Agriculture (AQSIQ)
• China Food & Drug Administration (CFDA)
• Foreign Exchange Bureau (SAFE)
• Administration of Taxation (SAT)
• And many others

In addition, local regulations are constantly changing within China, and companies should develop policies to manage their trade compliance efficiently and effectively. Organizing oversight for these processes is a must. Hiring a third-party may be a good idea for developing good practices.

In the meantime, companies can self-assess their internal trade compliance by doing the following 10 checks:

1. Know your facilities, how they operate, and where they are located
2. Know the total number of import declarations your company filed
3. Know the total value and clearance time of declarations made
4. Know your duties, and ensure that they are calculated accurately and paid in timely fashion
5. Know your price declaration history by item to ensure there are no large fluctuations, which might indicate a problem
6. Develop a management policy for your supply chain to ensure that the classifications used are correct (or you will be the one penalized)
7. Know your compliance documents statuses, specifically for accuracy and retention. All importers need to have a copy of the required declaration documents
8. Ensure all issues in areas such as classification, valuation, and missing documents are monitored and resolved
9. Evaluate your freight forwarders’ or customs brokers’ activity to ensure they are legit. Keep copies of invoices and all documents they provide you.
10. Maintain a written handbook for trade compliance policies. This shows auditors that you have enforcement policies in place.

The best way to determine if you are meeting the above goals is to ask yourself the following question:

“How fast can my company respond to a Customs audit and provide the declared value of regularly imported items, with corresponding customs declarations, from the last 3 years?”

If your answer is anything more than six months, the norm for an inspection after Chinese Customs gives you notice, you may need to review your compliance goals and adjust them to ensure a timely response if Customs come knocking at your door.