China’s annual foreign trade data was released on January 13
th
. The data shows that although international financial markets have been less stable due to international political events, the total value of imported and exported goods in the year of 2016 was RMB 24.33 trillion. The increase through the final quarter of 2016 in particular indicated healthy foreign trade going into 2017.
Several of our clients are involved in foreign trading businesses, and large numbers of clients and potential clients, including several start-ups, are planning to operate in the same area. In China, in order to operate import and/or export businesses, enterprises should include the types of items to be imported and exported within their approved “Business Scope” as listed in the Articles of Associations and within the company’s their Business Licenses. It is not enough for a company to operate import & export business with a Business Scope covering “import and export.” The company must also acquire import & export rights from a few different authorities in China, requiring a series of certificates and approvals.
A company seeking official approval to engage in import and export business is required to obtain approvals from the Commerce Bureau, the State Tax Bureau, Customs, the Public Security Bureau, the company’s own Bank, the Inspection and Quarantine Bureau, among others. These procedures can often be complicated and onerous for company personnel to handle, as sometimes professional questions as to legal and taxation issues will be involved.
The ability to conduct import and export will benefit a foreign trade company immensely; most notably by removing the company’s need to reply on import or export intermediaries and associated costs. Additionally, the company will gain the full benefit of VAT rebate upon export of products. The opportunity to communicate directly with foreign purchasers will expose the company to additional avenues for business.
Any China trading company seeking to engage in import and export needs to be aware of all the formalities required to obtain approvals to operate in this business area. A local China lawyer can assist with identifying and obtaining all required approvals.