Even with its dominance as the world’s biggest sourcing base and second largest consumer market, it has never been easy to conduct trade in China. But in June 2016, the China General Administration of Customs (GAC) started a pilot program in Shanghai which introduced nationwide customs clearance reform with the goal of national implementation by 2020.
The reform is an important move forward from the previous Regional Customs Clearance Integration Reform. It provides the foundation to unify China customs for consistent nationwide enforcement in declaration issues such as classification and valuation, which would address a traditional compliance challenge resulting from the current customs district driven approach. Once the new model is fully implemented by 2020, companies will be able to submit declarations to any customs district regardless of port of entry for imports or departure for exports.
The pilot program established two Shanghai-based centers, a National Customs Risk Prevention Center and Unified Tax Collection Center, to carry out a new supervision model that will standardize and streamline previously difficult regulations and grant preferential trade facilitation measures to companies with demonstrated compliance records. Customs will release the goods at the port after a safety and security risk analysis of the goods, and conduct tax collection and follow-up supervision after clearance.
By establishing these two centers, the GAC aims to accomplish three initiatives: carrying out a new model for fast and safe goods clearance; transforming the tax collection method; and realigning customs enforcement responsibilities.
Above all, this reform will lead to a significant change in China Trade Management before and after submitting declarations to customs for all of the parties involved. However as with any change, there will be challenges and benefits.
We suggest companies’ leverage automation capabilities specific for import and export compliance for Chinese customs processing in a global trade management solution. In particular, it’s important to have the right partners and infrastructure in process, people, and technology in place to respond to the constantly changing regulatory requirements with very short lead times in China. This will require a strong local focus and expertise.
This is a significant China Customs trade facilitation reform policy. Whether this is a response from China to bolster trade in a time when the numbers are bleak, is yet to be understood. Amber Road has published a full report to help organizations analyze its impact on trade operations and formulate a plan to take advantage of this initiative as it progresses. Visit here to download the full report.
Kae-Por Chang is general manager for China Trade Management at Amber Road.