QualityInspection.org

Quality Assurance, Product Development, and Purchasing Strategies in China

  • Home
  • Articles
    • How To Manufacture A Product In China (without losing your shirt)? [Importer’s Guide]
  • Best Of
  • About Us
  • Contact us
X

Don't miss a post

It's easy to subscribe to our newsletter where you'll receive weekly updates for professional importers and manufacturers on better understanding, controlling, and improving manufacturing & supply chain in China, India, Vietnam, and beyond.

You are here: Home / Sourcing New Suppliers / Is an export license a must for Chinese suppliers?

Is an export license a must for Chinese suppliers?

November 27, 2012 by Renaud Anjoran

Sourcing New SuppliersSome quality control firms say to their clients: “You should book an audit on the factories you intend to work with. We’ll check if they have an export license. If they don’t, it is a bad sign because they are not authorized to export their products.”

Well, it is not so simple, as often in China. Factory audits are quite helpful in screening potential suppliers. But the absence of an export license is not such a bad sign. Most small factories don’t have that license, and they have no problem to export.

I remember asking some suppliers why another company name was written on the shipping documents. They explained that they don’t have the export license themselves, so they use an “agent” (notice the very general term) to “do the paperwork”. This agent’s work costs them about 1% of the value of the order.

This is quite common. But is it strictly speaking legal?

At the end of a previous article on freight forwarding, a reader called Callum asked this question in the comments:

A lot of Chinese suppliers do not have export permits. Instead they pay a fee to a third-party company with an export permit and in exchange they are allowed to put that company’s name on the commercial docs. I don’t know much about Chinese law, but I have a feeling this practice could be considered fraud.

To which Sandra Nguyen Thanh, from Karl Gross, responded:

In fact, in order to export products from China a supplier must either have a dedicated export permit (license) of their own or must “outsource” this process to an Import-Export company licensed to export any (non-restricted) product. The Import-Export company would accordingly appear on the export documents for the customs clearance. This is a normal procedure and totally legitimate in China.

Reasons why some suppliers prefer to use an Import-Export companies may be as follows:

1) They pay agent fee but it saves them labor cost and other costs.

2) Import-Export companies may have beneficial know-how about the market and government regulations. They are professional to settle documents and refund matters.

3) Import-Export companies have regular business so they get the tax refund faster from the government.

At the same time, there is another misconception to debunk. Some importers think the Chinese government audits factories and approves only the best ones for export. Wrong! If you are not careful, you might work with a company that is producing for the first time…

For more misconceptions about buying in China, I suggest that you go and read this article.

Filed Under: Sourcing New Suppliers

Comments

  1. James Guzzo says

    November 29, 2012 at 10:21 PM

    Excellent insights into the export license issue. I think some buyers prefer to work with a supplier who has their own export license just to simplify things – one less middle man between them and their products. Thats just my thoughts on the matter.

    • Renaud Anjoran says

      November 29, 2012 at 10:27 PM

      Thanks James. When you work with a big manufacturer it is not a problem, but for placing small orders I guess it is not always practical.


Weekly updates for professional importers on better understanding, controlling, and improving manufacturing & supply chain in China.

This is the official blog of Sofeast.com.

This blog is written by Renaud Anjoran, an ASQ Certified Quality Engineer who has been involved in chinese manufacturing since 2005.

Hit the button below to get in touch:

Contact Us!

Subscribe to our email newsletter

Connect with us

  • Email
  • Facebook
  • LinkedIn
  • RSS
  • Twitter
  • YouTube
sofeast
sofeast
sofeast

Latest Articles

  • Benefits of Product Design Optimization (Taguchi Method)
  • 9 Key Quality Management Challenges in China
  • Why the AQL Inspection System Is Still So Widespread
  • The Design for Reliability Process for Launching Reliable Products
  • Breaking news! China opens its borders to all foreign travellers!

Categories

  • Quality Control Tips
  • Sourcing New Suppliers
  • Supplier Management
  • New Product Development
  • Process Improvement
  • Ethical Sourcing

Archives

© 2023 QualityInspection.org