CERTOSA

Zoning In

There are many types of zones and bonded areas (both of which offer relaxed import restrictions) in China at the state, provincial, city and district levels. Both foreign and Chinese companies may choose to set up shop in either any or all of these zone areas. These zone areas are central to the PRC government policy to attract investments as they allow companies to import, process and export with fewer taxes and less red tape than other places in China. For example development zones have helped foreign firms integrate China into their global supply chains, whereas export-processing areas allow trade to flourish, transfer skills (i.e. know-how to the domestics companies) and induce local employment opportunities. However, China boasts dozens of zones (bonded areas) with a confusing array of options. The basic categories are: -

Economic and technological development zones – are areas that provide international standard facilities and supporting services

Free-trade zones (FTZs) - are specialized areas for international trade, foreign investment, bonded warehouses, and export processing.

High-tech industrial development zones – encourage the transformation of scientific and technological advances into marketable products

Border and economic cooperation zones – encourage frontier trade and export processing, improved relations with neighboring countries, and better economic conditions in areas populated by national minorities

Export-processing zones (EPZs) – are special enclosed areas supervised by the General Administration of Customs

To this end, Certosa can expertly help enterprises by advising the best options/solutions available to them; particularly, to companies who may have the need in post-warranty support area for their spares and products where the China Government gives preferential treatment for deferred duty/VAT payment until actual use, with the aim of an improved flow of goods, flow of cash and flow of information.

Example of having a Consignment Bonded Warranty warehouse vs placing the goods at a Free-Trade-Zone area like WaiGaoQiao in Shanghai:

	Supervised Bonded Warranty WH	FTZ's bonded WH (example: WaiGaoQiao in Shanghai
Site Location	Can be in any designated area (with a min size of 2000 sq.m in facility)	Must be within a FTZ
Customs monitoring	Coming and going of goods require no customs supervision. Monthly report will do	A must. Double entry declarations required. Example: one at airport and one at FTZ
24 x 7 operation	Yes	Yes but practically impossible
Proximity to end users	It's within the city limit, i.e. 2 hrs commitment is within reach	It's far away from town
Customs VAT Deposit	Not required	A must depending on the size of WH
VAT Refund	Yes if under warranty subject to the legal import paperwork to be produced by end user	Not allowed
VAT grace period	30 days if return unused	Pay as you go basis
Re-exporting of used items	No restrictions	Used items cannot be exported
Legal entity	Must set up a local legal entity	Can go thru a 3 rd party trading right
Income and foreign remittance	Allow foreign remittance & customer invoicing, etc. Income can be used to set off expenses	Must go thru the marketplace at FTZ or employ a 3 rd party trading right
Pick and Pack	Packing, re-packing, labeling and breaking down of spares for distribution are allowed	As is per item imported
3C application	Yes	No
Tax relax	No	Yes subject to FTZ policy