Fiji Water in China: Legal Environment

China will adopt a more proactive opening-up strategy by exploring new areas, improving internal system, enhancing the quality of the economy, forming a new pattern of development and promoting development, reform and innovation.

----President HU Jintao

Although China touts an opening up of their economy, many roadblocks remain. While investigating requirements for importing our product, we found that additional links on government websites were frequently inaccessible. Instead, we found advertisements for companies who are willing to assist foreign companies who want to enter the Chinese market. Additionally, bribery is not only legal but frequently expected by local officials. This complicates business practices for companies incorporated in countries where bribery is illegal. Fiji Water is now based in the United States and the U.S. recognizes the Foreign Corrupt Practices Act which makes bribery of foreign officials illegal for U.S. companies.

World Trade Organization (WTO)

Since China began participating in the WTO, tariffs have come down significantly.

China has scored remarkable achievements in economic and social terms since joining the WTO:

2nd largest economy in GDP terms

1st largest merchandise exporter

2nd largest merchandise importer

4th largest commercial services exporter

China is facing many obstacles: China has limited methods of economic management

Lower tariff levels

Increasing pressure from huge importers

Rebalancing Chinese economy

Over-dependence on processing trade

Lower end of the Global Value Chain

China is still a developing country

Pressure from outside to make larger contributions

Pressure from inside to protect and develop

Trading Partners

First Largest trading partner of: Australia, Chile, Japan, South Korea, Hong Kong China, Malaysia, Russia, Brazil, South Africa, Saudi Arabia

Second largest trading partner of: Argentina, Canada, European Union, India, Indonesia, Mexico, New Zealand,Singapore,United States

Third largest trading partner of: Turkey, Germany, Italy

Imports: Many import restrictions and they change frequently:

In the past five years, the Bottled Water Production industry in China has developed rapidly. Driven by increased domestic demand and higher output levels over the five years through 2012, revenue has been growing at an annualized rate of 19.0% to an estimated $31.1 billion, says IBISWorld.

Shipments to China

Frequent changes in customs regulations in China have altered requirements once again in the export and import clearance process.

These changes are summarized as follows:

Importer and Exporter Customs Registration Codes

All importers and exporters in China are required to register with Customs authorities for an importer or exporter Customs Registration code (CR Code), or engage with an agent who has the CR Code and is authorized to act as the importer or exporter of record for their shipments. This CR code is to be indicated on customs declaration forms of all shipments, except for documents and personal effects. Shipments being imported into China may be placed on hold by Customs authorities until this information is available.

Harmonized System Codes

All shipments, with the exception of documents, being imported into China will require a Harmonized System code (HS Code) to be indicated on customs declaration forms. The provision of the HS code, along with an accurate and detailed goods description in the supporting documents, will help expedite HS classification and ultimately clearance of the goods.

These requirements affect all players in the logistics industry in China, and working with the General Administration of Customs in China to address clearance concerns is important to avoid any negative impact for businesses in China.

Taxation:

Importing to and exporting from China generally involves three types of taxes:

Value-added tax: the applicable tax rates are the same as those applied to goods sold within the domestic market (i.e. 17 percent, and 13 percent for some goods). VAT is payable on the day of customs clearance.

Consumption tax: Items subject to consumption tax include luxury products such as high-end watches, non-renewable petroleum products such as diesel oil, and high-energy consumption products such as passenger cars and motorcycles.

Customs duties: include import duties and export duties, with a total of 8,238 items taxed, according to China’s 2013 Customs Tariff Implementation Plan (“2013 Tariff Plan”).