Exporting Your Products to China? You Better Check Their Up-to-date HS Codes

May 2, 2023
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Do you export goods to China? Have you used the same HS Code and paid the same level of import duty for years? If so, it is time to check whether the current HS Code is still the most suitable for your products.

HS Codes in a nutshell

HS Codes, also known as the Harmonized System, are a standardized international system to classify globally traded products. HS codes are used internationally for several important reasons, but most importantly to ease global trade by creating unified categories to classify different types of goods.

Usually HS codes will consist of 6 digits, but the number of digits differs between countries. For example, the China Customs Commodity HS Code has been changed and now consists of 13-digits:

In China, duty rates on import goods are composed of most-favored-nation (MFN) duty rates, conventional duty rates, special preferential duty rates, general duty rates, tariff quota duty rates, and others. Temporary duty rates may apply to import goods within a specific time limit.

MFN duty rates apply to imported goods originating from members of the World Trade Organization (WTO) that are subject to the common application of the MFN clause, import goods originating from countries or regions with which the People’s Republic of China has concluded a bilateral trade agreement for reciprocally granting of MFN treatment, and import goods originating from the customs territory of the People’s Republic of China.

The KVM switch above can be used as an example of the significant difference in duty, which is a privilege offered to WTO members. In this case MFN duty is 0%, compared to general duty, which is 35%.

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Why are HS codes important when exporting to China?

One of the biggest issues faced by exporters is that customs regulations do not clearly specify which HS codes are applicable to their products. It’s important that you are able to classify your products with the correct HS Codes, so that customs authorities know what regulations and certifications apply to your products.

Using the wrong HS codes can delay customs clearance, costing you time and money. If you accidentally use the wrong HS code, you should cooperate with your Chinese importer and preferably seek advice from a third party with relevant expertise to help you out.

It is important to check whether the HS Code you use is the one most suitable for your products, since HS codes can be affected regularly by new government reforms to optimize imports, by China’s signing of preferential treaties with different countries, as well as by the professionalism of your local agents when dealing with customs authorities.

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The importance of HS codes to a business set up in China

HS codes play a critical role while setting up a Chinese entity. During the registration process, a company must declare its business scope, which details the HS codes of the products the company plans to import, export, and trade. This list will ultimately determine whether further licenses are required or which measures the company must take. Be mindful that the HS code list dictates a company’s sphere of trading. For example, a company that trades electronics cannot simply alternate to selling shoes without modifying the business scope and adding the relevant HS codes accordingly. In order to avoid this long and tedious process, we recommend including a broader range of HS codes in the initial business scope, so it covers additional products the company might intend to trade in the future.

Get a free evaluation of  your product’s HS Code

Digital HS Codes finders are available online; however, they are often inaccurate and unreliable. That being said, at PTL Group, we can provide you with a free evaluation of your first product updated HS Code to discover whether better duty rates for your products exist.

Contact us now to get a free HS Code evaluation, and any other China business support.

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