Guidance

Exporting to China

A guide for British businesses interested in selling goods and services in China.

Visit great.gov.uk for guidance on how to research overseas markets as well as a range of other important issues for exporters.

China in world business rankings

China is 78th in the World  Bank ease of doing business ranking.

Source: World Bank: Ease of doing business 2017.

Doing business in China

China is the great economic success story of the past 30 years. It’s now the world’s largest economy and a huge and expanding market for UK businesses. Jaguar Land Rover (JLR) is the UK’s biggest exporter to China, but is just one of many UK companies now operating in this important market.

Benefits for UK businesses

There are a number of reasons to choose China as an export destination:

  • largest country in the world by population with over 160 cities of more than a million inhabitants
  • fast growing consumer market resulting from increasing number of middle income consumers
  • growth ensured by Chinese monetary policy
  • forecast to become the world’s largest luxury goods market by 2020

Read our guide for UK businesses selling goods and services into China.

Industries importing into China

The top 10 industries importing into China are:

  1. electrical machinery and equipment
  2. mineral fuels and oils
  3. machinery and mechanical appliances
  4. medical, optical, photographic, cinematographic, measuring and precision equipment
  5. ores, slag and ash
  6. vehicles
  7. plastics
  8. organic chemicals
  9. oil seeds, oily fruits, grains
  10. copper

You can read more about what China imports at World’s Top Exports.

The International Trade Centre (ITC) ranks the value of China’s top services imports.

Challenges and overseas business risk in China

There are some unique challenges when you are doing business in or with China. These include:

  • large parts of the economy are still closed to full foreign participation
  • strong competition from well-resourced and positioned state-owned enterprises
  • finding and retaining the right skills in the local workforce
  • complex business culture
  • language barriers
  • need for patience to build up trust and networks
  • significant time difference
  • weather extremes across the country and high levels of pollution in certain urban centres
  • anti-monopoly legislation in relation to foreign firms

You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act.

Read the Foreign and Commonwealth Office’s (FCO) Overseas Business Risk report for China.

Watch the China-Britain Business Council’s (CBBC) recorded webinar on avoiding common scams when doing business in China.

Researching the Chinese market

China is not one single market. There are different regional economies and economic hubs. You will need to understand the regional economic and cultural differences that could impact the success of your product and develop the right strategy.

Read about the different economic regions in the CBBC guide to choosing the right location.

You should do as much market research and planning as possible before starting to sell your products and services in China, using both desk research and visits to the market. As the market is so complex you should also consider getting specialist market research help.

Contact the CBBC’s business support service to help you research the Chinese market.

Visit the Department for International Trade’s (DIT) events portal to find upcoming events and missions.

Getting started in China

You are likely to need a long-term strategy in China to achieve success. Some companies take a staged approach such as selling a small amount to test the market first.

Consult local English speaking lawyers to avoid costly mistakes and ensure your product or service is being sold in the most appropriate way.

Find out more about getting started in the Chinese market on the CBBC website.

Direct exports to China

It is possible to directly export to China. However, due to the size of the market and language issues, you may need to consider other options.

Agents and distributors in China

You may want to consider using export agents or distributors. You may also need a number for different regions and it can take time to find the right partners and establish relationships.

Find out more about using agents or distributors in China.

Watch CBBC’s video on finding an agent or distributor in China.

Setting up a company in China

Incorporating a company in China is a complex process requiring various approvals. You should seek professional advice early on due to the difficulties in altering business structure once a legal entity is incorporated. Foreign companies cannot legally employ Chinese staff unless the company is registered in China.

CBBC offers a ‘Launchpad’ service enabling companies to test the market before committing to a permanent presence.

Selling online to China

Check out online marketplaces in China. You can access special terms negotiated by the UK government there too.

You can start exporting in a few steps online. The DIT can help you find the online marketplace best suited to your product or service in China and access preferential deals negotiated by government.

You can sell your products and services to China over the internet through:

  • your Chinese website which will need to be hosted within the Chinese government firewall and set up to work with Chinese search engines such as Baidu
  • a Chinese e-marketplace

Watch CBBC’s video on selling online to China.

Read CBBC’s guide to e-commerce in China.

You must not charge Value Added Tax (VAT) for online sales to China. You must fill out a customs declaration when you ship the products and keep ‘proof of export’.

Franchising in China

Franchising of brands continues to grow in China. There are opportunities for UK brands as increasing numbers of China’s cities develop the relevant infrastructure and local governments encourage the creation of new businesses.

There are challenges including the complexity of local regulations and finding the right franchise licensees.

Visit the international section of the British Franchise Association for more information on franchising.

UK-based consolidator exports to China

You can enter the Chinese market through a UK company that consolidates mixed containers to send to China. This will usually mean that the consolidator will do the paperwork and you will pay a fee to them.

Business incubators in China

CBBC’s ‘Launchpad’ service is one of a number of incubator schemes in China. It provides a simple, cost-effective, low-risk and legal means of having a presence in China, before you set up your own office, enabling you to test the market.

Getting finance to fulfil an export contract to China

Schemes are available to UK companies selling products and services to China to make it easier to fulfil an export contract and grow your business. Contact your bank or specialist financial organisations for assistance.

UK Export Finance (UKEF) has significant risk capacity to support exports to China. Contact one of UKEF’s export finance advisers for free and impartial advice on your finance options.

Getting paid in China

Your contract must be in a template suited to the Chinese market. It will need to specify the payment terms clearly. You must ensure the contract includes an arbitration clause.

Read CBBC’s guidance on getting paid in China.

Payment risks in China

UKEF helps UK companies get paid by insuring against buyer default.

Be confident you’ll get paid for your export contract. Speak to one of UKEF’s export finance advisers for free and impartial advice on your insurance options or contact one of UKEF’s approved export insurance brokers.

Currency risks in China

China has a controlled currency reducing the impact of currency fluctuations. However many Chinese companies prefer to be invoiced in US dollars. It is sometimes possible to negotiate contracts in euros or sterling.

Transferring money from China

China’s State Administration of Foreign Exchange (SAFE) strictly controls conversion of the Chinese renminbi (RMB) to foreign currency.

Chinese companies need approval from the transmitting Chinese bank to send foreign currency overseas. This requires a:

  • written contract for the goods or services which is signed and dated by all parties
  • formal written invoice for every required payment which is signed and dated by the UK company in a form acceptable to the bank

It is advisable that both documents include a Chinese translation.

Chinese banks may ask for additional documents such as:

  • proof of existence of the UK company
  • contract registered in accordance with Chinese law if payment is a royalty for a technology licence or similar agreement

Setting up a bank account in China

China’s banking system is complex and restrictions apply to foreign companies. Foreign-invested entities (FIEs) need to establish at least 2 bank accounts: an RMB basic account and a foreign currency capital contribution account.

UK companies can set up accounts in China through their own bank (assuming it has a presence in China) or through a Chinese bank.

China has what is officially termed ‘a socialist legal system with Chinese characteristics’. The legal system is based on both statutory law and custom.

You must identify whether the market is open to you and whether restrictions apply. In some sectors it is possible to set up a 100% foreign-owned company. In others, entry is possible only through a local partner.

Check the ‘Catalogue for the Guidance of Foreign Investment Industries’ published by the Chinese Ministry of Commerce (MOFCOM) to find out which industries are open, restricted or closed.

Read guidance on dealing with commercial disputes in China.

Contact the DIT team in China to help find tax and legal advisers before entering into agreements.

Trade embargo on China

The EU has a partial embargo on the export of arms and related material to China.

Contact the Export Control Organisation for more information on the arms embargo.

Controlled goods export licences for China

You need a licence to export items on the EU dual-use list (goods along with their associated technologies that can be used for both civil and military purposes) to China.

Find out about export licensing requirements for military or dual-use goods, services or technology.

Some other products may need certification or licensing.

Standards and technical regulations in China

China sets its own national standards. These are often referred to as ‘GB standards’, with some mandatory and others voluntary. A prefix code indicates the status, GB=mandatory and GB/T=voluntary.

Not all Chinese standards are aligned with established international standards. It’s important to check the Chinese laws, regulations, standards and certification requirements that apply to your area of business. Sectors such as medical and food require registration (and possibly testing) and certification.

The Standardization Administration of the People’s Republic of China has responsibility for standards.

China Compulsory Certification (CCC)

The CCC mark is a compulsory quality and safety mark. It’s generally required for manufactured products that could impact on human life and health, animals, plants, environmental protection and national security.

Goods imported into China that require the CCC mark and do not have it may be held by Chinese customs and be subject to penalties.

China’s National Certification and Accreditation Administration (CNCA) publishes a catalogue that lists all the products that require a CCC mark.

Find out more about CCC marks.

Watch CBBC’s video on applying for CCC marks.

Packaging in China

Packaging must meet Chinese medical and safety regulations. It must not be poisonous or dangerous and must be easily degradable and recyclable. Wood packaging must carry the International Plant Protection Convention (IPPC) logo.

Find out more about regulations for wood packaging.

Product labelling in China

Goods for sale in China must be labelled in Chinese. For some products, information must be printed directly onto the packaging. Your labelling should always indicate which Chinese standards have been used where this is applicable.

Labels must clearly indicate country of origin of the product and the name and address of the Chinese distributor.

Food product labels must also contain:

  • net weight
  • ingredients listing
  • date of production and expiry date

You should always check the labelling requirements for your products.

Intellectual property (IP) in China

China is a World Trade Organization (WTO) member. As part of your market entry strategy you must:

  • establish how you can protect your IP rights
  • find out about costs
  • monitor the market for possible infringements

You must register your trademarks in China before entering the market. China uses a ‘first-to-file’ system for trademarks. You may lose legal protection if a similar trademark has already been registered within China.

Read CBBC’s guidance on IP in China.

The European Commission’s China IP Rights SME Helpdesk also offers help for small and medium enterprises (SMEs).

Taxation in China

The UK has double taxation agreements in place with China.

Value Added Tax (VAT) in China

If you’re VAT registered you can zero-rate the VAT on most goods you export to China. You will need to get evidence of the export within 3 months from the time of sale.

Corporate tax in China

If you set up an office in China corporate tax will apply. Taxes applicable to a foreign- invested enterprise (FIE) include:

  • enterprise income tax: 25% (rate for SMEs under Chinese law is 20%)
  • business tax: usually 3% or 5%

The EU SME Centre provides information on enterprise income tax in China.

All service companies obtaining income in China or with consumers located in China are subject to Chinese taxes, unless exempted expressly by Chinese regulations.

Customs and documentation for China

Complying with HMRC regulations to export to China

You must make export declarations to HMRC through the National Export System (NES) to export your goods to China.

You must classify your goods as part of the declaration, including a commodity code and a Customs Procedure Code (CPC).

Find commodity codes and other measures applying to exports in the UK Trade Tariff.

Find out how to contact the HMRC Tariff Classification Service for more help.

You must declare any goods that you take with you in your baggage to sell outside the EU.

Temporary export of goods to China

You can use an ATA (Admission Temporaire/Temporary Admission) Carnet to simplify the customs procedures needed to temporarily take goods into China. The goods and carnet must be validated by Chinese customs on arrival.

Hand-carried goods entering China through an ATA Carnet must be registered with the Council for the Promotion of International Trade within 3 days of clearing customs.

You need an export licence to temporarily take dual use goods to China.

Use SPIRE to apply for a temporary export licence.

Customs in China

Importation of goods into China can fall into 3 categories: prohibited, restricted and permitted.

Find the General Administration of Customs of the People’s Republic of China’s (GACC) listing of prohibited and restricted items.

Chinese customs uses a valuation database that lists the values of various imports based on international market prices, foreign market prices and domestic prices. Importers’ values are normally accepted, but if they are out of line with the valuation database there may be a recalculation.

The GACC also provides general information on customs procedures and tariffs.

You can find more about import tariffs in the Market Access Database.

Documentation in China

Goods exported to China must comply with domestic legislation. The documentation needed by Chinese customs varies according to product.

Certificates of quality, quantity or weight issued by manufacturers or public assessors are normally required. Certain goods will be inspected on arrival or must be accompanied by formal certification recognised by the Chinese government

Goods will be returned to the seller if they don’t conform with the certificates after re-inspection by the Chinese authorities. In addition, a claim may be lodged for compensation.

Check with CBBC business advisers for further advice.

Shipping your goods to China

If you are not knowledgeable about international shipping procedures you can use a freight forwarder to move your goods. A forwarder will have extensive knowledge of documentation requirements, regulations, transportation costs and banking practices in China.

Find freight forwarding companies to help you transport your goods to China via British International Freight Association (BIFA) or the Freight Transport Association (FTA).

Posting goods to China

Find out about sending goods by post to China.

Shipping dangerous goods to China

Special rules apply if you are shipping dangerous goods to China.

Terms of delivery to China

Your contract should include agreement on terms of delivery using Incoterms.

Free Trade Zones (FTZ) in China

FTZs are being developed in Shanghai, Fujian, Tianjin and Guangzhou. The new pilot Shanghai FTZ has the potential to change the way UK companies operate in China.

Read CBBC’s practical guide to China’s ‘Free Trade Zones’.

Opportunities for UK Businesses in China

DIT provides free international export sales leads from its worldwide network. Find export opportunities in China.

Business behaviour in China

China is a large country, where sub-cultures and practices differ from place to place.

Mandarin Chinese is the language of business. You should not assume Chinese firms will have English-speaking staff. A translator or interpreter is usually essential.

You should:

  • be careful with gestures as they can convey different meanings in China
  • avoid embarrassing your hosts as the Chinese do not like to say no directly
  • not be offended by personal questions relating to age, income or marital status
  • build close personal relationships to enable you to develop business partnerships

Entry requirements for China

You should obtain a visa to enter mainland China before arrival. You can find details of visa requirements on the Chinese embassy website.

Travel advice for China

If you’re travelling to China for business, check the FCO travel advice page first.

DIT and partner contacts for China

Contact a local DIT trade adviser in the UK if you’re interested in finding out more about doing business in China.

Contact the DIT team in China for more information and advice on opportunities for doing business in China.

Published 12 November 2016
Last updated 18 November 2016 + show all updates
  1. Change to HMRC tariff code contact number
  2. First published.