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Welcome to the presentation
Import and Export procedure in China
Presented By 2
16204006, MBA
Summer 2017, IUBAT

14 steps step for conducting export transaction
The entire 14-step process for conducting an export • Step 5: the bank of New York advices the US
transaction is summarized. Take for example an exporter of the opening of a letter of credit in his
China importer and US exporter. favor.

• Step1: The China importer places an order with the • Step 6: the US exporter ships the goods to the
US exporter and asks the American if he would be China importer on a common carrier. An
willing to ship under a letter of credit. official of the carrier gives the exporter a bill of
• Step 2: The US exporter agrees to ship under a
letter of credit and specifies relevant information • Step 7: the US exporter presents a 90 day-time draft
such as price and delivery terms. (bill of exchange) drawn on the State
Bank of China, in accordance with its letter of credit
• Step 3: the China importer applies to (e.g.) State and the bill of lading to the bank of New
bank of China for a letter of credit to be issued in York. The US exporter endorses the bill of lading so
favor of the US exporter from the merchandise the title of goods is transferred to the Bank
importer wishes to buy. of New York.

• Step 4: the state bank of China issues a letter of • Step 8: the bank of New York sends the draft and
credit in the China importer’s favor and sends it to the bill of lading to the State Bank of China.
the US exporter’s bank, the bank of New York. The State Bank of China accepts the draft, taking
possession of the documents and promising
to pay the now accepted draft in 90 days.

14 steps step for conducting export transaction

• Step 9: State Bank of China returns the accepted • Step 12: State Bank of China notifies the China
draft to the bank of New York. importer of the arrival of the documents. He
agrees to pay the State Bank of China in 90 days.
• Step 10: the bank of New York tells the US exporter State Bank of China releases the documents
that it has received the accepted bank draft, which so the importer can take possessions of the
is payable in 90 days. shipment.

• Step 11: the exporter sells the draft to the bank of • Step 13: in 90 days, the State Bank of China receives
New York at a discount from its face value and the importer’s payment, so it has funds
receives the discounted cash value of the daft in to pay the maturing draft.
• Step 14: in 90 days the holder of the matured
acceptance ie, bank of New York presents it to
the State Bank of China fro payment. The State
Bank of China pays.

Export procedure

Export Documentation
Documents related to goods

• Proforma Invoice
▫ Used as a formal quotation for Export • Commercial Invoice
Sale ▫ Most important export document
▫ Should “mirror” how shipment will ▫ Instrument of payment and/or release
occur of foreign exchange
▫ Is used by Buyer to open L/C or to ▫ Negotiable as part of L/C transaction
obtain financing ▫ Has legal standing as demand for
▫ Is required by many countries to obtain payment
Import License or Foreign Exchange ▫ Must mirror Proforma, L/C, purchase
authorization order, or other formal instruction
▫ May have to be in other language


Export Documentation

• Shipper’s Letter of Instruction
• Customs Invoice
▫ Your instruction to Freight Forwarder as to When the commercial invoice is prepared
how documents are to be prepared on the format prescribed by the customs
and distributed authorities of the importing country, it is
▫ Must be sure that SLI matches purchase order, called “Customs Invoice”.
L/C, or other instructions from consignee
▫ Authorizes Forwarder to issue
documents on your behalf

Export Documentation

• Packing note and Packing • Certificate of Origin
List ▫ Required by many countries for all
▫ Should have 100% accurate information products, also for individual products in
– from actual measuring and weighing some cases
▫ Legal requirement in many countries ▫ Must watch L/C language – Chambers
of Commerce do not “issue” C.O.’s
▫ No pricing information to be shown
▫ May be needed for duty reductions in
▫ Should be in metric measurement (not
some countries
in English measurement only)
▫ Some Countries have own forms (Israel,
NAFTA, Caricom)
▫ Free Trade Agreements have their own
rules of origin and also may require

Export Documentation

• Bill of Lading • Air Waybill
▫ Used to direct cargo to exporting carrier ▫ Name of the carrier
▫ Important to maintain “paper trail” ▫ Place and date of issuance
record of shipment in case of loss or ▫ Name of the consignor and consignee
damage ▫ Port of loading and destination
▫ Gives routing instruction for freight ▫ Air way bill should not be claused or a
carrier charter party
▫ Must specify any special instructions,
such as any third party billings or
discounts to be

Export Documentation
• Letter of Credit • Bill of Exchange

▫ There is a contractual relationship between ▫ Drawn on the party/bank as stated in the
the importer and exporter, evidenced letter of credit
by sales contract. ▫ Drawn in favour of the negotiating bank
▫ Banker customer relationship exists ▫ Drawn for a period not exceeding six
between the importer as applicant to the months from the date of shipment when it
letter of credit and opening bank. Similar is usance bill
relationship exists between the exporter
and advising/negotiating bank. ▫ Drawn in sets as per the terms of L/C,
marked first and second bill of exchange for
▫ Relationship between the opening bank and the net amount of the invoice
negotiating bank. The later acts as the
special agent of the former.
▫ Relationship between the exporter and
opening bank. Credit contract is established
as the opening bank opens letter of credit in
favour of the exporter

Export Documentation
There are five important parties to a Bill of Exchange:

• The Drawer: The drawer is the person who has issued the bill. In an export transaction, exporter draws
the bill as money is owed to him.

• The Drawee: The drawee is the person on whom the bill is drawn. Exporter draws the bill on the
importer who is the drawee. Drawee is the debtor who owes money to the exporter (creditor).

• The Payee: The payee is the person to whom the money is payable. The bill can be drawn by the
exporter payable to the drawer (himself) or his banker.

• The Endorser: The endorser is the person who has placed his signature on the back of the bill
signifying that he has obtained the title for the bill on his own account or on account of the original payee.

• The Endorsee: The endorsee is the person to whom the bill is endorsed. The endorsee can obtain the
payment from the drawer.

Export Documentation

• Certificate of Inspection
It is a certificate issued by the Export Inspection Agency certifying that the consignment
has been inspected under the Export (Quality Control and Inspection) Act, 1963 and found
that the requirements relating to quality control and inspection have been complied with,
as applicable, and the goods are export worthy.

Import Documentation
The following initial documents are required to import into China:
1) NTN
National Tax Number Certificate, which is issued by the Income Tax Department on filing of
application form accompanied with one attested copy of NIC.
2) Bank Account
Current Bank Account is required for import proceedings and documents.
3) Sales Tax Registration
Sales Tax Registration is required to import into China. For registration, Form ST-1is required to
send to the local sales tax registration office via post with acknowledgment due (courier is
4) Chamber Membership
Membership certificate of Chamber of Commerce and Industries or any relevant trade
association of Pakistan.

Import Documentation
• Importer must show “Right to make entry” • Typical documents required
▫ Transport Document ▫ Customs Entry/Entry
▫ Commercial Invoice ▫ Summary (CHB)
▫ Packing list
▫ Immediate Delivery
• Importer must give Power of Attorney to
▫ Application (CHB)
▫ Commercial Invoice (Shipper) – must
• All importers must be bonded
be in English
▫ Transport Document (Shipper)
▫ Packing List (Shipper)

Import Documentation

• Other Documents may be needed
▫ Duty Free Entries such as TIB, U.S.-Israel FTA, NAFTA c.o.
▫ Other agency documents such as FCC, EPA, USDA
▫ Customs may ask for additional documentation to prove classification or valuation

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