Billions drained by car import rackets
CHINA is losing as much as 10 billion yuan (HK$9.3 billion) a year in customs duties because the Government is failing to control the car import market, the Hong Kong China News Agency said yesterday.
It said the authorities had now tightened controls on the market, hoping to stem the influx of undeclared cars and components, which was threatening the local car industry.
The 'grey market' of undeclared vehicles has flourished since senior cadres were ordered two years ago to swap expensive imported cars for locally manufactured vehicles such as Audis.
But the supply of Audis, which are manufactured under a joint venture in China, was far below demand. The factory can only produce 35,000 cars a year.
To capitalise, car agents have imported parts into China and some have even set up workshops in the mainland to handle assembling work for their clients. In some cases, these agents were found to be running smuggling rackets.
Jiujiang and Zengcheng in Guangdong were well known for their assembling industries and, according to the agency, the workshops in those two cities turned out at least 400 and 1,200 'assembled sedans' respectively in February alone.
The car assembling industry in Guangxi, Fujian and Shandong was also said to be booming.
Since these 'grey imports' of components were not considered 'sedans' or 'vehicles', the agents were usually not required to pay the high customs duties.
The agency said a 'grey import' usually cost 300,000 to 400,000 yuan but a local buyer would normally pay 600,000 yuan for a real imported Audi.
The agency also noted that the number of smuggling cases was increasing.
In the first five months of this year, 566 second-hand cars and 1,390 parts had been smuggled into China.
Sales of foreign vehicles imported through the legitimate channels dropped 60 per cent in the first half of this year, compared to the same period last year.