Looser customs to benefit luxury goods
Luxury-branded merchandise shipped into the new free-trade zone in Shanghai could stand to benefit from a reduction in red tape and speedier release of products if customs and quarantine inspection policies in the zone are changed.
Routine customs and quarantine inspections on the mainland can at times become a nightmare of delays and increased costs to foreign companies, especially when it comes to imports of luxury products that are usually shipped in a single consignment that consists of an assortment of small quantities.
"The non-duty barrier in China is set very high and to qualify shipments may be held up for laboratory tests that can take at least 10 days," said Pamela Lin, logistics director at LVMH Perfume & Cosmetics in Shanghai.
The ratio of merchandise that is set aside for inspection may range from one in every 30 items to as high as half of all items imported, depending on the track record and reputation of the company, said Lin, and although LVMH enjoyed the lowest inspection rate, its distribution process was still held up.
"We have many stock-keeping units per shipment as our products come in many varieties," she said. "Even if just one item is selected for inspection the other products in the same shipment have to be put on hold."
But Lin said the company was now in negotiations with Shanghai officials to delay the laboratory tests until after its products were imported and distributed to retail outlets - a practice adopted by many other countries. Under such a system, the Entry-Exit Inspection and Quarantine Bureau could still conduct a test at any time and the firm concerned would be obliged to recall the product if it failed the test.
Not all companies, she said, could be entitled to this fast-track approach. Only those with good production control, a good reputation, good control of Chinese labels, and the ability to ensure an effective product recall, could qualify.
"If the authorities were to adopt this approach it would encourage international companies to set up their national distribution centres in the free-trade zone," she said.
Lin hoped such a policy would be announced in the first quarter of next year.
What remained to be clarified, she added, was whether the relaxation of inspection policies would apply only to merchandise released for sale in Shanghai, or if it could apply to products distributed to other mainland cities from the free-trade zone.
Lin said a draft government guideline had said it would loosen controls for international cargo entering the zone, while shipment of goods to other cities would still be subject to effective control.
Logistics operators are banking on the opening-up of customs controls to improve the efficiency of cargo imports into Shanghai.