Originally published by Gordon Orr on LinkedIn: Easier to Import into China?

Two parts "YES", one part "NO"

A flood of announcements from China’s government are intended to build awareness globally that China wants to import more. An unstated milestone is to eliminate its balance of surplus entirely, not that challenging a goal. While a massive surplus with the US would remain, China could factually state that its trade is in balance with the rest of the world. A highlight of policy direction is the upcoming China International Import Expo in Shanghai. While some regard this as likely to lead only to photo opportunities as President Xi tours the stands from thousands of exporters to China, it is likely going to much more than that. All relevant Ministries have been told have to their top team in attendance to problem solve and remove barriers reported to them by exhibitioners. All major state owned enterprises will be present, their check books bulging with cash after the government’s latest release of loans to them.

Beyond this one off event there are additional actions that will benefit importers over the long term.

• Streamlined customs clearance procedures to get product through at a faster pace. Investment at ports and airports will reduce logistical costs.

• Actual tariff reductions from automotive to pharmaceutical will reduce end user prices by almost US$10bn with collected tariff rates falling to 7.5% from 9.8% last year. Tariffs for electronic equipment and machinery to 8.8% from 12.2%, duties for textiles from 8.4% from 11.5% and for paper products from 5.4% from 6.6%.

• As trade ministers visit China, they are increasingly handed agreements to take back with them that open up access for products from their home market. For example, over the summer visits by Ministers from the UK led to announcements of the opening up of Chinese markets to UK dairy and beef products

• Moves to make cross border ecommerce into China easier is an important move for many SMEs, for whom the cost of setting up to export to China has previously been prohibitive. The development of free trade “ports” to hold product in China duty free, the new ecommerce law holding the ecommerce platforms accountable for whether products sold on their platform are genuine, the upgrading of the teams within Alibaba and JD.com to reach out and market to potential exporters to China in dozens of countries globally have all helped SMEs to get to market at lower risk.

Several countries are seeing the benefits of these moves. UK exports to China rose nearly 30% year on year in 2017 and reportedly are continuing to grow at a similar rate in 2018. China’s consumers see the benefit of being able to buy a wider range of products from their home in China, rather than having to binge buy when they travelled abroad or relying on less efficient more costly grey channels

While reducing the financial burden on companies is undoubtedly beneficial for firms, particularly for manufacturing firms importing the machinery to make goods, as these firms are on the frontline of trade tensions and currently face structural funding issues of their own, such as rising land costs.

Overall these moves are driven more by China’s secular needs than out of concern for current frictions, given China’s need for increased consumption and for foreign investment to enhance its domestic industrial, technological, and service capabilities.

Yet of course more could be done to make it easier for importers. Announcing policies, signing deals and cutting tariffs are all in many ways relatively easy actions to take. Ensuring that changes are implemented consistently across hundreds of ports and airports and thousands of local government departments is much much harder. One of the most common complaints of both importers to and investors into China today is the required approvals and the process for gathering them vary dramatically from location to location. While brand and IP protection has undoubtedly improved year on year it remains challenging especially for smaller companies to navigate the processes required to have knock off products removed from online platforms and to get courts to impose penalties on offenders in a timely fashion.

One final barrier, particularly for companies in the agricultural sector, is the requirement to have their processing facilities and factories in their home countries inspected and approved by Chinese inspectors. These inspectors have to travel from China, at the cost of the overseas company, and are in short supply. It is a slow and expensive process and so remains a real barrier to starting to export to China.

Net net, real commitment, good progress but further steps that could be taken to sustain momentum in 2019.