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China Importation 101, Part IV. AQSIQ.

Posted in China Business, Legal News

As China steps up its enforcement of its customs laws, it is becoming increasingly important for foreign companies doing business in China to understand those laws and how they are enforced. This is the final part of a four part series of posts by Shawn Mahoney designed to help you avoid China customs problems.  Go here for Part I, China Importation 101, which dealt mostly with the core concepts related to importing product into China.  Go here for China Importation 101. Part II, which mostly discussed China’s Harmonized Tariff Schedule and the similarities between China customs laws and US and EU customs laws. And go here for China Importation 101, Part III, which mostly deals with how to deal with China’s General Administration of Customs (GACC).  This post examines the most effective ways to communicate and interact with AQSIQ (The General Administration of Quality Supervision, Inspection and Quarantine).  Here is part IV of Shawn’s series:

Though just about everyone is aware of China Customs (GACC), many foreign companies doing business in or with China know little or nothing about the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ). This lack of knowledge is dangerous, as AQSIQ has more power than GACC in many aspects of importation approval. In today’s post I will introduce AQSIQ as an institution, with some brief advice on how best to interact with them.

AQSIQ is most widely recognized for its oversight of food/beverage products and scrap materials, yet it controls, directly or indirectly, thousands of products including:

  • Chemicals
  • Cosmetics
  • Any item which requires a CCC Mark
  • Items that require compulsory inspection
  • Specialized machinery like Refrigerators

All told, AQSIQ has 19 internal departments and 15 separate “affiliates” and it manages the administration of the Certification and Accreditation Administration of China (CNCA) and the Standardization Administration of China (SAC). AQSIQ has 35 Entry-Exit Inspection and Quarantine Bureaus (usually known as CIQ’s), nearly 300 branches, more than 200 local offices, nearly 3500 laboratories and tens of thousands of employees in China to assist with its mandate. To quote AQSIQ’s own website:

AQSIQ participates in the planning and checking of national ports opening up to the outside world. According to the relevant law, AQSIQ formulates the List of Entry-exit Commodities subject to Inspection and Quarantine of Entry-exit Inspection and Quarantine Agencies. AQSIQ administers the inspection and quarantine clearance for the entry-exit goods related to environment, health, animal and plant health, and human safety, and for transportation means and personnel. At ports, an inspection and quarantine clearance management model is applied to entry-exit goods, that is, “Inspection application first, and customs declaration second”.

According to the Law of the People’s Republic of China on Import and Export Commodity Inspection and its implementation regulations, AQSIQ carries out inspection and supervision on import and export commodity and its packaging and transportation means. AQSIQ conducts legal inspection, supervision and administration over commodities included in the List of Entry-exit Commodities subject to the Inspection and Quarantine of Entry-exit Inspection and Quarantine Administrations, and conducts sampling test over the non-listed commodities.

As evident from its own description, AQSIQ is responsible for inspecting and supervising the import and export of ANY product specifically listed under its authority and for sample testing non-listed commodities. I am always saying “Inspection application first and customs declaration second” to clearly signify how AQSIQ has greater relevant authority than GACC for all products in which it has been given statutory oversight. Yet virtually every month a company already exporting products to China will contact me with no knowledge about AQSIQ and no idea why AQSIQ has authority over their products.

Much like GACC, AQSIQ has become a much more efficiently run and managed institution over the last decade, especially in the last five years. However, it has not developed a professional relationship infrastructure like the Customs MCME system. This only heightens the importance of discovering in advance if AQSIQ has oversight over your product(s) exported to China. If it does have that authority, it is vital to learn as much as possible about the specific law and regulations pertaining to your product before you begin exporting it to China. Once you have acquired this knowledge, it is important to reach out and create a relationship with AQSIQ in the Chinese ports and cities in which your products will be imported and used. Depending on the circumstances, your WOFE office or your customer would work on creating this relationship.

Although there is no MCME system in place for directly working with AQSIQ, several laws have recently been enacted requiring registration by all exporters and importers in certain product categories, with the most notable being all food and beverage imports starting in 2012. This required registration allows foreign companies a foot in the door to create a working relationship with AQSIQ.

I will leave you with an example of the value in knowing the regulatory details regarding your product and in having a relationship with the appropriate branch of AQSIQ. A few years ago, I was working with dozens of customers in a specific part of the food industry. One customer in particular had an ongoing problem exporting one of its more valuable food products to China. Over the course of five years, AQSIQ had rejected every sample and order shipped by our client. Even though both the importer and exporters tests showed they were in compliance, AQSIQ continually claimed the product was outside the allowed limits for nitrate and nitrite.

We offered to assist our client in finding a workable solution to this ongoing problem. We quickly identified the AQSIQ standard allowing only three testing methods for nitrates and nitrites, two of which were never used in the US. Our next step was to approach a customer outside of the largest ports with a good working relationship with their local CIQ. Via this relationship, we approached the local CIQ and after several days we were able to agree among the three parties to:

  • Use the exact same testing method (the one we use in the US),
  • Use the same quantities of solution
  • Use the same fluid to create the solution
  • Share all test results

In the end, all tests came back nearly identical and all showed that the product was well within China’s standards for both nitrate and nitrite levels. Because of this, our customer was able to ship its product to China on a consistent basis for the first time in six years. This result would not have been achievable without the intercession of someone with an ongoing relationship with AQSIQ and a thorough understanding of the rules and regulations pertaining to that specific product.

  • Jeff Gandy

    “Once you have acquired this knowledge, it is important to reach out and create a relationship with AQSIQ in the Chinese ports and cities in which your products will be imported and used.”

    Lets be honest. The reason your client could not get his product through customs could have been a) he didn’t payoff the right person, b) his product that was being imported would have put him in direct competition with a Chinese supplier who had a better relationship with the local AQSIQ person.

    So your client had the option of hiring a lawyer and fooling around for months on end to get these tests done, pay out the nose and eventually get this product into China. Or he could have just paid off the right guy either with cash or letting him skim a percentage of the container as it came into the country.

    A more creative way to say it is – “create a relationship”, but really it is just corruption.