import and export documentation
TRANSCRIPT
Farhan Irshad Import And Export Documentation process 2015
CONTENTSINTRODUCTION.......................................................2BACKGROUND OF THE COMPANY..........................................3
THE APPROVED PROCEDURES............................................4THE PROCEDURE IN EXPORTING USED CLOTH FROM QINGDAO SHUOYUAN INTERNATIONAL TRADE CO., LTD.....................................4DOCUMENTATION AND CUSTOM CLEARANCE...............................4
SHIPPING THE CARGO...............................................5THE DOCUMENTATIONS USED............................................6
THE INCOTERMS......................................................7DEFINITION OF 'INCOTERMS'........................................7
FOB – FREE ON BOARD..............................................7CFR – COST AND FREIGHT...........................................8
BILLING AND CHARGES – TRANSPORTATION AND PORT......................9IMPORTING TO EXPORTING FROM CHINA GENERALLY INVOLVES THREE TYPES OF TAXES:.......................................................10
IMPORT OR EXPORT PROCEDURES.......................................12
PROCESS DIAGRAM.................................................12IMPORT & EXPORT PROCESS EXPLANATION.............................13
CONCLUSION AND RECOMMENDATIONS....................................14BIBLIOGRAPHY......................................................15
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INTRODUCTION
We have chosen to import bundle goods from China;
company’s name is Qingdao Shuoyuan International Trade Co.,
Ltd. which is located at Hong Kong Middle Road, the commercial
core area of Qingdao, China. It is a limited liability company
approved by Shandong Provincial Foreign Economic and Trade
Commission and entitled with import & export operation right.
This company is a comprehensive international trade company
integrating the production, trade and services in one.
Integrity, efficiency and win-win are their business
principle.
This company enjoys a very superior geographical
advantage; adjacent to Qingdao Port, which is Northern China's
largest container port of shipment. They are not only
facilitates their outgoing shipments, but also helps them to
have an efficient and convenient operation of the import and
export procedures. Their trading partners are spread
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throughout China, Malaysia, Korea, the United States, Britain,
Germany, Japan, the Netherlands, Italy, Singapore, Australia,
Saudi Arabia, South Africa, Botswana, etc.
There are many items that Malaysia imports from this
company. This is listing of item that Qingdao Shuoyuan
International Trade Co., Ltd. provides:
ITEM DETAILED
LADIES
Ladies Jean pants, Ladies Cotton/Silk Skirt, Jean skirt, Ladies
Silk Dress, Ladies Cotton Dress, Ladies Pants, Ladies
Cotton/Silk Blouse, Ladies short Pants, Ladies Women Shirt,
Ladies T-shirt, Adult Jean jacket, Ladies Cotton Pants, Long
Pants With Several
Pockets, Ladies Night Dress, Ladies Tight pants, Bra
MEN
Men Jeans Pants, Men Cotton Pants, Men Long/Short Sleeve T-
shirt, Men
Brief, Men Boxer, Men Short/Long Sleeve Shirt, Men Short
Pants, Jean
Pants Short, 3/4 Pants, Swim Suit, Adult Corduroy Pants
CHILDREN
Children Summer Wear, Children Dress, Children Skirt, Children
Spring and
Autumn Wear, Children Shirt, Children Pants
OTHERSFashion Bags, Pajama, Cap, Ladies Silk Scarf, Belt, Toy, Sports
Uniform, Adult Training Wear, Adult Jogging Wear, Shoes etc
Malaysia have choose to operates import goods which is
from this company because they provides swift and satisfied
services such as transportation, and provides a full range of
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technical support and logistics support. This company also
accepted Incoterm such as FOB, CFR, CIF, EXW, DDP, and DDU.
BACKGROUND OF THE COMPANY
Qingdao Shuoyuan International Trade Co., Ltd. is one of
the biggest professional exporters of used clothing, used
bags, and used shoes in china. It was established in 2001 and
has vast experience in collecting, sorting, packing, loading,
custom clearance, ocean, and shipping and destination custom
clearance. This company provides a very good condition used
cloth with no torn, clean, and high quality cloth and very
trendy and fashionable cloth. Over more than 10 year of
business Qingdao now have 6 warehouses, which is strategically
placed at Guangzhou, Shenzhen, Shanghai, Qingdao, Tianjin
which are the developed and modern cities in China. In order
to provide the best quality, the used cloth is sorted
immediately after arrival and packed on the same day, loaded
few days later. This system allows us to keep the goods in
best condition and serve customer in most efficient way. The
cloth that this company provides is really affordable daily
necessity in Africa and Southeast Asian customer.
The used cloth exported by Qingdao is very well known in
Africa which has the largest trade market consist of 55% of
the whole trade and followed by Mid east, North America,
Southeast Asia, South America all has trade amount of 10% and
smallest demand for used good by Qingdao is from central
America.
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This company is found to be responsible to all their
customers which in a survey 47.8% of buyer have contacted the
supplier are responded in term of electronic mail.
THE APPROVED PROCEDURES
THE PROCEDURE IN EXPORTING USED CLOTH FROM QINGDAO SHUOYUAN INTERNATIONAL TRADE CO., LTD
Qingdao is a company that focused their export in used cloth.
There is several procedures on exporting used cloth from
china. When importing clothes and textile products from China
the deciding the design and quality is very important, not the
supplier. There’s no universal definition of “good quality”,
especially when it comes to clothing and textile products.
There are some features need to be highlight in determining
the selection of cloth which lead to, materials, component,
branding, and design feature. The document that required in
exporting is custom clearance and supporting document. In the
custom clearance the document used is K2 document and
commercial invoice, packing list and the CIF. Where in the
supporting document it involve bill of lading and export
permit JK59. The commodities used in this shipment are using
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DOCUMENTATION AND CUSTOM CLEARANCE
The company will choose either to use full container load or
less container load. The documents that will be used start
from the importer which placing order and received by the
exporter. The exporter then prepares the commercial invoice,
packing list and shipping instruction. The freight forwarder
paid by the company should book the vessel and prepare the K2
document for exporting the used cloth and the insurance for
the goods. Then the freight forwarder will finalize the
freight that need to be paid by the company and pay the
haulier company to carry the cargo to the container freight
station. This consignment doesn’t include in the high-risk
cargo thus it will be granted release automatically after the
custom charges has been paid. The freight forwarder then paid
the freight and charges on behalf the exporter and entitles to
collect bill of lading.
(Grönkvist, 2013)
SHIPPING THE CARGO
Clothing and textiles are low density, high volume and low
weight, which make Air Freight non-viable for anything but
samples. However, certain textile accessories such as caps
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have smaller volume and higher weight per unit, thus small
shipments could work with Air Freight.
Sea freight is the only option in most cases and high quality
export packing is important. While clothing and textiles can
absorb shocks better than other products, it’s sensitive to
liquids and damp environments. The process in shipping the
goods begin with the Port operator makes arrangement to move
container from Container Freight Station (CFS) or warehouse to
container yard. And then, port operator loads container to
vessel load list document. Shipping agent submits export
manifest document Ocean Bill of Lading (OBL) electronically to
Customs within seven days after vessel departure.
(MITI, 2012)
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THE DOCUMENTATIONS USED
There are some importance documents are needed for a
particular shipment such as country of origin and destination
as well as transshipment, selecting modes of transportation
from air, land, sea or pipeline and the parties involved in
the transaction.
The documents involve are invoice, packing list, Bill of
Lading, certificates of origin and etc. The name for export
documentation is also known as FCL (Full Container Load). This
term are used in ocean freight service describing full goods
in a container from one place to another. FCL usually
associates one shipper and one consignee, FCL usually is lower
in cost and equivalent size and weight of cargo bulk. What
document is being used in the export of cargo in container?
Next, there are procedures that must be follow carefully and
also settle the payment of fees. Firstly, shipper will contact
their agent to move the goods to the rightful places that are
being coordinated by the shipper. Then the agent will arranges
to have a shipping line place an empty container at the
shipper’s premises to be loaded and book space on the next
vessel to the destination port. Bill of Lading instructions
are sent to the shipping line for them to produce the Ocean
Bill of Lading. This is the point at which the agent will tell
the shipping line what type of Bill of Lading to use.
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The shipping line will use an Ocean Bill of Lading with
the shipper being the agent at the originating port and
consignee being his agent at the destination port or otherwise
the shipping line will use the same type of Bill of Lading
with shipper being the exporter at the originating port and
the consignee being the importer at the destination port and
will notify the party being the agent at the destination port.
If first option is used then the agent will raise a House
Bill of Lading with the shipper being his clients which will
the consignee being the importer at the destination port. Once
the shipment has sailed, the agent will send to his agent at
the destination port a pre-alert consisting of Ocean Bill of
Lading, House Bill of Lading, if used an invoice and any other
supporting documents. The shipping line will send notice of
arrival to agent or consignee.
The agent in the port of destination will take control of the
shipment and customs clear and arrange for delivery to the
importer. The agent may use prime mover to get the container
delivered
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THE INCOTERMS
The company is always using the win-win process
because that is their principle. So, they have a lot type of
Incoterms that they can use, as long as the buyer is agreed
with that transaction. The Incoterms that the company use is
FOB, CFR, CIF, EXW, DDP, and DDU. The FOB and CFR is the most
common type of Incoterms that they always use.
DEFINITION OF 'INCOTERMS'
Trade terms published by the International Chamber of
Commerce (ICC) that are commonly used in both international
and domestic trade contracts. Incoterms, short for
"International Commercial Terms," are used to make
international trade easier by helping traders in different
countries understand one another. Incoterms were first
developed in 1936 and are updated from time to time, in order
to conform to current trade practices. Because of these
updates, contracts should specify which version of Incoterms
they are using (e.g., Incoterms 2010)
(Muracciole, 2010)
FOB – FREE ON BOARD
The seller must load the goods on board the vessel
nominated by the buyer. Cost and risk are divided when
the goods are actually on board of the vessel (this rule
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is new!). The seller must clear the goods for export. The
term is applicable for maritime and inland waterway
transport only. They are not for multimodal sea transport
in containers (see Incoterms 2010, ICC publication 715).
The buyer must instruct the seller the details of the
vessel and the port where the goods are to be loaded, and
there is no reference to, or provision for, the use of a
carrier or forwarder. This term has been greatly misused
over the last three decades ever since Incoterms 1980
explained that FCA should be used for container
shipments.
CFR – COST AND FREIGHT
Seller must pay the costs and freight to bring the goods
to the port of destination. However, risk is transferred
to the buyer once the goods are loaded on the vessel
(this rule is new!). Maritime transport only and
Insurance for the goods is NOT included. This term is
formerly known as CNF (C&F).
(Robinson, 2010)
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BILLING AND CHARGES – TRANSPORTATION AND PORT
The billing and charger for transportation and port it’s a
process of documentation for import and export procedure of
payments goods. These processes will use documentation such
as, bill of lading, letter of credit, integrated export
document, customs document and other kind of document that
involved. In these, process export finished goods of Qingdao
Shuoyuan International Trade Co., Ltd.’s product, the
companies use forwarding agent, have specialist expertise
relating to preparing and processing documentation for
international shipping.
Forwarding agent it’s specialist expertise relating to
preparing and processing documentation for international
shipping. The bill of lading is document to move a freight
shipment. The bill of lading works as a receipt of freight
services, a contract between a freight carrier and shipper and
a document of title. The bill of lading is a legally binding
document providing the driver and the carrier all the details
needed to process the freight shipment and invoice it
correctly. These are the Qingdao Shuoyuan International Trade
Co., Ltd.’s price for charges by port authority:
Port Charges for carrier export and clearance of exported:
1) Charge per Bill of Lading Set RMB 400
2) Container Yard Charge RMB200.00/20,RMB400.00/40’
3) Port Sur-charge RMB105.00/20,RMB165.00/40’
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4) Document Charge 100/consignment
5) Terminal Handling Charges RMB370.00/20’ RMB560.00/40’
6) Customs Clearance Fee RMB150.00/consignment
7) Commodity Inspection Fee100/consignment
8) Container Yard Stuffing Fee RMB160/320
9) It should add BAF:USD199/398,CAF:O/F*6.4% to shipping
charges when in European routes (including transit port
in Europe).
10) It should add AMS: USD25/BILL to shipping charges in
American routes.
The payment of customs duties and taxes can be made by
cash, cheque or bank draft. Payment by cheque requires prior
lodgment of security, normally in the form of a banker's
guarantee to ensure the securing of the amount to be drawn.
Export Duties:
Export duties are only imposed on a few resource products
and semi-manufactured goods. In 2013, China continues to levy
temporary tariffs on exports including coal, crude oil,
chemical fertilizers and iron alloy to conserve resources.
The tax base for export duties are the same as import
duties – i.e. the DPV. The DPV for export duties is based on
transacted price, i.e. the lump sum price receivable by the
domestic seller exporting the goods to the buyer. Export
duties, freight-related expenses and insurance fees after
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loading at the export spot, and commissions borne by the
seller are excluded.
(Matson, 2003)
IMPORTING TO EXPORTING FROM CHINA GENERALLY INVOLVES THREE TYPES OF TAXES:
1. Value-added Tax for Imported Goods
Imported goods to China are subject to value-added tax (VAT),
and the applicable tax rates are the same as those applied to
goods sold within the domestic market (i.e. 17 percent, and 13
percent for some goods). VAT is payable on the day of customs
clearance.
The input VAT imposed on importing goods can be used to deduct
the output VAT paid when the imported goods are sold in the
domestic market.
2. Consumption Tax for Imported Goods
Items subject to consumption tax (CT) include luxury products
such as high-end watches, non-renewable petroleum products
such as diesel oil, and high-energy consumption products such
as passenger cars and motorcycles.
Import CT is collected either on an ad valorem basis or
quantity basis, with tax rates and amounts varying greatly. CT
should be paid within 15 days from the day that Customs issues
the Import CT Bill of Payment.
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3. Customs Duties
Customs duties include import duties and export duties, with a
total of 8,238 items taxed, according to China’s 2013 Customs
Tariff Implementation Plan (“2013 Tariff Plan”). Customs
duties are computed either on an ad valorem basis or quantity
basis.
(Cannady, 2015)
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IMPORT OR EXPORT PROCEDURES
PROCESS DIAGRAM
The transaction is an export and import transaction
between China and Others. They use the FCL which mean Full
Container Load. As they always consolidate their cargo into
one fully container.. There are only one shipper that covering
the whole container in process. That’s why the FCL is being
used rather than LCL. The process can be explained in the
diagram below:
Malaysia is the exporter and US is the importer in this transaction.
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(Mitsui, 2013)
IMPORT & EXPORT PROCESS EXPLANATION
In the diagram, we can see that the process we’re very
complicated as the good is keep transferring from one point to
another point. But that what is meant to be logistic. From
China, when the order from other country is accepted, then the
cargo is needed to be ready to be export. The order process is
only through the internet as it is much easier and faster.
Then the incoterm will be selected by the agreement between
seller & buyer. The Incoterm that is selected was the FOB or
CFR. After that, the seller must reserve the space in the
ship from the shipping company.
When the cargos have been packed into the container, they
will be sent to the port where the custom will do some
inspection towards the item inside the container. The document
needed here is the packing list. When all the charges
including the tax have been cleared, the custom will release
the cargo and they can be load on the ship. This is where the
bill of lading will be issued by the master. Then, when the
bill of lading have been passed to the seller, the cargo is
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now are the carrier responsibility. The cargo will start the
journey to the other country.
After reached the port of destination, the master will
unload the cargo only when the freight has been paid. Then,
the master will pass the cargo to the person that holds the
bill of lading. Then the cargo is transferred to the buyer
hand. The buyer also needs to pay the unloading process
charges and the tax. Then the item will be trough some
inspection before it can be release at the port gate.
That is how the import and export procedure transaction
is happen between China and the other country that do the
business wit them.
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CONCLUSION AND RECOMMENDATIONS
When we all examine together about our assignment, we
found that there are positive impact on each topic. We choose
Qingdao Shuoyuan International Trade Co., Ltd which located in
China. This company is really good in import and export of
product. They also have 6 warehouses in China which make them
very big. They are using the “Hub and Spoke” function system
which are very advanced are very profitable to them. This
company can be a role model to our industry in Malaysia as we
are booming in our way of industry.
Our suggestion is when we talk about import and export,
each company in Malaysia must improvise and increase the
number of productivity of our own GNP. For example, increase
the number of manufacturer. As our Prime Minister Dato’ Sri
Najib said we should make more people “who does something to
our country”, and not to be “someone who work under somebody”.
This can be made only when our resident in Malaysia have the
knowledge and the quality of making something new.
Furthermore, when a country is richer, they will tend to
import more products from the other country. These products is
well known as a raw material or something that can be
improvise to be a final product that can be sell in a higher
price. So, when the richer the country, the people can live in
a very comfort way.
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BIBLIOGRAPHYCannady, J. (2015). Export Gov. Retrieved 2015, from Common Export Documents: http://www.export.gov/logistics/eg_main_018121.asp
Grönkvist, F. (2013). China Importal. Retrieved 2013, from Import clothes from China – The Ultimate Guide: http://www.chinaimportal.com/blog/import-clothes-from-china-for-small-businesses/
House, R. (2010). The Free Dictionary. Retrieved 2010, from Selection: http://www.thefreedictionary.com/selection
Matrade. (2011). Malaysia External Trade Development Coperation. Retrieved 2011, from Logistics and Export Documentation: http://www.matrade.gov.my/en/malaysia-exporters-section/119-going-global-beginners-guide/636-logistics-and-export-documentation
Matson, K. (2003). Wan Hai Lai America Ltd. Retrieved 2003, from Container Tracking: www.wanhaiusa.com
MITI. (2012). MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. Retrieved 2012, from Process Flow of Export, Import and Transshipment: http://www.miti.gov.my/cms/content.jsp?id=com.tms.cms.section.Section_4709a20e-c0a81573-10311031-dd94fb50
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Mitsui. (2013). Mitsui Soko. Retrieved 2013, from Sea import/export fowarding: http://msc.mitsui-soko.com/en/service/forwarding_s.aspx
Muracciole, V. (2010). International Chamber of Commerce. Retrieved 2010, from The Incoterms: http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/the-incoterms-rules/
Robinson. (2010). C.H. ROBINSON. Retrieved 2010, from Incoterms Tools: http://www.chrobinson.com/en/us/Resources/Global-Trade-Resources/Incoterms-Tool/
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