import and export documentation

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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http://en.wikipedia.org/wiki/Free_on_Board


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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