Must I Deal With A Company With Export License in Yiwu?

How Does Export License Work in Yiwu?

What is Export License?

As you can see from the name, it's a thing like a driving license. You have a license, then you can export. This system used to be a very important administrative measure in China's foreign trade management. And it's still important in some parts of China I suppose. But it's not important in Yiwu business anymore.

Does An Export License Really Matter?

As far as I know, this piece of paper doesn't really matter in a business situation like Yiwu. 95% of the exporters in Yiwu don't have this export license. Another 5% may have this license, but they are not really using it. For these 95% of exporters, they just buy a title for each shipment. This title just costs them 20-30 USD. In order to avoid tax and the complicated process of applying for a license, these people just simply buy it. For this 5% of exporters, they ONLY use this license and their own title when they need an export tax rebate from the China government. But in order to have this rebate, they have to provide a VAT invoice. In Yiwu, usually a container is a mix of hundreds of products from dozens of suppliers. It's very hard to have all these suppliers provide VAT invoices. The paperwork of applying for a tax rebate in such a case is really time-consuming. So the benefits of having an export license are not big at all.

What Really Matters?

Is this company officially registered in Yiwu or China? This matters! If a company has an export license, it has to be registered in Yiwu/China. So those 5% who have an export license are all registered within China. For the other 95%, you have to check their business licenses (real licenses, not fake ones) to see if they're registered in Yiwu/China. From my observation, many people just spend 700 USD to register a company somewhere, set up a website, copy lots of content from everywhere, then sit and wait for customers to come in. For these people, it's better to have a second thought before contacting. If a company is registered in China or Yiwu, when a crime occurs, police can easily find the business owner. But if a company is not registered in China, China police have to ask for international cooperation. If your loss is not THAT scary, I bet the police won't even touch a finger. Within the 95% without an export license, probably 90% of them aren't registered in China. They just register overseas like HK or some small islands. Police can also eventually find out the business owner via their bank account, but as I mentioned above, it's HARD for China police to have the international cooperation to punish criminals.

More About China Export and Import License:

From 1959 to 1979, all imports and exports were put in the hands of the special national import and export companies under the former Ministry of Foreign Trade and their branch companies. These companies handled imports and exports in strict accordance with state plans, thus the role of import and export licenses was reduced. During this period, the import and export license system was mainly directed at those departments outside of foreign trade enterprises, which, with the approval of the state, wanted to import a small amount of equipment and goods for scientific research, educational, cultural, sport, and public health purposes, and export a small amount of non-trade commodities. Since adopting the policy for reform and opening to the outside world, China's foreign trade has witnessed continuous development, and the operation of import and export business had expanded from the specific national import and export companies under the Ministry of Foreign Trade and Economic Relations to the foreign trade companies in various localities and under various ministries. While bringing some vitality to the work of foreign trade, this had also resulted in some confusion in the normal order of foreign trade and incurred certain losses to the state. Therefore, the government again decided to re-institute and strengthen the import and export license system. In June 1980, the Ministry of Foreign Trade and Economic Relations enacted the "Interim Rules on the Export License System." The document stipulated that firms that engage in export business must file in advance applications to the Ministry of Foreign Trade and Economic Relations or the foreign trade administrative departments in the various provinces, autonomous regions, and municipalities directly under the central government that have been authorized by the Ministry of Foreign Trade and Economic Relations. Having been approved, they must register with the local foreign trade administrative departments and the relevant customs houses while presenting the documents of approval. Only then could they engage in export business. In January 1984, the State Council issued the "Interim Regulations of the People's Republic of China on License System for Imported and Exported Goods." It stated that for the import of all goods that need licenses to import according to state regulations, it is necessary to apply for import licenses beforehand, and only then could orders be placed with the relevant foreign trade companies. It also stipulated that the Ministry of Foreign Trade and Economic Relations was responsible to draft and adjust the list of goods whose import calls for licenses. In this period, the control was enforced on all foreign trade enterprises dealing with import and export business. Since 1992, China gradually relaxed the control over import. For instance, it abolished or reduced the range of import licenses, import quotas, as well as import control. In January 1994, the Ministry of Foreign Trade and Economic Relations again issued the "Interim Provisions Regarding Import Quota Control over Commonplace Commodities." It marked that China's import management system was reformed in line with the relevant regulations of GATT. In 1998, China removed control by import licenses and import quotas over the overwhelming majority of commodities that needed licenses to be imported formerly, while only continuing to enforce import license control over the products of a small number of infant industries that call for special protection.

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