Send a package to China from Cambodia with a quick export guide

8 Mins Read
Share on
facebook sharing button
twitter sharing button
linkedin sharing button
Smart Share Buttons Icon Share

Effective from January 1, 2022, Cambodia-China Free Trade Agreement (CCFTA) stands as a testament to their robust economic relationship. This milestone agreement sees over 90% of trade goods enjoying zero tariffs. In 2022, Cambodia experienced a surge in trade with China, its largest export destination. Tallying up to a staggering US$1.24 billion, China absorbed 5.5% of Cambodia's export pie, General Department of Customs and Excise revealed. In the same breath, Cambodia imported goods worth US$10.4 billion from China, which made up a whopping 34.1% of its total imports. 

Delving deeper, Cambodia's primary exports to China were essentials like milled rice, bananas, and apparel, while imports ranged from raw garment materials to machinery and electronics. For Cambodian businesses eyeing this flourishing trade opportunity, getting one key aspect right is crucial: China's customs guidelines. 

Navigating the China import customs clearance process smoothly can be the key to tapping into this golden era of Cambodia-China commerce. We elaborate further in our export guide.

1. Cost of shipping to China: Import fees 

When it comes to the cost of international shipping to China, understanding the various import fees is crucial for businesses. These fees encompass four primary categories:

  • Customs duty
  • Value-Added Tax (VAT)
  • Consumption Tax (CT)
  • Cross-border e-commerce tax

China customs duty rates

For Cambodian businesses aiming to export to China, it's essential to be aware of the multiple customs duty rates that China imposes. These rates are mainly determined by the value or quantity of goods being shipped. Here's a breakdown:

General duty rates

Products between two countries not governed by any specific agreement fall under this category. However, given the robust bilateral relationship between Cambodia and China, Cambodian products usually aren't subjected to general duty rates when entering China.

Most Favoured Nation (MFN) duty rates 

MFN duty rates are what countries commit to when dealing with fellow World Trade Organisation (WTO) members unless there's a distinct FTA in place. Notably, China slashed import tariffs on 954 products in January 2022, which include medical and environmental products. MFN duty rates predominantly apply to:

  • Goods imported from WTO member countries
  • Products from countries with bilateral trade pacts that include MFN treatment with China
  • Goods that originate from China itself

As a part of the Regional Comprehensive Economic Partnership (RCEP), the world's most extensive free-trade agreement, Cambodia enjoys preferential trade and tax benefits with China, including reduced MFN import tariffs.

Conventional duty rates

Specific to goods coming into China from nations having regional trade accords granting favoured import tax rates. This includes the China-Cambodia Free Trade Agreement.

Special preferential duty rates

These rates are typically lower than the MFN or conventional duty rates. They're designed for goods from nations that have special preferential duty agreements with China.

Tariff Rate Quota (TRQ) duty rates

With TRQ, goods that are imported up to a specified quota are taxed at a reduced rate. Any imports exceeding the quota are subjected to higher tariffs when entering China. This pertains to eight goods categories: wheat, corn, rice, sugar, wool, cotton, and fertiliser.

Temporary/provisional duty rates

China occasionally introduces these rates to encourage imports and cater to growing market demands. Starting January 1, 2023, China will launch provisional import tariffs on 1,020 items. These tariffs will be more favourable than the MFN rates. They will include:

  • Medical: Zero tariffs for certain raw materials for medical drugs, including those for cancer and COVID-19. These also apply to medical supplies such as dentures, raw materials for vascular stents, and contrast agents.
  • Consumer goods: Reduced tariffs in alignment with contemporary consumption trends, including various foods such as cashew nuts and infant food, and small household gadgets like juicers and coffee machines.
  • Manufacturing: No tariffs for specific resources like potash fertiliser and raw cobalt, alongside reduced tariffs for certain woods, paper products, and more.
  • Electronics/industrial: Lower tariffs to foster advanced manufacturing's innovative development, such as lithium niobate, electronic ink screens, iridium oxide for fuel cells, roller bearings for wind turbines, and other products.

Value-Added Tax (VAT)

For Cambodian businesses keen on exporting to China, understanding the country's VAT system is crucial for cost calculations and price competitiveness.

China's VAT system bifurcates taxpayers into two primary categories: general and small-scale taxpayers. The general taxpayers, with an annual taxable turnover exceeding ¥5 million, are liable to pay a VAT ranging between 9% to 13%. Small-scale taxpayers, however, with an annual taxable income below ¥5 million, are typically charged a 3% VAT. But noteworthy changes have been recently introduced:

VAT exemption

From January 1, 2023, to December 31, 2027, small-scale taxpayers with monthly sales below ¥100,000 do not need to pay VAT. Put differently, such taxpayers will not incur any VAT if their quarterly sales don't surpass ¥300,000. In situations where small-scale taxpayers have total monthly sales exceeding ¥100,000, yet, after discounting real estate sales for that period, the figure is less than ¥100,000, they're exempt from VAT for the sale of goods, labour services, services, and intangible assets. However, they do have the option to relinquish this VAT exemption, and issue specialised VAT invoices for certain sales.

VAT reduction

For the existing small-scale taxpayers, previously liable to a 3% VAT, there's a reduction. They will now be levied at a rate of 1%, and those items under a 3% VAT prepayment rate will enjoy a trimmed prepayment rate of 1%.

For Cambodian businesses with a business presence in China, here's a basic framework to calculate potential VAT:

General taxpayer VAT

General taxpayer VAT

Small-scale taxpayer VAT

VAT Payable = (Sales* x VAT Rate) - Input VAT**

* “Sales” refers to income received by the taxpayer excluding the VAT incurred [Sales Including Output VAT / (1 + VAT Rate)]

VAT Payable = Sales* x VAT Rate

* “Sales” refer to income received by taxpayer excluding VAT incurred [Sales Including VAT / (1 + VAT Rate)]>

Consumption tax

For Cambodian businesses entering the Chinese market, grasping the consumption tax nuances can be a game-changer. Consumption tax in China is specifically targeted at entities that either manufacture or import taxable products for processing, consignment, or direct selling.

The rationale behind this tax is manifold. Firstly, it's imposed on imported products that are potentially detrimental to human health. This encompasses items like tobacco and alcohol. Secondly, luxury or premium goods like jewellery, cosmetics, and even certain automobiles like cars and motorcycles come under this tax. The idea is to control the excessive consumption of luxury and environmentally harmful items.

Now, the consumption tax rates are not uniform; they diverge based on the specific product category. To navigate these rates, businesses have a few methods at their disposal:

Ad valorem method

Ad valorem method

Quantity-based method

Compound tax method

Consumption Tax Payable = Taxable Sales Amount × Tax Rate

This approach essentially links the tax directly to the value of the product in question.

Consumption Tax Payable = Taxable Sales Quantity × Tax Amount per Unit

Instead of the product's value, this method pegs the tax to the quantity of products sold or processed.

Consumption Tax Payable = (Taxable Sales Amount × Tax Rate) + (Taxable Sales Quantity × Tax Amount per Unit)

A combination of the two aforementioned methods, it is used for products where both value and quantity play a role in determining the consumption tax.

Cross-border e-commerce import tax

Engaging in e-commerce with China brings with it certain tax implications. For Cambodian businesses, it's crucial to understand that products bought from entities either registered within China's e-commerce framework or located overseas aren't exempt from taxes. These goods are liable for customs duties, VAT, and consumption tax.

Yet, there's some relief: if a shipment's value is under ¥2,000 and the yearly accumulated value doesn’t exceed ¥20,000, customs duties are waived. However, it's not an all-clear. 

Even such shipments are levied VAT and consumption tax, but at a reduced rate, amounting to 70% of the usual tax imposed through general trade channels.

2. Goods you can and cannot ship to China

As with any export venture, understanding what can be shipped into China and those that can’t is important. Prohibited goods are strictly not allowed for entry. Meanwhile, restricted goods can enter the country as long as customs requirements are met.

Prohibited goods you cannot ship to China

Examples of China’s prohibited goods include:

  • Arms, ammunition, and all kinds of explosives
  • Counterfeit currencies and fake negotiable securities
  • Printed materials, magnetic media, films, or photographs that may undermine China's political, economic, cultural, or moral foundations
  • Lethal poisons
  • Illicit drugs
  • Animals and plants known to carry diseases
  • Foods, medicines, and items originating from disease-afflicted areas
  • Used garments
  • Local RMB currency
  • Foods containing colourings and additives flagged as harmful by the National Health and Family Planning Commission (NHFPC)

Restricted goods you need approval for before shipping to China

Examples of China’s restricted goods include:

  • Advertising brochures/books for non-commercial use
  • Plant-derived products
  • Foodstuffs
  • Films
  • Non-hazardous chemicals
  • Cosmetics
  • Alcoholic beverages and tobacco
  • Telecommunication equipment, including mobile phones, their accessories and components, and toys
  • Lithium batteries.
  • Prescription drugs
  • Coal and firewood, inclusive of samples
  • Textile goods
  • Medical and dental supplies and apparatus

3. Documents to prepare for China imports

When importing into China or any international destination, several essential documents must be readied to ensure a smooth customs clearance process. Here's a summarised list:

  • Bill of Lading
  • Commercial invoice
  • Detailed packing list
  • Customs declaration
  • Shipping insurance
  • Sales contract
  • Import Quota Certificate for General Commodities (if applicable)
  • Import licence (if applicable)
  • Inspection certificate
  • Other safety or quality licences (depending on the product type)
  • Certificate of origin (if applicable)
  • Hygiene/Health certificate (for foodstuff)

Ship to China with DHL Express

Choosing DHL Express Cambodia to facilitate your shipping needs to China is a decision backed by numerous advantages. We pride ourselves on our profound knowledge of China's customs regulations, ensuring your shipments transition seamlessly across borders, saving both your precious time and hard-earned money. 

We offer highly competitive rates, making international shipping cost-effective for our clients. Our integrated platform allows for easy scheduling and management of shipments. Managing invoices and financial records is simplified with our efficient online system, MyDHL+. Additionally, our expansive network covers over 220 countries and territories, offering a range of flexible and fast delivery options, including On-Demand Delivery (ODD), tailored to your needs.

Moreover, with DHL Express, you're never alone. Our dedicated 24/7 customer service is always on standby, ensuring you have the support you need whenever you need it. Stay informed with real-time updates on your shipment's clearance status overseas, and benefit from the convenience of determining your shipment's pick-up time. Plus, our user-friendly tools ensure a smooth shipping process. And, with an eco-friendly air and land fleet, you can reduce your carbon footprint as you expand your overseas venture.

Trust in DHL Express for a hassle-free shipping journey to China, resting assured you're in the hands of experts.