HS Codes & Import Duty Rates in China: The Ultimate Guide

Suggestion: Watch the 10 minutes video tutorial before reading this article

Exporting to China requires thorough planning and that you manage product testing, labeling, preparation of documents needed well in advance before you ship your goods.

What many exporters know little about is how so-called HS codes are used and treated in China.

HS codes are used internationally for a number of important reasons and you won’t be able to clear the customs without them. Thus, HD codes are not only important in China but globally.

In this article, I explain all the crucial information you need to know about HS codes and the import duties used for different HS codes in China.

Topics covered:

• What are HS codes?
• How many digits are used in HS codes?
• Why do I need HS codes when exporting to China?
• When do I need to inform about my HS codes?
• How can I find the HS codes used for my products?
• What happens if I use the wrong HS codes?
• Import duty by HS codes

What are HS codes?

The word HS codes is an abbreviation from Harmonized Commodity Description and Coding System, the codes are used to classify products traded in a country.

In China, HS codes are divided into 22 categories, which are in turn divided into 98 chapters, and the chapters are thereafter divided into around 5000 subheadings.

Even if HS codes are used worldwide, the appearance of the codes can differ between countries such as the number of digits used.

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How many digits are used in HS codes in China?

From Wikipedia’s description, HS codes only consist of 6 digits. This is the standard for most countries.

In China, on the other hand, HS codes now have 13 digits, updated from 10 digits in 2018. Countries in Southeast Asia generally use 8 digits.

The first 8 digits in Chinese HS codes come from the WCO HS code and are followed by the commodity HS code of the “Import and Export Tariff of the People’s Republic of China”, “customs supervisory numbers, and the last 3 digits are related to the CIQ.

Interestingly, cross-border eCommerce has become so huge so that the WCO has dedicated a separate section on the matter on their website. Some key aspects that identify cross-border eCommerce are that:

• There are time-sensitive goods flow
• Higher volumes of smaller packages
• Unknown parties and players participate
• Return/refund processes are required

Which organization manages HS codes?

The World Customs Organization (WCO) manages the HS codes and updates them every fifth year.

In the US, 10 digits are used on the contrary to 8 in Southeast Asia and 13 in China. As such, we can say that the Chinese HS codes are more detailed in their classification.

For more information about the organization, I recommend you to check their website directly. They also provide plenty of useful guides and information related to international trade.

Why do I need HS codes when exporting to China?

There are many reasons why HS codes are needed to classify products in countries, including China.

While you probably think it’s obvious that products need to be classified, below I have listed some specific reasons why HS codes are needed.

1. Control of imports and exports

HS codes are needed to control the exports and imports of products. Let’s say that the Chinese government wants to protect its local wheat producers from competition overseas, who wish to import wheat into China, for example.

The Chinese government can then restrict imports by setting limiting quotas for the specific HS code used for wheat.

Or, let’s say that an epidemic breaks out that affects the quality of poultry products. The Chinese government can then prohibit the imports of poultry by recognizing the HS code used for that product.

Normally, CIQ is the authority that handles the control of imports and exports at the harbors and airports.

2. Product testing

HS codes are used to determine what GB standards and product testing that apply to your products.

When your goods arrive at the Chinese harbor, the customs will be able to judge what product testing that you need to comply with, based on the HS codes that apply to your products. They can thereafter request the test reports needed.

GB standards are used for testing, labeling, packaging, and are similar to the ISO standards used in the West. In fact, many GB standards have derived from ISO standards.

3. To collect trade data and statistics

HS codes are also used to collect trade data and statistics.

This is crucial to understand if a country’s economy is ‘healthy’, what the trends are, and if there’s any trade surplus or deficit. The government can then regulate imports and exports accordingly.

4. Determine customs tariffs

With the correct HS codes, the Chinese customs can also determine what customs tariffs that apply to your products (more about that later in this article).

Keep in mind that HS codes can be used due to other reasons, not mentioned above.

When do I need to inform about my HS codes?

You need to know your product’s HS code when you register your company at AQSIQ, this is one of the first steps in the exporting process in China.

The HS codes need to be included on the customs declaration form as well.

Without the codes, the customs won’t be able to determine what product testing your products need to comply with and what import duties to use.

How can I find the HS codes used for my products?

HS codes can be found by using online searching tools. The systems are automatized, so it’s important that you double check the HS codes retrieved.

You can also find the HS codes on government pages, like the China customs official website.

Don’t forget to confirm with your Chinese importer whether the HS codes are correct, as they are responsible to manage the customs clearance.

It’s their joint obligation, as importers, to help you through the customs clearance process.

Seeking help from a professional third-party is also recommended to reduce risks, as they can help you with everything from determining HS codes, customs clearance, labeling, product testing, CIQ declarations, CCC certification, and more.

What happens if I use the wrong HS codes?

Using the wrong HS codes can delay customs clearance, costing you much money and time. Below are examples of results that might happen if you use the wrong HS codes.

• Longer customs clearance process
• Fines by the authorities
• Seizure of shipment of goods
• Suspicion of smuggling
• Addition to a Customs watchlist
• Credit downgrade

You’ll also face risks to either pay too much or too little taxes, the latter one can be treated as a serious crime.

In addition, the customs won’t be able to know what products you intend to import, hence they don’t know what product testing you need to comply with.

If you accidentally use the wrong HS codes, you should cooperate with your Chinese importer and preferably seek help from a third party to help you out.

Import duties by HS codes

In 2017, the Chinese government has reduced import duties for almost 200 products, including apparel, meat, cosmetic products and more.

Rates have been lowered with various levels, ranging between 30% to 100%, which is a great reduction, helping to increase imports and to improve the quality of local products.

You can find the complete list translated into English here. The third column represents the HS codes (税则号列).

From 2021, the Chinese government will reduce the import tariffs further as explained on the tax authority’s website.

This is a measure to increase imports and boost local consumption. For more information, I recommend you to visit the website directly and where you can read further.

Conclusion

HS codes are used to classify products traded in a country. The codes aren’t used in China only, but internationally and managed by the WCO.

Worth mentioning is that the codes start with 6 digits but range up to 13 digits in China, for further details about the classification.

There are various reasons why countries use HS codes, but some of the most outspoken ones are that they have to collect trade data, control imports, exports, and determine import duties.

Failing to use the correct HS codes will result in problems at the customs clearance, which can cost much money and time.

Using the wrong HS codes can also make you pay too much in tax, or too little, which can in the worst case be treated as a serious crime.

You can find HS codes with search engine tools or by visiting government websites. You can also contact the WCO for more information if needed.

I hope you find this article interesting and recommend you to read the complete article if you want to know more.

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