With global trade expecting to slightly warm up in China, international corporations and executives are doing the right thing by considering and keeping up their trade with China in order to expand. We speak with Shanshan Xu, the Senior Partner of Hiways Law Firm, who reveals what you should do to avoid litigation cases during Chinese Customs, how international trade in China has developed and how mediation is beneficial during disputes with international organisations.
Since you began practising, how has international trade and its law changed in China over the years?
Since I began practising, the international trade and its law has always been developing dynamically. China plays more of an important role in the process of the globalisation and not only abides by WTO rules, but also actively promotes the bilateral trade negotiation. Currently, the US has left the Trans Pacific Partnership (TPP), which provides the opportunity for China to enhance the cooperation with other TPP members and obtain the leader status in the globalisation.
During the process of the trade facilitation and deduction of the tariff and non-tariff barriers, China also pays attention to the duty income and national security interests. For example, in the respect of personal articles, the individuals who act as the purchasing agents and carry the goods from overseas to mainland China, the personal articles for taking advantage of the preferential tariff policies become the targets hit by Chinese Customs; while in the respect of the goods, the Customs enhanced the audit against the loyalty payment made by the importers to the exporters in the auto industry.
How can companies avoid litigation against them in regards to smuggling and customs? If these cases do arise, what would you recommend the company’s first step be?
My suggestions on the customs compliance against the smuggling and customs are listed as follows:
In the daily operation of the business, the companies should not use the tax saving as a key performance indicator for the executives and staffs.
Provide the complete and true documents to the Customs for the customs declaration.
Don’t pass the uncertain/unknown information to the Customs, e.g. HTS code, price, and sensitive information.
Set up a compliance department independent of other departments in the companies.
Seek for the assistance of the professional experts, including but not limited to, the opinions in areas of the classification, valuation, certificate of origin, and trade process.
If these cases do arise, the companies should write down the list of the documents taken by the Customs, and the responsible Customs officials in charge of your case. Meanwhile, the companies should retain a professional attorney to conduct the self-examination and make timely and continuously communication with the Customs.
Has mediation become a more popular method of solving international trade, and why?
Yes, mediation has become a more popular method of solving international trade, due to mediation having many advantages compared to lawsuits, including but not limited to: cost saving, confidentiality, the high possibility of realisation of the comprehensive and maximum interests, the maintenance of the good relationship, and benefit for the further cooperation.
Unless mediation is forbidden by law for certain kind of cases, it works for most cases, especially the disputes occurred between the equal parties. More effective communication is conducted, higher possibility of resolving the disputes through mediation will be realised.
How difficult is it to mediate between a Chinese company and an internationally based company? What common misconceptions do international organisations have?
Generally, international organisations have the common misconception towards Chinese companies regarding the discredit and non-compliance with the rules. This misconception against Chinese companies greatly increases the difficulty in mediating between a Chinese company and an internationally based company. Moreover, the executives of the internationally based company may have made their judgement based on the wrong and incomplete information delivered by the staff, due a misunderstanding of the information delivered between one another.