Imitation Jewelry - China CIQ Update - January 6 Addendum 

Below is an outline of updates we've received today from our sources in China.  We hope this information proves helpful as you work with your vendors through this unusual challenge.  Please feel free to contact us if you have questions or require additional assistance:  

• China Customs will be holding a meeting in Qingdao tomorrow for all factories/shippers to discuss the new rule and answer questions
• Liberty's partner in Qingdao will be attending the meeting and we will provide an update with FAQ's tomorrow
• It is rumored that the China government will announce its own testing services for test reports during this meeting encouraging factories to use the State provided services on a fee basis; this rumor has not been confirmed, but is coming from several sources in the forwarding, brokerage and shipper communities
• Per China Customs, attempts to move product without complying with the new rule could be considered contraband, bringing serious results
• There have been many questions regarding which types of jewelry require the new Inspection Certificate (high value jewelry, base metal jewelry, plastic jewelry, etc.).  CIQ's new rule applies to all imitation jewelry made with base metal 
• We've had many questions about how the process will actually work (how the cargo will move and what the document flow will be).  Here's a brief recap:  the commodity inspection certificate will be issued by China CIQ and will be one of documents used for export Customs clearance.  The factories must register at CIQ first, before they can secure the certificates for their export cargo
• Many factories have finished the registration process now, but some are still in the preparation stage.  All parties should be encouraged to move as quickly as possible to register to insure future shipments are not delayed
• After registering, the factories will provide several documents to China CIQ to apply for commodity inspection.  After receiving application from the factory, CIQ may ask the factory to bring samples to them for checking or CIQ may send someone to the factory to do an on site check of both the products and the factory itself 
• The whole procedure will take about 3-5 working days from submission of the application to issuance of the certificate.  The process could happen more quickly.  We've seen one factory secure a certificate in 2 days without a factory visit.
• After the factory has all the documents, including the inspection certificate, for export Customs declaration on hand, they'll turn over the documents and cargo to the Customs broker and freight forwarder for export clearance and then outbound shipment.
• During Customs clearance, the cargo should be in the airline/Customs nominated warehouse

• In Qingdao most factories are moving forward and have the process under control.  We have a list of key factories in Qingdao along with their current status with respect to the registration and CIQ certificate status.  Contact kkenney@libertyint.com to check on your factory's status
• Regulation is applicable for both air and ocean shipments  
• China Customs refers to it as a "Merchandise Inspection"
• Moving forward factories will need approximately 3-5 working days to secure the certificate
• Factories should have a plan in place to insure there are no delays - process can begin a few days before all goods are completed
• The registration and application process must be handled by the shippers/factories themselves (not via the broker or forwarder)
• Generally speaking, the process should not be a problem for those factories/shippers with an export permit
• The regular fee for the certificate should be approximately RMB 500-600 ( USD 90 - 100 )
• Those factories/shippers without an export permit will have challenges
• In addition to borrowing another company's export permit, factories without an export permit must now get the Merchandise Inspection Certificate through a third party.  The fee for the certificate through a third party could be as high as USD 500
• Many commodities in China are subject to merchandise inspection and most factories are aware this requirement exists 
• Importers in the US must be very careful when accepting ex-works terms of sale in the future
• If an imitation jewelry factory/shipper requests ex-works terms, it is generally because the order is very small and the factory does not want to pay for extra FOB costs OR it could be because the factory has no export permit at all
• If terms are ex-works and the factory asks the importer to have their nominated forwarder pick up the merchandise, the importer must insure all clearance documents and processes are in order.  Otherwise, the importer could be left dealing with the Merchandise Inspection certificate on their own
• As an example, there are over 5000 factories in the Yi Wu area.  Most of them are related somehow.  However, there are fewer than 50 factories/shippers in Yi Wu who own an export/import permit
• In Qingdao most factories have finished the first step of Commodity Inspection, which is the registration at the CIQ
• After registration, the factories need to provide a Factory Inspection List, Carton Certification (only need to provide after Jan 17), Shipper's Announcement, Testing Report, Commodity Inspection Authority, Commercial Invoice, Packing List, Contract, and AWB
• Most registered factories have confirmed they will have no problem to provide these documents except the Testing Report
• This report is now required for every export item. Many factories are not familiar with the testing process
• The Testing Report may be provided by a China testing lab, overseas testing lab or even the consignee's lab
• This is, of course, the biggest challenge.  We do not know if China CIQ will waiver on this requirement moving forward, but currently the document is being requested in order to make shipment
• After the above documents are prepared and presented, the factories can submit the application for the commodity inspection to CIQ
• According to the shipper's/factory's documents, CIQ will perform chemical testing or factory inspection at their own discretion (if they see a need)
• The Commodity Inspection Certificate will then be issued after 3-5 working days.
• There are some Qingdao factories/shippers that have finished most steps and are waiting for CIQ to issue the certificate
• We are estimating that some factories in Qingdao may be ready to move goods this weekend
• Yi Wu factories/shippers seemed to be more challenged by the new regulation for many of the reasons highlighted above
• Most are still in no position to comply with the new rule
• For Yi Wu shipments, we can assist factories/shippers in locating a local trading agent to help provide the factory inspection and Commodity Inspection services for pending shipments.  Please contact Karen Kenney at kkenney@libertyint.com for additional information
• Many importers have asked if they can move goods out of Yi Wu to South China or Qingdao to avoid local issues.  In most cases, the factory/shipper cannot move the goods within China until export clearance has been effected.  Export clearance must be effected by them at the local level before cargo moves for export (even if by truck to another province).  Most factories/shippers have only a local import/export license (if they have any license at all)