The export license system has been an important measure in the Chinese foreign trade management since 1950.
Since 1980, the interim rules on the export license system have stipulated that companies intending to export must in advance file an application and be approved as an exporter by the Ministry of Commerce (MOFCOM), and then register with the local foreign trade department to become a so-called Foreign Trade Company (FTC).
What is an export license?
There are two types of export license in China, the general license and the special license.
When an FTC holds a general license, there is no need to apply for individual export license for every shipment. The FTC in this case has a valid export license for any transaction within the approved scope of business.
The MOFCOM regularly publish a list of restricted items. If a product is listed as a restricted item, a special license must be applied for, for every shipment. An example of this list can be found here (will download in Chinese) and the English translation of the announcement can be read here.
Who can export from China?
The exporter must have a valid export license for the consignment being exported. The export license is required for the goods to be shipped from China.
Most exports from China are carried out by Foreign Trade Companies (FTCs). These companies can export their own products or products they have acquired in the Chinese market, or act as agent for local manufacturers not holding export licenses.
Who is responsible for obtaining the export license?
In general, it is the responsibility of the exporter to ensure that a valid export license is issued. That being said, many smaller manufacturers do not hold export licenses, and will expect the freight forwarder to assist in identifying an FTC for the export license.
If I am the consignee, how do I know if the shipper has an export license?
In making the initial commercial agreement between shipper and consignee, it is important to clarify whether the shipper holds a valid export license or not. If the shipper (i.e. the exporter) does not have an export license, there will be an additional cost of appointing an FTC. The shipper and the consignee should agree on who will carry this cost up front to avoid later unexpected costs.
What is the cost of the export license?
Appointing an FTC for the export license is often more cost effective if arranged by the exporter than if arranged by the freight forwarder. The exact cost can depend on cargo value or a fixed rate.
Note that any cost associated with export license is traditionally outside the scope of the transportation solution offered by the freight forwarder, and hence not part of the cost for customs clearance.
How does an export license look?
The export license is in Chinese, and includes information about the exporter, the buyer, the cargo, value and mode of transportation.