DHL Express in China Overview and China Customs regulations. November, 2012

DHL Express in China Overview and China Customs regulations November, 2012

Content Page Country & Macro-Economics Overview DP-DHL Overview Custom Clearance Order 33 & 43 Import Regulations Export Regulations China Overview Nov 2012 Deutsche Post DHL Page

Content Page Country & Macro-Economics Overview DP-DHL Overview Custom Clearance Order 33 & 43 Import Regulations Export Regulations China Overview Nov 2012 Deutsche Post DHL Page

China Facts China China Land Area Population (2011) Population Density (2011) GDP nominal (2011) GDP per Capita (2011) 9.6 million km² 1.347 billion 140 pp/ km² RMB 47,156 billion ( 5,777 billion) RMB 34,999 ( 4,288) Economic growth driver Growth engine of the world economy and has experienced rapid growth: China 2011 GDP: 9.2% in 2011, totaling approximately 47.2 trillion CNY according to the government National Bureau of Statistics. 8.9% in 2012 China is now the 2 nd largest economies in the world behind the US Strong trade activities: With a total international trade value of US$3.64 trillion 1.9 trillion in exports and US$1.74 trillion in imports (2011) Factory of the world: World largest producers of toys, leather shoes, automobiles, television, garments Talent pool: Young workforce with a rapidly improving skill set Emerging capabilities in research and development: 3C; Pharmacy; Engineering and Manufactory; Fashion China Overview Nov 2012 *Source: WTO Deutsche Post DHL Page 4

Detailed Information Macro Economic Indicators Key Macro Economic Indicators 2009 2010 2011 2011 Sep YTD 2012 Sep YTD (3) 2012 RF (1) GDP 9.2% 10.4% 9.3% 10.7% 7.7% 7.8% (1) Retail Sales of Consumer Goods 15.5% 18.4% 17.1% 17.0% 14.1% - (2) Export (in value) -16.0% 31.3% 20.3% 22.7% 7.4% 6.2% (2) Import (in value) -11.2% 38.7% 24.9% 26.6% 5.0% 7.2% (2) Export (in w eight) - - - - -6.1% - (2) Import (in w eight) - - - - 12.5% - (1) Fixed Assets Investment 30.1% 24.5% 23.8% 24.9% 20.5% - (1) Value Added Industry 11.0% 15.7% 13.9% 14.2% 10.0% - (1) NBS, 2011 GDP w as restated in Sep 2012; (2) CEIC; (3) EIU: updated Oct 11, 2012 Inflation: CPI 8% 6% 4% 2011 FY: 5.4% 2012 Sep YTD: 2.8% Inflation: PPI 8% 6% 4% 2% 2011 FY: 6.0% 2012 Sep YTD: -1.5% 2% 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 4.9% 4.9% 5.4% 5.3% 5.5% 6.4% 6.5% 6.2% 6.1% 5.5% 4.2% 4.1% 2012 4.5% 3.2% 3.8% 3.4% 3.0% 2.2% 1.8% 2.0% 1.9% 0% -2% -4% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 6.6% 7.2% 7.3% 6.8% 6.8% 7.1% 7.5% 7.3% 6.5% 5.0% 2.7% 1.7% 2012 0.7% 0.0% -0.3% -0.7% -1.4% -2.1% -2.9% -3.5% -3.6% Data China source: Overview (1) CEIC; Nov (2) 2012 China Customs; (3) EIU; inflation NBS Deutsche Post DHL Page 5

Detailed Information PMI & Electricity Consumption Official PMI vs. HSBC PMI New Order Index vs. New Export Order Index 60 60 50 50.5 51 53.1 48.8 49.6 48.3 53.3 50.4 50.2 50.1 49.2 49.8 49.3 48.4 49.3 48.2 47.6 47.9 50 50.451.1 51 46.9 55.1 54.5 49.2 51.9 52.2 50.4 49 48.7 49.8 49.8 48.8 47.5 46.6 46.6 40 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 40 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Official PMI HSBC PMI New orders New Export Orders Electricity Consumption YOY Growth % 30 25.6 22.7 23.3 20 23.1 20.815.7 21.0 15.3 15.8 12.3 13.8 14.7 13.0 14.4412.8 11.8 14.7 11.210.8 14.113.9 13.4 13.4 12.5 9.3 10.1 10 11.010.5 11.8 12.17 11.4 10.5 9.1 9.9 7.0 3.7 5.2 4.3 4.5 3.6 3.8 4.1 2.9 3.3 3.0 0 1.6 1.1 0.9 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 24.7 22.9 Total Industry Data China source: Overview CFLP, Nov CEIC 2012 Deutsche Post DHL Page 6

Detailed Information Foreign Trade Trend Total Exports in Value Export Trade Index US$ bn 200 Exports 2010 FY 31.3% 2011 FY 20.3% 2012 YTD 7.4% 9.8% 45% YoY 120 111.1 150 100 30% 100 101.3 50 15% 0 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Jul 12 Aug 12 Sep 12 0% 80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Qutantum Index Price Index Total Imports in Value Import Trade Index US$ bn Imports 2010 FY 38.9% 2011 FY 25% 2012 YTD 5% YoY 140 200 150 100 2,3% 75% 60% 45% 30% 120 100 104 98.3 50 15% 0% 80 0 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Jul 12 Aug 12 Sep 12-15% 60 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Qutantum Index Price Index Data China source: Overview Foreign Nov trade 2012 data CEIC Deutsche Post DHL Page 7

Content Page Country & Macro-Economics Overview DP-DHL Overview Custom Clearance Order 33 & 43 Import Regulations Export Regulations China Overview Nov 2012 Deutsche Post DHL Page

DHL as a Strategic Resource China Overview Nov 2012 Deutsche Post DHL Page

One Stop Logistics Provider DHL China China Overview Nov 2012 Deutsche Post DHL Page

Content Page Country & Macro-Economics Overview DP-DHL Overview Custom Clearance Order 33 & 43 Import Regulations Export Regulations China Overview Nov 2012 Deutsche Post DHL Page

Introduction to China Customs Import / Export Formalities Document: Order 33 This documents serves as a network introduction to the detailed and complex requirements for both imports and exports to & from China. Recent customs legislation changes have caused more stringent clearance procedures, notably through: 1) HS codes on all import / export WPX shipments 2) Customs Registration ( CR ) number (or appointment of an IOR / EOR (Importer/Exporter of Record) for all inbound & outbound parcel shipments) 3) Change to Import Deminimis status whereby if the duty assessment is less than CNY50.00 (approx. USD7.00) the shipment is now deemed deminimis. Previously deminimis was based on declared value. The change now causes a Customs declaration to be calculated and completed to establish the deemed duty thus affecting clearance time.) The effect of Order 33 is that a number of our inbound shipments are no longer Cleared on Arrival. China Overview Nov 2012 Deutsche Post DHL Page 12

Introduction to China Customs Import / Export Formalities Document: Order 43 1. Personal Effects are limited to unaccompanied baggage (luggage or articles transported separately from passenger) or as commodity / gift sent from private individual to private individual (sent from relatives or friends) and within a reasonable quantity for personal use. 2. Business to Consumer (B2C) including internet shopping shipments cannot be cleared as personal effects, instead they should go through general Customs clearance process (informal / formal) which requires IOR (see prev page). 3. Value limit on Personal Effects shipment is CNY800.00 (approx. USD117.00) from / to Hong Kong, Macau & Taiwan or CNY1,000.00 (approx. USD147.00) from / to other countries. 4. Shipments that exceed the above value threshold will not be allowed to be cleared as Personal Effects, except for instances when there is only one single item inside a shipment and the value for that single item is already over the above value threshold. Those shipments will then need to be reviewed and approved by Customs on a case by case basis. China Overview Nov 2012 Deutsche Post DHL Page 13

Content Page Country & Macro-Economics Overview DP-DHL Overview Custom Clearance Order 33 & 43 Import Regulations Export Regulations China Overview Nov 2012 Deutsche Post DHL Page

China Customs Regulations in Express Industry Import At the National Government level Customs regulations are clear but at field level they are subject to local interpretation and execution China Overview Nov 2012 Deutsche Post DHL Page 15

Special Notes on Informal / Formal Import Clearance All inbound parcel shipments to China requires: A HS code (preferably the first 6-8 digits input at origin), clear written description (compatible with HS code), and desirably the consignee CR number (if possible, but not mandatory) The Customs Registration number (CR number) which serves as identifying the consignee as the Importer of Record (IOR). Consignee must have IOR (Importer of Record) status with Customs for deminimis, informal & formal clearance, otherwise consignee needs to appoint a 3rd party agent to act as IOR on their behalf. (DHL cannot unilaterally appoint an IOR on behalf of the consignee). Quarantine Certificate (where applicable) e.g. Certificate of Inspection for Goods Inward, China Compulsory Certificate (3C), etc. Import Licence (where applicable) e.g. Automatic Import License (for machinery and electrical products, etc.. China Overview Nov 2012 Deutsche Post DHL Page 16

Types of Clearance Types of Clearance: 1. Deminimis Clearance (<CNY50) All done by DHL 2. Informal Clearance (>CNY 50 CNY5000) All done by DHL 3. Formal Clearance (>CNY5000) Consignee can choose DHL or their own broker to do formal clearances. If consignee chooses DHL to clear formals, the following paperwork needs to be provided: - Power of Attorney (with IOR information, description in Chinese) of all items listed on invoice, HS code, import mode general import, duty free, etc., Duty/VAT settlement) - Customs Handbook (where applicable, typically used by manufacturers importing raw materials) The standard processing time for a Formal Entry is 2 business days, including quarantine declaration. (informal quarantine only, if formal quarantine required, 1 extra day to be added) Clearance time could be shortened if the required clearance paperwork are kept on file by gateways with part master file and blank POA s. Consignee s response time in providing clearance paperwork is crucial for quick clearance. If consignee is located in a bonded area (FTZ Free Trade Zone or EPZ Export Processing Zone), bond transfer clearance will need to be done by consignee s appointed broker with extra charge. Returned To Origin ( RTO ) is strictly controlled by China Customs. The standard processing time for RTO approval is around 3 weeks DO NOT Miscode. China Overview Nov 2012 Deutsche Post DHL Page 17

Special Notes on Informal / Formal Import Clearance Customers in China can access the following Customs website addresses to find out the guidelines and procedures on how to get registered with China Customs to get a CR number for import and export activities. This can only be applied at local level in China. Beijing: http://beijing.customs.gov.cn/tabid/29866/default.aspx Shanghai: http://shanghai.customs.gov.cn/default.aspx?tabid=5771 Guangzhou: http://guangzhou.customs.gov.cn/tabid/4028/default.aspx Shenzhen: http://service.customs.gov.cn/default.aspx?tabid=12293 China Overview Nov 2012 Deutsche Post DHL Page 18

Sample Paperwork Import China Overview Nov 2012 Deutsche Post DHL Page 19

Content Page Country & Macro-Economics Overview DP-DHL Overview DHL Express DHL Global Forwarding DHL Supply Chain Custom Clearance Order 33 & 43 Import Regulations Export Regulations China Overview Nov 2012 Deutsche Post DHL Page 20

Content Page Country & Macro-Economics Overview DP-DHL Overview Custom Clearance Order 33 & 43 Import Regulations Export Regulations China Overview Nov 2012 Deutsche Post DHL Page

China Customs Regulations in Express Industry Export At the National Government level Customs regulations are clear but at field level they are subject to local interpretation and execution China Overview Nov 2012 Deutsche Post DHL Page 22

Special Notes on Formal Export Clearance Formal export declaration is required when value is above CNY5,000 (around US$700.00). Shipper should have EOR (Exporter of Record) status (i.e. a CR number) with Customs for formal export declaration, and the following paperwork need to be provided: - Power of Attorney (with EOR information) - Export Declaration Form (not more than 5 line items per form) - Customs Handbook (where applicable) - Export License (where applicable) Formal export declaration takes 1 business day, however for shipments originated from East China cities, same day uplift can be achieved if shipment is collected before cutoff time. Some customers might have special request to do formal export declaration on their informal shipments (for tax return or payment remittance purpose), then the 24 hours processing time for export formality will apply. When shipper is located in FTZ (Free Trade Zone) or EPZ (Export Processing Zone), additional FTZ/EPZ declaration and bond transfer with extra charges will be required. China Overview Nov 2012 Deutsche Post DHL Page 23

Sample Paperwork Export China Overview Nov 2012 Deutsche Post DHL Page 24

End China Overview Nov 2012 Deutsche Post DHL Page 25