Selling goods manufactured in China – what are the FCA terms? Who is responsible?

Question

We are a UK company, selling goods manufactured for us by a factory located in China. Usually we sell under ex works terms; the buyer being responsible for all transportation, insurance and export declarations. We now have a buyer who wishes us to ship the goods to their forwarders warehouse in Hong Kong. We do not have a problem with this.

However, we do not have the manpower for the export declaration/paperwork. I gather that FCA terms would mean that the responsibility for this would be ours.

However, could we sell on ex works Hong Kong terms and include the cost for the delivery of goods to Hong Kong (and any gate fees etc) in with our price to the customer but still maintain no responsibility for the export documentation? Would this be appropriate?

In addition, would our invoice still travel with the goods from Hong Kong to final destination? thanks in anticipation of any advice.

Answer

Hi Frances,

You’re question is a challenge we’ve helped many clients overcome in the past – in fact, one very similar involving a Hong Kong forwarder.

I presume you don’t currently have a legal entity / subsidiary in China that can be the exporter of record? In which case, you can either find a supplier (factory) who has an export license, who find a reliable agent who can help you prepare the export documentation for the goods to get through customs in China and be shipped to Hong Kong. Either way, even on EXW terms, the obligation to get your goods out of China by preparing the necessary paperwork can usually only be completed by a domestic legal entity in China who is the exporter of record.

I’d be happy to have a chat to see if we can help out. You can contact me on andy.clayton@lnpchina.com.

Kind Regards,

Andy Clayton,
CEO, LNP China

Answer

Dear Frances

If your terms on the Invoice are EXW than this is what you agree with your buyer.If you include cost of shipping on the invoice than this does not bound you for taking responsibility for that shipment. Formally although could be disputed.

However , If you tell your client that you deliver his goods to the warehouse in Hong Kong and than would be good if you take that responsibility.

If it is simple electronics and is not dangerous or does not have famous company trade marks , or does not have a battery, than moving it to Hong Kong is simple and many agents can do this without you moving a finger.

The simplest way would be to ask your manufacturer to help you to arrange that shipping to Hong Kong warehouse for you.

Second option you need introduction to shipping agent.

About the invoice question. Generally you need two invoices one for Chinese customs and one for destination. If you use local Chinese shipping agent who will take goods to your Hong Kong warehouse he might use his own invoice as they need to declare the goods on their own entity but goods can arrive to warehouse without any invoice if you wish.

If you need more info email me tha.jacob2@gmail.com and I can add you to some Wechat groups where you can get some info and contacts. Alternatively you can find me by my Wechat ID: thajacob

Regards

Jacob

Answer

Dear Mr Anthony,

Thank you for your query regarding goods manufactured in China.

If sounds very much as though these goods are shipped between China and Hong Kong. If that’s not the case and they do in fact pass through the UK then you can find guidance surrounding the question of export procedures in our public notice no.275, “Customs Export Procedures”. It’s available online at
https://www.gov.uk/government/publications/notice-275-customs-export-procedures
The question of export declarations is dealt with at section 2.

Yours sincerely,
HM Revenue & Customs
Customs, International Trade & Excise
Website: www.hmrc.gov.uk/contactus

I must emphasise that the advice given is based on the information you supplied. If the nature of the transaction changes in technical detail, or the relevant details provided were incomplete or incorrect, we will not be bound by this ruling.

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