100737 Resource 94086 93210 94146 1124872505102 1201208817944 Controlled China’s Warranty Bonded Warehouse Program Helps Reduce and Defer Duty Payments

Encourages Central DC and Overnight Network Strategy for Imported Parts

What is a Warranty Bonded Warehouse? <ul><li>China Customs rules allow special treatment of service parts</li><li>Service parts VAT = 17% of part value unless for in-warranty replacement –no WTO changes to this</li><li>Key points:</li><ul><li>No duty if original part is in-warranty</li><li>Deferred duty (monthly vs. daily) payment for out-of-warranty parts –30-day part “loan” when unclear what part is required to repair equipment </li><li>Physical separation of inventory (by wall or cage) for imported parts and among companies </li><li>Defective returns flow outside bonded area –Inventory management system must keep track of paperwork, Serial numbers and information for original equipment, related replacement parts, “loans” and defectives, this is a major challenge. </li><li>Actual implementation is highly dependent on local China Customs treatment (i.e., Beijing is different from Shanghai) </li><li>Many 3PL’s operate warranty bonded facilities on a common “campus” in Beijing) </li><li>Requires Importer of Record status –many MNC’s do not have this and require from their Import/Export partner </li><li>Customers primarily benefit from reduced and deferred duty payments Customer’s challenges: </li><ul><li>Complex Customs rules </li><li>Implementing the required inventory management system</li><li>Maintaining service levels through single DC model within Customs “hours of operation”</li></ul></ul></ul> 10 application/xml false china bonded warehouse china bonded zone china distribution china supply chain china warranty china WTO global logistics global sourcing global supply chain supply chain strategy Mozilla/5.0 (Windows; U; Windows NT 6.0; en-US; rv:1.8.1.11) Gecko/20071127 Firefox/2.0.0.11 127.0.0.1 127.0.0.1 Establish 208.105.4.154 false true false false true 187565 false false true false false false true 94086 blog blogsite/ChinaSupplyChain/web