HS Code China: The Definitive Guide

I know you’re probably wondering what HS Code China is.

Or maybe, you’d like to know why the HS code is important when importing from China.

Well, this guide will make everything simple for you.

It will also show you how to benefit from understanding HS Codes.

Keep reading to learn more.

HS Code China Definition

It is an acronym for the Harmonized Commodity Description and Coding System.

It refers to the internationally-standardized system of classifying traded products by names and numbers.

In simple words, HS code is a term used in global trade language as an element, which brings standardization to international trade.

It thus explains the reason HS code is necessary not only in China but in international trade as well.

This system was designed in 1988, but at the moment, it is maintained by the World Customs Organization.

Understanding the Structure of HS Code China

HS Code is used internationally as one of the standardized tools for global trade.

However, its structure often varies from one country to another.

Ideally, in China, the HS code has 10 digits.

However, the contracting parties must use at least 4-digit and 6-digit provisions to ensure harmonization.

The four and six-digit provisions are international rules and notes, but it is acceptable to adopt additional subcategories and notes.

The structure of HS Code in China thus encompasses the following elements;

· Section

It is the place where all the HS code classification process begins.

It broadly classifies the commodities into 22 main categories.

· Chapter

In China, the 22 main HS code sections are subsequently subdivided into 98 chapters.

These 98 chapters are restricted to national use and temporary modifications.

The two front numbers denote the chapter code.

Within every chapter, there is a chapter note, which describes different products falling in various categories.

It also offers definitions of what the HS codes describe.

· Heading

It dictates the particular category within a specific chapter.

It is necessary to determine the most appropriate heading, which describes the product accurately.

You should never move on further when classifying goods until you are certain the heading code of your choice is suitable.

· Sub-heading

It is defined by the last two digits of the HS code.

These numbers are more specific in describing the subcategories of the product.

The sub-heading drill down to finer details of the commodities imported.

In China, the HS code has about 5000 subheadings.

· Country Statistic Code

In China, you can use additional 2-4 digits for particular categorizations.

Specific local governments modify the final 2-4 codes.

It is essential because it provides flexibility for local customs authority to modify its HS code to meet local requirements.

These digits are also essential in tracking particular or several products where the first 6-digits may unable to do so.

The HS code structure is logically and legally arranged.

It also has well-defined rules to ensure it realizes uniform classification worldwide.

Knowing 10 Digit HTS Code

Typically, close to 98% of commodities in international trade are classified in terms of HS.

This code reduces costs related to import and export since it doesn’t require any translation.

HS code has 99 chapters, which cover 21 sections.

The code consists of 10 digits derived from the chapters and the sections.

Let’s take 1704.90.10.00 as an example to understand the tenets of the 10-digit HS code.

In this case;

• 17 represents chapter 17 of section IV. Usually, this would include beverages, tobacco, prepared foodstuff, vinegar, and manufactured tobacco alternatives.
• 04 represents sugar confectionery
• 90 represents sweetmeats or confectionaries, which are ready for consumption.
• 00 represents candied nut.

In a nutshell, the HS code 1704.90.10.00 refers to candied nuts.

In this case, here is how the code is broken down form better understanding;

1704.90. – The first two digits define the chapter of the HS nomenclature.

1704.90. – The second two digits represent the heading within the specific chapter.

1704.90. – The last two digits identify subheadings within the chapter.

So 1704.90.10.00 HS code is the 10-digit classification code as administered by a particular country involved in international trade.

But in that case, the first six digits; 1704.90 are the HS codes.

The next two digits after the first six digits; 1704.90.10.00 identify the subheading of the HS code.

They come in handy in establishing custom rates.

The last two digits, 1704.90.10.00, refer to the statistical suffix, which collects trade data and not necessarily classifying the product.

Stat suffix needs to be accurate when required.

And if it is not required, the last digits can as well be 00 as indicated in this example.

Notably, the first six digits are standard globally.

You can never change them irrespective of the country the products are originating from.

On the other hand, the last four digits can be modified from one country to another.

Benefits of using HS Code for Shipping

The advantages of using HS code for shipping include the following;

a) Facilitates Proper Collection of Taxes

The code allows the government through the customs authority to identify imports and exports through a country’s borders.

It also allows the customs officials to categorize commodities in a global system used for customs clearance.

The clearance official uses this code to submit it to the particular customs in the country of import.

This then allows for confirmation of import duty rate or tariff payable when importing in a country.

All these enhance the strategic collection of import/export duty, which is vital in determining the economic growth of a country.

b) Improves Ideal Data Reconciliation

Application of HS code is universal, and this enables carrying out of effective data reconciliation readings.

Ultimately, it allows the concerned parties to determine the loopholes and areas of improvement.

c)  Effective Product Classification

The code contains detailed information and a description of the products.

It thus makes it easy to use the headings and subheadings as building blocks for classifying other products.

d) It is a Universal Trading Language Tool

The HS code has a legal text, as well as comprehensive explanatory notes.

Such details ensure there is maximum consistency in terms of interpreting the definitions of commodity groups.

The essence of this is it creates a global language, which is applicable for trade negotiations and also in commercial practice.

e)  It improves the Globalization of National Economies

It allows for international comparability of trade statistics, specifically at the 6-digit level.

In essence, this helps to enhance the detailed analysis of global trade as well as the globalization of different national economies.

f) It is a Demonstration of Complying with Legal Requirements

Product classification is a legal responsibility among all importers and exporters.

The government has set vital structures to ensure all the traders receive updated HS code as well as accurate data relevant to the particular industry.

Role of HS Code China in Import Business

HS code plays a critical role in the overall import business in China.

Other than the classification of the commodities, here are some of the roles of this digit;

Controlling of Import and Exports

The HS code is necessary for regulating the importation and exportation of a wide range of products.

It thus allows the government to protect local manufacturers from unnecessary competition.

This happens when the government restricts the importation of certain products, which are also produced with the country.

It also enables the government through its agencies to prevent depletion of products in case production is scarce.

This happens, especially when the level of production of a particular commodity diminishes due to various reasons.

· Determining Customs Tariffs

The HS codes allow the Chinese government authorities to determine the specific tariffs to apply to certain commodities.

This is vital because it makes it possible for the government to raise or lower tariffs on specific goods depending on market requirements.

· Product Testing

The GB standards, as well as product testing applicable to your products, are facilitated by the use of HS codes.

Ideally, it enables the government to determine the right type of product testing products that need to comply with based on the applicable HS codes.

· Collecting Data and Statistics of Trade

HS codes are fundamental in the collection of statistics and data revolving around the trade.

It is a critical role, which a country needs to understand when it comes to its economic wellbeing.

In that sense, the government can use the data and information collected to control imports and exports accordingly.

It also enables the authorities to determine the necessary areas for improvement if need be.

· Determines the Shipping Process

Product classification using HS code is possibly the last hurdle, which commodities face before hitting the ultimate finish line in the shipping process.

It thus means the code has a significant impact on determining the efficiency of the shipping process of commodities from China.

How to use HS Code Finder

When using HS code finder, there are three major approaches you can use to find the particular code of a product.

These approaches include the following;

· Searching by Product Name

In this case, you’ll need to know the name of the product.

Once you type it, you’ll find several recommendations of the most relevant 4-digit HS code.

If the recommendations do not contain the correct HS code hit search to allow you to get all the results.

You’ll need the click on 4-digit code to obtain six and eight-digit HS codes details.

The information is what you’ll use for purposes of import-export and also for establishing the GST rates.

· Searching by HS Codes

In this case, you need to type the first two or four digits of the HS code.

Then click on the ideal result to attain more details regarding the HS code.

· Searching by Categories

HS codes are categorized into between 21-23 broad sections under all categories depending on a specific country.

In this case, you’ll need to navigate from this menu to 2, 4, 6, and 8-digit HS code, respectively.

You’ll then find the GST rates of the HS codes by clicking the 4-digit code.

Here are some useful links you can use to find HS Codes:

i. Find HS Codes

ii. HS Codes Lookup

iii. HS Code Finder

iv. HTS Search

Why HS Code is A Requirement by China Customs

In China, the government requires products to have HS code due to several reasons including the following;

· To Regulate Importation and Exportation of Goods

This is necessary since it enables the government to make an informed decision based on the respective date.

China, as one of the leading manufacturing hubs in the world, needs to determine the specific types of products they export and import.

This data allows the responsible authority to control the commodities as a way of enhancing moderation.

Therefore, this code makes it possible for proper classification of products exported and imported through Chinese boarders.

·  To Effect on Duty Rates

HS codes directly affect the duty rates of imports and exports.

In China, failure to assign this code or even providing incorrect ones can be commercially risky.

It is thus necessary to understand the duty tariffs and other vital elements revolving around the entire shipping process.

· Taxation

The Chinese government uses HS code to set import and export tax of commodities accordingly.

In essence, it enhances revenue collection for the country, which is vital in steering its economic growth and wellbeing.

· To Draft Trade Policies

The HS code guides the government in making sure it comes up with feasible trade policies to implement with her partners.

The trade policies ultimately increase the levelheadedness of ensuring seamless trading operations between the countries.

· To Set Freight and Transport Tariffs

The HS code is also essential in ensuring the government regulates the tariffs surrounding freight and transportation of goods.

This allows the players in the industry to have a clear picture of expectations regarding these tariffs and related elements.

· To Collect Transport and Trade Statistics

It becomes possible to track information surrounding the movement of commodities to and from a different place by using HS code.

It doesn’t matter the method of shipping you are using since the code will be able to identify such information.

Importantly, such statistics enable the government to lay down structures on how to improve the efficiency of the movement of goods.

·  For Economic Research and Analysis

The bottom line of needing HS code is to help to capture data, which the government uses for purposes of economic research and analysis.

The authorities ensure they use the information for bettering various aspects of manufacturing and international trade.

The data also provides the government with relevant information for projecting and steering the economic growth of the country.

How HS Code China Works in Import Business

It is quite a detailed process, which requires a high level of meticulousness to attain the necessary accuracy.

Even so, there are general rules of interpretations for guiding users to use HS codes in for classifying imported goods.

The steps for this process include the following;

1) Gathering Information

It is regarded as the critical aspect of classifying commodities into HS codes.

Any slight misinterpretation of the primary use of the product may lead to high duty tax rate.

In this instance, it is necessary to understand all the descriptive terms of a product.

This may include material composition, physical attributes, chemical characteristics, and quantities, among others.

Classification of any imported commodities requires all the relevant documents to assist in the process.

Some of the document sources a customs broker will refer to gather information include;

• Commercial invoice and cargo packing list, which provide the description and quantity of the cargo.
• CAS number, which is correlated directly to the applicable HS code for a chemical element.
• Commodity catalog, which is essential when it comes to determining the primary use of the product.
• Material safety data sheet, which provides chemical classification and material component of the goods
• Ingredient list, which offers a list of ingredients the food contains.

2) Establish all Possible HS Code Classification

It is the point to refer to the HS code to identify all possible HS codes relevant to the specific commodity.

An ideal approach of attaining this is by using the alphabetical index.

The other vital way to obtain accurate HS code is by referring to the top-level table of contents of HS code.

3) Refer to the General Interpretive Rule

This rule sets a parameter regarding the application of HS code.

The GIR, as it is commonly known, is often applied hierarchically.

It thus implies if you can never classify the HS code with GIR 1 rule, you can move to GIR 2.

GIR 1 primarily, stipulates that classification is determined based on the terms of headings and any relative section or chapter note.

Alternatively, if GIR 2 still cannot classify an HS code satisfactorily, you’ll then move to GIR 3 rule and so on.

You’ll continue moving to the next GIR rule in the sequence until you attain the correct classification for the product.

GIR 2 stipulates that any reference in a heading to a product must have a reference to the commodity, whether unfinished or incomplete.

All it needs to have is the essential character of finished or complete product at the same entry.

GIR 3 provides for classification principles for commodities, which at first glance, fall under two or more headings.

This rule has three parts applied serially until a particular classification is determined.

GIR 4 concerns new products not necessarily covered by any specific heading of Harmonized System.

In case the product is required, this GIR offers classification with commodities it closely resembles in nature.

Then GIR 5 deals with containers and packaging of the products.

Few products are ideally, traded without being packed in a particular manner.

And the question arising out of this is always how to account for such packing containers and materials.

After accomplishing these three major steps, you’ll determine the number and use it to submit information to customs department.

They do it to verify the rate of payable import duty or tariff on imported commodities.

It is thus necessary to provide your customs clearance agent with details regarding the products.

It enhances the clearance process of the goods through the customs.

How ITC-HS Code and HSN Code Compare

ITC-HS code is an acronym for Indian Trade Classification. It was adopted in India to facilitate import-export operations.

It is a schedule with two parts.

The first part is an eight-digit schedule with nomenclature, while the second part is a schedule with a description of goods chargeable to export duty.

The major difference between these two codes is ITC-HS adds two more digits in the HS code structure to classify products.

The addition of these two digits is done following HS system stipulated regulations as set by WCO.

Notably, there are no changes interfered with the existing structure.

Importance of HS Code China in Export Business

It is a legal responsibility for any company or trader exporting goods to China.

Therefore, it helps in facilitating faster customs clearance of shipments.

It also prevents unnecessary inspections and fines as well as penalties.

Besides, it helps in double-checking revenue in regards to taxes and duties.

It streamlines the revenue collection process, thus guaranteeing accuracy at each time.

Also, it helps in calculating the bottom line of the business, which is essential in saving time and money.

In essence, records may indicate you comply with all the requirements surrounding HS code.

It is more or less like a common business language.

Furthermore, it is easier to facilitate the exportation of commodities from different countries irrespective of the language barrier.

It is essential in cataloging products correctly in trading transactions.

The fact many companies are exporting products all over makes classification a critical approach in the export process.

Limitations of HS Code China

It has a fair share of disadvantages, which include the following;

• Any slight mistake in regards to improper use of HS code might lead to incorrect levying of duties and taxes.

Ultimately, this makes the products highly expensive for the end-users.

• The last digits after the HS code tend to vary from one country to another.

Thus there is a possibility of confusion if mentioned on the commercial invoice.

It could end up defining a different product for your customer’s country.

• It calls for high meticulousness, especially for new products to prevent incorrect classification.

It becomes challenging to change codes once approved since it can be costly.

It may also attract punitive legal and technical issues about tax laws and delay at the borders.

• It suppresses the developing nations since they have to do with standards sets by the developed countries.

It thus makes it difficult for the former to match the standards for their manufacturing sector.

• It is exposed to fraud, especially when an incorrect HS is used for classifying a product.
• It can turn chaotic in case the respective auditors interpret the codes differently. An incorrectly interpreted HS code leads to heavy taxes on the part of the importer. In such instances, the customs officer usually impart duty as they see it fit.

How to Control Export and Imports using HS Code China

HS code plays a fundamental role in controlling export and imports in China.

It works in a way that allows the government through its agencies to set specific limits for imports and exports.

For instance, if the Chinese government is interested in protecting local rice producers from overseas competition, it can do so by using HS Code.

What happens, in this case, is the government enforces a specific HS code used for rice.

Such HS code is designed to restrict imports by setting limiting quotas, which help to prevent overseas traders from exporting rice to China.

And perhaps let’s assume there is an outbreak of certain calamity, which affects the production of pork in the country.

Of course, this may lead to a decrease in production of pork in China.

Therefore, the Chinese government can then prohibit the exportation of pork to freight markets by recognizing the HS code for the product.

China Inspection and Quarantine (CIQ) is the agency mandated with regulating imports and exports.

It thus becomes easy for the government to enforce specific HS codes through this body to control export and imports.

Impacts of using wrong HS Code when Importing from China

Capturing an incorrect HS code for a product is regarded as illegality when importing from China.

It is the reason it advocated for importers to ensure they use professionals who understand the dynamics of this classification tool.

Using wrong HS codes has all negative impacts, which include the following;

· It triggers Administrative and Smuggling Investigation

Once a wrong HS code is detected, the importer is automatically subjected to smuggling investigation by the relevant investigative bodies.

This act is regarded as a violation of customs law in China; hence the importer is subject to smuggling charges.

The process of vindication can be tedious, time-consuming, inconvenient, and costly.

· Delayed Customs Clearance

Detection of a wrong HS code automatically leads to delayed clearance at the customs department.

It is where the process of justification begins, which implies the goods are set aside pending investigation.

Depending on the nature of the case and product, the entire consignment can take several days or weeks before it is cleared.

In some instances, it is never cleared at all, thus causing immeasurable inconvenience.

· Inaccurate Certificate of Origin

The certificate of origin is often pegged on the information derived from the products.

It is prepared using data from HS code, among others.

It thus means wrong HS code automatically results in incorrect drafting of the certificate of origin.

The moment this happens, it is bound to cause clearance issues at the other country of destination.

· Denial of Preferential Duty Treatment

It can also lead to the refutation of the commodities from preferential duty treatment.

In other words, in case the items were subjected to zero duty or tariffs, it becomes difficult to prove otherwise if the HS code is incorrect.

In essence, you end up incurring unnecessary costs in terms of paying duty for goods, which were not to be taxed.

· May Jeopardize Bilateral Trade Agreements

In serious cases, the wrong HS code may break trade relations between China and the importing country.

At times the relationship can be compromised to the extent where bilateral trade agreements are discarded.

There is always a natural feeling that perhaps the country of origin intended to smuggle the goods to the country of destination.

Importing country may initiate an investigation, which could ultimately hinder the relationship between the two nations.

· Punitive Fines and Penalties

Ultimately, the importer may be subjected to severe penalties and fines once the investigation is over.

In essence, this affects importer’s budget and hence causing unforeseen inconveniences.

How to Find HS Code for Products you’re Importing from China

When importing goods from China, you can find the HS code for the same using a wide range of online searching tools.

They are available and summarized in such platforms to allow importers to easily access when need arises.

Government pages such as China customs official website are also ideal places to find the HS code when importing from China.

Once you are on such websites, you need to find a description closest to your commodity.

In any case, there are instances you may fail to get the precise description of the product.

Even so, there are options, which allow you to explore descriptions leading to the specific commodity.

Nevertheless, there is a need to verify the HS code for a particular product is correct.

It prevents unnecessary legal issues, fines, and back and forth during customs clearance.

After finding the HS code, you can view the import duty payable for your product. It is usually visible in the overview of specific codes.

Understanding Import-Export Duties and Taxes in China

In China, the HS code and declared value of the commodities are the elements, which determine the method applied for calculating import-export duties and taxes.

Importing/exporting from China attracts taxes such as customs duty, Value added tax, and consumer law. Any product imported to china is subjected to a VAT of either 13% or 17%.

13% are for goods from agricultural sector and particular types of utilitarian commodities.

17%, on the other hand, is for any other product.

Consumption tax applies to companies and organizations producing and importing products.

In China, goods considered toxic to human health are taxable imported products subjected to the consumption tax.

All shipments, which contain samples and marketing articles, are subjected to tax depending on their respective commodity HS codes.

I hope you learnt everything you need to know about HS codes.

However, in case you have any question, feel free to contact Tj chinafreight team.