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A welcomed boost for parallel import dealers

Updated: 2016-07-09

( China Daily USA )

Dealers of parallel import vehicles in the China (Shanghai) Pilot Free Trade Zone will enjoy cost savings thanks to a three-month bonded warehouse service which will exempt them from tax, according to a notice issued by Shanghai Customs on June 30.

In a parallel import business, auto dealers directly purchase vehicles from a foreign production base or dealer. Prices for parallel import cars are normally 10 to 20 percent lower than the prices offered by automaker-authorized dealers.

“It usually takes about two months to sell an imported car. This new policy will help enterprises save the cash required for tax payments and make it less stressful when finding a buyer,” said Wang Haoran, assistant to the chairman of China Greenland Rundong Auto Group Limited, a luxury auto brand dealer.

The State Council piloted the parallel import vehicle program in the Shanghai FTZ in 2014 before extending it to other free trade zones including Tianjin, Guangdong and Fujian provinces. In 2015, China’s top certification authority streamlined the 3C (China Compulsory Certification) accreditation process for parallel vehicle importers, allowing them to obtain the certification without the authorization from the manufacturers. Experts considered this to be an important step in boosting the growth of the parallel import vehicle industry.

Previously, only authorized dealers could apply for a 3C in China. Independent dealers used to get around regulatory pitfalls by importing cars in the name of aftermarket tuning factories.

In April 2016, the Ministry of Commerce simplified import procedures for imported vehicles and on June 21, a 3C was granted for parallel imported vehicles in the Shanghai FTZ, providing them with a legitimate identity for the first time.

“The parallel import vehicle industry is more promising than ever as the two major obstacles — 3C certification and the bonded warehouse — have been tackled,” said Sun Jing from the economic development department in the Shanghai FTZ’s bonded area.

“Because of this, the Shanghai port is expected to obtain about 30 to 40 percent of the nation’s parallel import volume in two to three years.”

Since 2006, the amount of imported cars in China has been steadily growing, hitting a peak of 1.4 million in 2014. China imports about 1 million cars every year, 10 percent of which are parallel imported vehicles. In 2015, 408,000 vehicles were imported through Shanghai Customs, making the city a major hub for such vehicles in China.