Opportunities for Emerging ASEAN Players as China Reduces Tariffs to Zero on Most Products

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Op/Ed by Chris Devonshire-Ellis

China has reduced tariffs for imported products from Cambodia, Laos, and Myanmar under its Preferential Tariff Program, part of its Least Developed Countries initiative. This means some 97 percent of all products from these specific ASEAN nations can now be imported to China duty-free.

Major export items from these countries to China include cereals, grains, fruits, rubber, electronic products, garments, footwear, minerals and precious stones.  

There are opportunities for export manufacturing companies in these three ASEAN nations to increase trade and increase exports to China. Assuming the product category can be properly identified – which includes an assessment of tariffs under both the PTA and APTA agreements together with price-competitive analysis – now may well be a ripe opportunity for these export manufacturers to look more closely at the China market. It may also facilitate a move into Cambodia, Laos, and Myanmar by investors already in the region in order to increase exports to China in addition to reducing operating costs in countries such as Thailand and Vietnam. 

Standard methods to do this involve ensuring any valuable trademarks are protected and registered in China as well as using corporate entities, such as low-cost base operations as Foreign Invested Commercial Enterprises (FICE), which allow foreign investors to possess both export and import licenses for China and cut out the need for local Chinese middlemen – important in competitive markets such as China. We wrote about registering trademarks in China here and about using FICE in the article Starting a Business in China: When to Use the FICE Model.

Given the new tariff status, there is plenty of room for export manufacturers in the smaller ASEAN economies to take advantage of the China market. Research and inquiries made to professional firms who can assist should be the first step.

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ASEAN Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices throughout ASEAN, including in SingaporeHanoiHo Chi Minh City and Jakarta. Please contact us at asia@dezshira.com or visit our website at www.dezshira.com

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