Warehouses where goods are kept under customs supervision are called bonded warehouses. The products put into the warehouse are held here for export or import later. There is no waiting limit, no time limit to the warehouse for the products kept in the warehouse. According to PRC Customs Law, importers should pay the duty and VAT when the goods enter the PRC territory. It means importers should make the customs clearance and pay the related expenses. The bonded warehouse allows products to be kept without paying customs duty and VAT.

Advantage of the Bonded Warehouse

1. Warehouses provide financing advantages for companies that import a large number of products and raw materials but do not want to pay the customs duties and VAT of all these products immediately. It also saves companies from the need for storage space. For example, an automobile manufacturer imports 500 containers of raw materials at once as raw materials. When 500 containers arrive in China, they ship them to a bonded warehouse by filing a warehouse declaration. This company, an automobile manufacturer, imports the 100 containers it needs from the bonded warehouse every month. Thus, it does not pay the tax and VAT of 500 containers full of raw materials at once. It also avoids using a warehouse area large enough to store 500 containers of raw materials.

2. "Just in time" production and sales companies use bonded warehouses according to the supply-demand balance in the market. So, for example, when the demand for the product suddenly increases in the market, the company imports the products that it has kept in the bonded warehouse instead of placing an order with a supplier in another country and waiting for the shipment time of the products.

3. Bonded warehouses are suitable places to carry out assembly operations on export products and complete the products that need to be reprocessed without incurring export-import costs twice. For example, marbles imported from an overseas country to the PRC are stocked in a bonded warehouse. Then, using these marbles, blocks are produced to be used as construction materials. And these blocks are exported to another country. These products, reprocessed in the bonded warehouse, are considered not imported into China, so no import duty is payable.

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