Monthly Archives: December 2016

Legal Position of Anti-Smuggling Risks in Processing Trade

To most foreign invested enterprises (“FIE”) that carry out a reasonable compliance standard, smuggling should be a rather remote concept. However, this may not be the case for those FIE that treat Chinese operation as the sourcing site and relies heavily upon the business model of processing trade (in a nutshell, processing trade refers to importation of materials free from Chinese duties and VAT (“Bonded Materials”) to manufacture finish goods and in turn export such finished goods back overseas pursuant to Chinse laws and regulations.