China is currently the largest trading partner of the Russian Federation. Despite the fact that import volumes significantly exceed the amount of exported products, commodity exchange between countries is moving in both directions.
Reasons for exporting to China
The rise of the Chinese economy has led to a significant increase in income and an increase in the middle class, which prefers imported products to the local luxury segment. This situation makes exporting premium products to China promising, from high-end products to automobiles, jewelry and luxury goods.
At the same time, urbanization and the aspiration of rural residents to cities, as well as the Chinese economy directed towards high technology and the digital segment provide a lot of opportunities for exporting ordinary food products to China. The rapid development of the consumer market and the mass production of industrial goods led to the filling of the main product niches, while the empty ones are ready to accept an almost unlimited number of exported goods.
The dynamically developing Chinese market has attracted the attention of Russian entrepreneurs. However, exports to China from Russia have their own characteristics. Along with the fact that the legislation is quite loyal to both large and small exporters, the Russian economy cannot offer the Chinese a wide range of competitive products.
Commodities
The leading positions among the categories of exports to China from Russia are traditionally occupied by commodities. Chinese entrepreneurs are eager to buy wood and lumber, mainly raw boards, but woodworking waste is also in demand. Of particular value are lumber from noble conifers.
Scrap of stainless steel and non-ferrous metals is also of great interest, and export to China of this type of raw material has long turned into an independent industry. According to experts, up to 40% of all smelted in Celestial stainless steel is made from scrap metal.
The countless amount of electronics manufactured in China requires an appropriate amount of copper, making this type of export a win-win option. An additional impetus to the export of copper scrap to China was given by the abolition by Russia of export duties on used copper cathodes. The cheaper metal immediately attracted the attention of Asian manufacturers.
Garbage export
Serious volumes in Chinese exports are occupied by the supply of “garbage”. Industrial waste processing technologies make it possible to turn secondary raw materials into necessary materials. Therefore, China around the world purchases waste paper, plastic and failed electronic components. The cost of recyclables sold to China only from the United States annually exceeds a billion dollars. In Russia, where waste processing is still underdeveloped, exporting such a product to China is beneficial not only in the economic sense, but also in terms of ecology.
Food
Today's China has the largest population on the planet, so the demand for food in the country is constantly growing. The Chinese are happy to join the cuisines of other nations, and the demand for meat delicacies, cheeses, caviar, honey and chocolate is constantly growing.
The need for everyday and universal food products is also not declining. Export to China of buckwheat, soy, grain and flour is constantly increasing. According to scientists from the University of Leeds, if the pace of Chinese urbanization continues, then in a few years the country will be able to consume all of the world's grain exports.
Along with flour and cereals, the Chinese market is very in demand meat, especially beef and chicken; vegetable oil of all kinds; milk, dairy products and Russian ice cream; sweets and pastries. A profitable business has been exporting cedar and other types of nuts to China.
Alcoholic drinks and water
Along with changes in culinary preferences, the approach of Chinese people to alcoholic beverages has changed. Wealthy Chinese people prefer time-tested foreign drinks, and the changing appearance of cities contributes to a change in tastes - new restaurants, bars and clubs open everywhere, where the European culture of drinking is promoted. For multinational Russia, with its centuries-old alcoholic traditions, rich opportunities open up here.
Some of the drawbacks and often low quality of drinking water in cities have created an extensive niche for export. Bottled water supplies to China are carried out from many countries of the world, and there is no shortage of buyers.
Features of export activities
When exporting to China, VAT is levied on the same conditions as for any export operations. The tax rate is 0%, provided that all the necessary papers are submitted to the tax office. If the relevant documents are not submitted within a 180-day period, the exporter will be forced to pay VAT at the usual rate of 18% of export earnings.
Reimbursement of export VAT in the amount of 10-18% depending on the type of product, which is carried out according to the results of a desk audit, will help increase profits even from the smallest exported consignment. In the case of a positive decision and the company has no debts to the budget, tax deductions will be returned to the entrepreneur’s account within 14 days.
In China, there is a mandatory certification of beverages and food, drugs and medical supplies, as well as non-food items. In case of export to China of Russian-made products, the supplier is fully responsible for the quality and availability of a certificate approved by Chinese law.
Also, Chinese laws clearly regulate the activities of foreigners in the country. To start a legal business, you will need to register a company with 100% foreign capital and, having accurately specified in the charter the entire list of activities, strictly adhere to it. In the case of export activities, the charter must specify absolutely all types of goods that will be imported into China.