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Parallel Imports Expected to Accelerate Development

Date:07-09 09:26 Source:Economic Daily Authour:Shen Zejin

In the future, more enterprises will be able to explore the parallel import channel. The CNCA will continue to carry out reform of the compulsory product certification system, instruct relevant pilot free trade zones and inspection and quarantine departments to perform entry verification before transaction, strengthen supervision during and after transaction, and encourage public scrutiny of pilot parallel import companies. Acquisition of quality and safety information and routine monitoring mechanisms for parallel imports would be established, so as to ensure that pilot enterprises meet their obligations in terms of product recall, quality assurance, after-sales service and the “three guarantees”.

The Opinions on Promoting the Pilot Project for Parallel Import Cars was issued, which probably brings new growth to the sale of parallel import cars.

Parallel Imports Expected to Accelerate Development

On June 21st, Song Xiangdong, Deputy Director of the China Quality Certification Center, issued the first ever CCC certificate for a parallel import car in China to a pilot parallel auto import enterprise in Shanghai Pilot Free Trade Zone – the Shanghai Waigaoqiao Automobile Exchange Market Company (SWAEMC). This means that the Opinions on Promoting the Pilot Project for Parallel Import Cars issued by the Ministry of Commerce and seven other departments has now been implemented in Shanghai Pilot Free Trade Zone, overcoming the largest obstacle in the domestic pilot project for parallel import cars and probably bringing new growth to the sale of parallel import cars in pilot free trade zones throughout the country.

SWAEMC is one of the first 17 pilot parallel auto import enterprises in Shanghai. The reporter checked its national compulsory product certification, which specifies in detail the product name, series, specifications and model of the vehicle (which is a 5-seat SUV). The certification has a term of 5 years and is issued by China Quality Certification Center. “Getting this certificate means we have achieved an initial breakthrough,” said Jiang Qimin, General Manager of SWAEMC, who is quite confident about the sales potential of parallel import cars.

Shanghai takes the lead in implementing the pilot project

Parallel import cars are imported from another country by dealers other than the general dealers in the sales systems authorized by auto makers; they constitute a sales channel “parallel” to the authorized distribution channel in the country. Specifically, these are automobiles purchased directly by auto traders from overseas markets and sold in the domestic market without the authorization of the manufacturer. Developing the trade in parallel imports will help break auto sales monopolies, optimize the auto supply system, strengthen the vitality of the imported car market, provide consumers with more options, and drive the transformation and upgrading of auto-related industries as well.

At the beginning of 2014, Shanghai started preparing its pilot project for parallel import cars. In October of the same year, the Ministry of Commerce gave official approval to the pilot project in Shanghai Pilot Free Trade Zone. As it is the first pilot free trade zone in China to implement the pilot project, government departments at all levels in Shanghai are undertaking various pilot tasks under the support and guidance of the Certification and Accreditation Administration (CNCA), the Ministry of Commerce, and the Customs and Administration for Quality Supervision and Inspection and Quarantine.

At the beginning of 2015, the Management Committee of Shanghai Pilot Free Trade Zone and the Municipal Commission of Commerce jointly approved the first 17 pilot enterprises and took the lead in establishing a public service platform for parallel import cars. By integrating the functions of the departments involved, this platform provides companies and their customers with public services like vehicle registration, confirmation of vehicle quotas, and collection of purchase tax. At the same time, Shanghai also set up an integrated information system for parallel import cars to help different departments strengthen supervision during and after transactions. In order to systematically resolve after-sales problems like the “three-guarantees” and the “recall” of parallel import cars, Shanghai Pilot Free Trade Zone also instructed pilot enterprises to establish their own after-sale service systems.

Reform breaks the logjam

However, over the past year and more, those involved in the actual parallel import operations have encountered a series of obstacles. Only 2 vehicles arrived in Shanghai Pilot Free Trade Zone through parallel import. The biggest obstacle lay in the lack of required authorizations, meaning that parallel import cars failed to achieve CCC certification, which is currently compulsory in the case of 158 products concerned with issues involving consumer health and safety and public interest, in 20 major categories in China. One of these is automobiles. According to previous regulations, parallel import cars had to have the relevant authorization documents from the manufacturer to be CCC certified. Otherwise it was very difficult for regulatory authorities to grant the relevant certifications. However, manufacturers are reluctant to provide parallel import dealers with the required technical data, which leaves pilot parallel auto import enterprises in a bind.

In order to remove this obstacle, at the end of last year the CNCA started to implement reform measures to lower the bar for CCC certification of parallel imports (easing of requirements on certification documents provided by the original automaker, and on vehicle quotas, and simplification of factory check requirements), which provided an import channel for more models, promoted the development of the trade, and improved the international business environment in the zones.

One of the three reform measures is loosening up the requirements for manufacturers’ authorized documents. If any authorized enterprise in the zones has established a complete “three-guarantee” and recall system for its automobiles, it does not need to provide the manufacturer’s authorization documents in its application for CCC certification; instead, a designated certification body will conduct a competency assessment and investigation of the company’s “three-guarantee” and recall systems. Another reform measure is easing the restriction on the volume quotas. If the designated certification organization acknowledges that the pilot enterprise has imposed effective management of the conformity of the vehicle to be certified, the enterprise may be granted a waiver over the limit on the number of certification models for non-mass-produced vehicles. The last reform measure is simplifying the requirements for factory inspection. If any parallel import enterprise has imposed effective product conformity management on the vehicle to be certified, complied with national policies and requirements, and not made any structural modifications to the vehicle, then factory inspection may be conducted at the refitting workshop in the pilot free trade zone as a replacement for overseas factory inspection.

The reform measures which simplify CCC certification have provided a solid base for the parallel import business and will effectively boost the reform of the auto market on the supply side, promote the development of parallel imports, invigorate the import market, accelerate the development of supporting service industries like vehicle maintenance, spare parts supply, and finance and insurance, and improve the competitive position and appeal of pilot free trade zones.

Exploring the features of free-trade zones

After the certificate was issued, Liu Weijun, Deputy Director of CNCA, told the media: “We issued the first CCC certificate today and will issue more in the future; in other words, more enterprises will be able to explore the parallel import channel.”

Liu said that the CNCA would continue to carry out reform of the compulsory product certification system, instruct relevant pilot free trade zones and inspection and quarantine departments to perform entry verification before transaction, strengthen supervision during and after transaction, and encourage public scrutiny of pilot parallel import companies. Acquisition of quality and safety information and routine monitoring mechanisms for parallel imports would be established, so as to ensure that pilot enterprises meet their obligations in terms of product recall, quality assurance, after-sales service and the “three guarantees”. Quality and safety would be guaranteed, and pilot enterprises would be sure to communicate trust and guide the buyer through the compulsory product certification.

The Administrative Bureau of the Bonded Area of Shanghai Pilot Free Trade Zone indicated that the next step would be to explore and improve the operation model, employ the joint conference system for the pilot project in Shanghai, and utilize the bonded area under the customs supervision and the pilot free trade zone’s advantage in institutional innovation, so as to work out an industrial model for parallel import cars that complies with national requirements and provides easier trading conditions for the pilot enterprises. The Bureau also indicated that it would continue to improve supervision, integrate the information system for parallel import cars, promote information-sharing among departments, and collect customers’ input and suggestions during and after the transaction, to make sure that pilot enterprises fulfill all their obligations to the buyer. It would also introduce socialized service agencies, and encourage and assist supporting service industries - assessment and maintenance, spare parts supply, and finance and insurance - to enter the zone and support the parallel import business. It would also expand the pilot scope in good time and follow the requirements of the CNCA and the China Quality Certification Center to further improve technical capacity, use the standard conformity rectification workshops for vehicles as CCC certification factories, and take the lead in implementing the pilot projects.


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