By Eshter Xu    Photo：CANVA

1. Background: Why Are Companies Increasingly Using FTZs for Imports?

In recent years, global trade conditions have grown increasingly complex. 

Importing goods into China often involves more stringent compliance requirements, rising costs, and unpredictable timelines. 

To maintain efficiency without compromising compliance, many companies are turning to China’s Free Trade Zones (FTZs) as a strategic solution.

FTZs are not merely “zones with preferential policies.” They provide companies with a far more flexible logistics model, streamlined customs processes, and convenient trade systems.

For businesses importing machinery components, precision instruments, electronic devices, food products, or other high-value goods, FTZ operations provide several distinct advantages:

Goods can enter the zone first without immediate duty payment

In-zone inspection, testing, sorting, repair, and relabeling are allowed

Supports bonded spare parts models for faster after-sales service

More efficient customs clearance with reduced risk and shorter wait times

Below, we illustrate these benefits using a typical import scenario.

2. Operational Flow: A Full Demonstration of FTZ Import Procedures

a. Cargo Entry Into the FTZ — “Enter First, Handle Later” Flexibility

A client needs to import high-value equipment parts from Europe to support after-sales service at multiple factories in China.

Under traditional import procedures, the process usually is:

Cargo arrival → Declaration → Duty payment → Pick-up

Under the FTZ model, it becomes:

Cargo arrival → Enter FTZ for storage → Declare & clear only when needed

This shift brings significant benefits:

Reduced financial pressure (no upfront duty payment)

Higher flexibility in supply chain management

Parts can be allocated to various customers as needed

Improves service responsiveness for urgent repairs

b. In-zone Activities: Inspection, Testing, Labeling, and Sorting

Once placed into the FTZ warehouse, the goods can undergo various bonded logistics operations:

Appearance inspection

Functional testing

Relabeling (including CN labels)

Re-packing and kit assembly

Temporary storage and inventory management

These actions, which may require additional regulatory handling outside the zone, are fully compliant and efficient within FTZ regulations.

c. Exiting the Zone & Customs Clearance: Declare Only When Needed

When spare parts need to be delivered to facilities across East, Central, or South China, they can be declared in batches based on actual demand.

Previously, the client shipped directly from overseas for every repair job, resulting in high transportation cost and long lead times. With the FTZ model:

International shipment is consolidated into one inbound batch

Domestic distribution is handled from within the FTZ

Customs declaration is done only for the quantity required

Delivery time is reduced from “10+ days” to “2–3 days”

The improvement in speed and cost efficiency is evident.

3. Common Mistakes & NG Cases

a. Misconception: “FTZ = Duty-Free”

FTZs delay tax payment; they do not eliminate taxes.

Only specific activities (e.g., bonded repair, bonded exhibition) may enjoy tax exemptions or reductions.

b. Failing to Confirm Whether Goods Are Eligible for FTZ Entry

Some products require licenses, quarantine documents, or regulatory pre-approval.

Non-compliant wooden packaging, for example, can prevent goods from entering the zone.

c. Discrepancies Between Documents and Actual Cargo

Common inconsistencies:

Model/quantity mismatches

Inaccurate product descriptions

Incorrect HS codes

These issues can trigger inspection or delay customs clearance outside the FTZ.

d. Assuming “Anything Can Be Done” Inside the FTZ

Although FTZs allow more operational flexibility, activities such as labeling must still comply with Chinese regulations.

Some test procedures may also require designated facilities outside the zone.

4. Practical Recommendations: Five Key Strategies for Maximizing FTZ Benefits

a. Confirm Product Attributes and Regulatory Requirements Before Entry

Does the item qualify for bonded storage?

Does it require certification (3C, energy efficiency, CIQ, etc.)?

Early verification prevents bottlenecks at zone entry.

b. Ensure All Documents Match Before Shipment

Commercial invoice, packing list, and product specifications must be consistent with the physical cargo.

Document errors remain one of the most common causes of delays.

c. Plan the “Entry → Storage → Exit” Rhythm

Building a bonded spare parts pool or bonded inventory system improves responsiveness and prevents reliance on overseas dispatch.

d. Make Full Use of In-zone Functions

Labeling, inspection, testing, light processing, and repackaging within the FTZ can greatly reduce domestic workload and shorten supply lead time.

e. Align Duty Payment Timelines With Financial Planning

Batch declarations allow companies to spread tax payments over time, improving cash flow and financial flexibility.

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