Import Cosmetics from China
A Complete Guide on “How to Import Cosmetics from China?”
China is on pace to become the world’s largest market and producer for beauty products, with burgeoning demand for premium cosmetics that knows no borders. Companies, retailers, and investors are taking notice. China is 10th largest market for U.S. beauty products exports, with U.S. products exports totaling $345.3 million in 2015, representing 3% of the total U.S. export market. China market has reached 200 billion Yuan in 2011and becomes one of the fastest developing markets with a 15% annual growth. China’s cosmetics market comprises mainly four major segments: skincare, hair care, color (make-up) and fragrance (perfume). Combined, they generate around 65-75% of the total beauty products sales in China while skincare being the outstanding contributor to revenue.
Current Trends in China Market
- Skin care products: They are the fastest growing sector in the cosmetics market and currently China’s skincare products market is trending towards the high-end.
- Hair care products: A market niche becoming saturated, seeing growth decelerating.
- Make-up products: the market far from saturated, particularly for enhancement items, such as color correcting (CC) and blemish balm (BB) cream but the market of eye make-up products has recorded significant growth in recent years.
- Products for children: Child-specific products are the fastest growing product category and sales of products designed for use by children continue to soar.
- Sunscreen products: Sunscreens products help ensure people will slow down their aging and also helps them to protect from harmful sun rays.
- Anti-aging products: cosmetic products that help consumers stay youthful and fight aging is steadily increasing.
- Sports cosmetics: today, many consumers who love sports and fitness pursuits are keen to maintain an attractive appearance. They need sports cosmetics that can help prevent the loss of moisture and are anti-odor, anti-sweat, anti-bacterial, packaged in compact and portable sizes.
- Cosmeceuticals: consumers have a growing awareness of products having to combine cosmetic and pharmaceutical features, such as spot lightening cream, acne treatment lotion, and acne ointment.
- Green/Natural cosmetics: containing natural or nutritional ingredients, such as aloe, vitamins, green tea and many herbs.
- Perfumes, Toilet Waters, and Fragrances: Finished perfumes and toilet waters are a much promising product category in beauty products.
- Selecting the Commodity: Importers should select their beauty products as goods only after considering various commercial factors as well as regulations contained in the EXIM Policy. Import of restricted cosmetic products is permitted only through licensing.
- Selecting the Overseas Supplier: Importers can Import Cosmetics from China and any country of the world and the information regarding the suppliers can be obtained from various, generals, international trade fairs and exhibitions and trade directories Consulate chamber of commerce.
- Capability and Creditworthiness of Overseas Supplier: Successful completion of the transaction of the imported beauty products mainly depends upon of the overseas supplier’s creditworthiness and capability. Therefore, it is always necessary to verify the Capacity of the supplier to fulfill the contract through confidential reports about him from the banks and Indian embassies abroad.
- Role of Overseas Suppliers Agents in India: Some reputed and renowned overseas suppliers have their agents stationed everywhere. These agents take orders from the firms/companies and arrange for the supply of goods from their principal abroad. Therefore, it is necessary to import through such agents as they can be readily contacted in case of an emergency or if there is any dispute regarding quality or quantity of, receipt of payment, documentation formalities, etc. of imported goods.
- An inquiry, Offer and Counter-offer: It is advisable that before finalizing the terms of import order of beauty products, one should call for the samples/catalog and other specifications of the items to be imported. Then after satisfying himself/herself with the samples/catalog and specifications, the importer should proceed to finalize the terms of the contract to be entered into.
Process to Import Cosmetics from China
This post gives a basic knowledge on how to import Perfumery, Cosmetic items, toilet preparations, and oils. This information enlightens the importers about a general idea to import Perfumery, Cosmetic items, toilet preparations, and oils goods from China applicable to almost all countries worldwide. Some of the items under this category of beauty products are prohibited or restricted in some countries. If you are importing any commodity, you need to obtain accurate information from concerned government departments of that importing country, as the details given in this post will provide only a common idea about the import of Perfumery, Cosmetic items, toilet preparations, and oils.
Different countries may have their own different requirements to import Perfumery, Cosmetic items, toilet preparations, and oils although most of the procedures and formalities are same in all countries after globalization of trade by General Agreement on Tariff and Trade, GATT.
Government registration as importer
In almost all countries, government registration is required to become an importer in the country who only can act as an importer. Foreign Trade government office of that particular country is responsible to issue such authorization to become an importer. For example in India, IEC number (Import Export Code Number) is obtained from the office of Director General of Foreign Trade office to operate as an importer and exporter in India. This process to become an importer is a onetime process, but renewal required as per the terms and conditions of such foreign trade office of a country.
Nowadays, in most of the countries, the information on registration for importer – exporter is linked with customs location and reserve bank, as the process of imports and exports are online digitalized. So the importers of beauty products i.e., Perfumery, Cosmetic items, toilet preparations, and oils are also required to contact concerned government agencies of their importing country to verify whether such onetime registration is necessary or not.
What are the special requirements to Import Cosmetics from China?
The process and formalities to Import Cosmetics from China may differ from one another and in country to country. Also, different procedures and formalities to import each item might be different under import of beauty products. However, some of the common requirements in major countries are explained below:
Food safety clearance
Some of the items under beauty products fall under high-risk food items. For example, synthetic flavoring essence under beauty products likes Perfume, Cosmetic items, toilet preparations, and oils. So Food safety clearance of importing country has to be undergone for any Import Cosmetics from China. Normally, this procedure is done by drawing samples of imported goods which are sent to respective laboratories for testing purpose. The imported goods are released only after obtaining favorable test report. If such imports are regularly taken place then import shipments are selected randomly for inspection.
CVD on RSP based valuation to Import Cosmetics from China
Some products under beauty products attract CVD on RSP based valuation at some of importing country when such goods are brought from overseas countries.
Certificate of Origin
The source of origin of imported beauty products is required in almost all countries. So a certificate of origin issued by necessary approved authorities at exporting country is required. Certificate of origin helps to determine the origin of imported beauty products to avail exemption on import duties and taxes. Different unilateral, multilateral, and a bilateral agreement between countries allows imports and exports with the exemption of import duties wherein Certificate of Origin is the primary proof on country of origin of imported goods under beauty products.
Procedures to Import Cosmetics from China
The buyer and supplier mutually agree on terms and conditions of import sale prior to actual shipment of imports take place. Pricing, quality specifications, terms of payment, terms delivery, and mode of transport and other terms and conditions are agreed and mentioned in the purchase order. Importation of beauty products is affected accordingly.
Under any importation of goods, necessary import documentation, and customs clearance procedures at importing country have to be completed either through importer’s customs broker or importer directly as per the foreign trade policy of the respective importing country. For importing beauty products also, import entry documents along with carrier’s document (Bill of Lading /Airway bill), commercial invoice, packing list, certificate of origin and other required documents are filed and necessary import procedures are completed to take delivery of imported goods. Nowadays, necessary information/document is filed online and produces required documents at the time of inspection, assessment, or delivery of import of goods at destination customs location.
The buyer and seller share quality measures each other and exempt from multiple inspections on same products both for export and import. However, as per the policy of most of the developed countries import of goods from Least Developed Countries (LDC) need to be certified by authorized agencies before export. So when importing beauty products the details of such information can be obtained from necessary government agencies of importing country.
Prior notice to importing country
In most of the countries, a prior notice regarding the Import Cosmetics from China has to be filed before the arrival of goods in entry port of importing country.
In this article, the documentation, process, and formalities to beauty products are explained. This information is generally applicable for all countries.
What must sellers know, before Import Cosmetics from China?
Buying cosmetics, beauty, and personal care products from suppliers in China can be extremely lucrative also venturing into the cosmetics and personal care space can be complicated.
Beauty and Personal Care Products Manufacturers in China
The beauty and cosmetic and personal care industry is very diverse, and include everything from chemical processing plants and R&D facilities to smaller workshops and manufacturers producing makeup accessories and other related products. China has following categories:
- Hair extensions
- Hair Salon Equipment
- Makeup Tools (i.e., Brushes)
- Skin Care
- Lip Treatments
- Electrical Beauty Equipment (i.e., Hair removal lasers)
- Nail Art and Equipment
- Cosmetic Bags
- Jars and Packaging
Manufacturers in the beauty and care products are primarily located in China’s most developed provinces, including Guangdong, Zhejiang, and Jiangsu.
What to find in the manufacturer?
When you source suppliers, you must look for the following:
- Product focus: Are they specialized in your product category?
- Product compliance: Can they comply with different safety standards?
- Registered capital: Is it more than 1,000,000 RMB?
Beauty products Regulations
Beauty products are strictly regulated in all developed markets, including the European Union, the United States, India, and Australia
To import cosmetic or personal care products, such as makeup or hair care products, importers need to verify that the product doesn’t contain any excessive amounts of restricted substances. In addition, the product must be correctly labeled and even registered with the authorities. All of this must be taken care before you import the products otherwise the customs authorities may seize and canceled the entire shipment upon arrival.
Below follows an overview of relevant regulations in several markets, where we compare them to the following factors:
- Substance regulations
- Registration requirements
- Labeling requirements
- Lab testing requirements
- Document requirements
Cosmetic Registration in India
All beauty products that are imported for sale in India need to be registered with the licensing authority as defined under Rule 21 of Drugs & Cosmetics Rules, 1945. A regulatory consultant helps in import and registration as well as in renewal of registered cosmetics with CDSCO in India. They also assist permission for import of cosmetic for trial, test, and analysis as well as repackaging for 100% export.
Below are some important points for importer:
- An application for issue of a Registration Certificate for beauty products intended to be imported into India shall be made in Form 42 either by the authorized agent or importer in India or by the subsidiary in India authorized by the manufacturer and shall be accompanied by a fee of two hundred and fifty US dollars or its equivalent to Indian rupees for each brand of beauty products.
The following documents are required to be submitted for grant of registration certificate:
- Covering letter by the importer
- Form 42
- Treasury Challan
- Power of Attorney
- Schedule D III
- Original or a copy of the Label.
- Free Sale Certificate (FSC)/Marketing Authorization letter/Manufacturing License, if any
- Product specification and testing protocol.
- List of countries where Market Authorization or import permission or registration was granted.
- Pack insert, if any
- Soft copies of the information about the brands, products, and manufacturer.
A single application may be made and a single Registration Certificate in Form 43 may be issued in respect of import of one or more than one cosmetics manufactured by the same manufacturer: Provided that the cosmetics are manufactured at one factory or functioning conjointly as a single manufacturing unit.
- A Registration Certificate, unless it is suspended or cancelled will be valid for a period of three years from the date of its issue: Provided that if application for a fresh Registration Certificate is made within six months before the expiry of the said certificate, the existing Registration Certificate will be deemed to continue to remain in force until orders are passed on the application.
- No beauty products shall be imported unless it complies with the specifications prescribed or any other standards of quality and safety, applicable to it, and other provisions.
- Beauty products which are imported into India in bulk for repackaging for 100% export to other countries will not require registration certificate. In that case, the importer has to obtain necessary permission from CDSCO HQ. The importer must give written statements that these products are not for domestic sale.
- For Import Cosmetics from China for R&D purposes like packaging trials, consumer studies, shelf life studies and transport studies, the registration certificate is not required. In that case, also importer has to obtain necessary permission from CDSCO HQ and must give written an undertaking that these products are not released for domestic sale.
Labeling Requirements in India
- The label of imported beauty products will bear the registration certification number of the brand and the name and address of the registration certificate holder.
- The label should also bear the name and address of the manufacturer as well as of the name of the country where the product has been manufactured.
- If the product has not been manufactured in a factory owned by the manufacturer, then the name of the country (made in China) should be there on the label.
Ban on Animal Testing on beauty products
At the time of clearance of the consignment at the port office, a written statement from the manufacturer stating that the products have not been tested on animals is required to be submitted to the concerned port office.
Makeup and Beauty Accessories, Equipment and Electrical Appliance Regulations
Many accessories, such as makeup brushes and scissors and electrical appliance, such as hair dryer, hair straightening are not defined as cosmetic products. Therefore, may not fall under the same regulations as makeup and hair care products.
However, doesn’t mean that these products are not regulated. Depending on the product and market, the following may be required:
- Country of Origin Label
- CE Mark
- WEEE Mark
- CA Prop 65
Testing of Products
The purpose of testing is to verify whether a product is compliant with one or more directives, acts, or safety standards. As there are different types of product regulations, so different types of testing:
- Substances testing (e.g. California Proposition 65 and REACH compliance testing)
- Electrical safety testing (e.g. FCC EMC compliance testing)
- Mechanical and physical testing (e.g. ASTM compliance testing)
Having a full certification on a product is the best and safest way to import. What does that actually mean? For an example: importer wants to import a hair clipper/hair trimmer. The hair clipper itself runs on an integrated rechargeable battery and the battery is charged via an external charger/adapter with a plug. In 90% of the cases, the supplier will only have an FCC/GS/CE certificate for the charger/adapter.
Because the adapter can be certified with GS/FCC/CE can be used on hundreds of different products that need a universal charger. So it makes sense for the manufacturer to certify the charger because he can sell it with different products and needs to certify the adapter once. While the hair trimmer is a separate unit in itself and may not sell well. So why would the manufacturer pay a lot of money to certify an entire product if they may not sell it?
Therefore, it is necessary to find a manufacturer who has a fully certified product. A full certification is quite expensive and therefore not often found. Yet some markets like Germany demand full certification, especially from retailers.
Labeling & Marking
The following markings must be on the final packaging in which the product is sold to the importer where applicable:
WEEE, FCC, CE, GS, Made in China, Recycle symbol
Suppliers must put all labels and markings of the product on the Instruction Manual (Electronic products usually have instruction manuals).
At times it doesn’t make sense to certify a product because your quantities are low or the product is so cheap that the certification cost doesn’t justify certifying it. In that case, importer must ask the supplier to issue a self-declaration which is in some cases accepted by authorities
The importer should at least need to be compliant with basic requirements like raw material being certified or tested according to regulations. However, most countries in Europe only allow CE or RoHS self-declarations for various items, mainly low voltage or battery powered products.
What is the MOQ?
MOQ depends on the type of product, but normally around 500 to 1000 pcs, per product. While many wholesalers may offer MOQs as low as 5 to 10 pcs per product, such products are non-compliant and even be dangerous.
What to think before importing cosmetics and personal care products?
The main challenge while Import Cosmetics from China is to comply with all applicable product regulations. As mentioned, far from all suppliers can manufacture products that comply with the strict regulations in the United States, the European Union, and other developed Asian markets.
In addition, lab testing can cost thousands of dollars per product, when it comes to makeup, face masks, skin care, and other chemical products (hair color).
Why can’t importer rely on the supplier to manage the compliance process?
The supplier is not responsible. At best, they can provide test reports from previous orders, but it’s always the importer that is responsible for ensuring that all imported products comply with all applicable standards and regulations.
The supplier that does manage compliance on their own, or hire a consultant to do it for them, will definitely not satisfied with selling their products at a factory price. Instead, he will launch the product overseas on their own, rather than selling to importers, who take most of the profits.
Importers, can private label their cosmetics and personal care products?
Yes, many suppliers allow their customers/importers to brand their products with a private label. However, keep in mind that private labeling is not changing the fact that importer is responsible for ensuring that the cosmetics or care product is compliant.
Shipping costs are a substantial percentage of your total product cost, so it’s important to keep them as low as possible. As a general rule of thumb, the bigger your order, the lower ‘per item’ shipping costs you will have. Following are the 4 most popular shipping methods you can use to import goods from China:
Regular Post: This refers to normal, regular China Post which can take approximately 6 weeks to arrive. No online tracking is provided and can be used for parcels under 2kg. Usually, importer uses the regular post for samples and again only if time is not that important and you can wait a few weeks for a package to arrive. It is not the most reliable system.
Courier: Shipping with a courier company is the most suitable method for most importers starting out if it involves small, lightweight items. With courier companies such as TNT, DHL, UPS or FedEx importer have to pay a premium price for each kilo but importer gets fast delivery times and an online tracking facility. These days most courier shipments take normally 3-5 business days to arrive in any Western country from anywhere around the globe.
Air Freight: This shipping method lies between courier shipping and sea freight. Shipping times vary from company to company, but in general, it takes 5 to 10 days which is not bad at all! Air Freight costs will be significantly lower than with courier companies, but extra work is involved when the goods arrive in your destination country. With Air Freight importer usually have to handle documentation and customs clearance on their own (unlike with courier companies), which for many newbies may seem impractical. The importer can always outsource these tasks to a freight forwarding company at an additional cost.
Sea Freight: This is the most popular shipping method used by big companies/firms to import goods from China. The cost per kilo (£100-£150 per pallet, even less if importer can order full, or half-container loads) is very low but the downside is their lengthy delivery time. Depending on where the importer is located it will be in the vicinity of 30 to 40 days in most cases.
Just like with Air Freight, the importer has to take care of the documentation, customs clearance, and delivery of goods from the port to home or office. So it always recommended using a freight forwarding company that will take care of all the procedures and deliver goods right to the door.
Also, with Sea Freight it’s very important to calculate all the EXTRA COSTS involved. The supplier will usually give the FOB price, which means that the goods are loaded onto the ship. But that’s not the end. Once your shipment arrives at the port there are all kinds of extra charges, such as: Unloading charge; Port fees; docking fees; Storage fees; Clearance fees, etc. In general, Sea Freight is better for bulky items. Sea freight shipping from China is perceived as a major hassle when importing products.
There are many more complex issues when importing from China. However, Importers still have reason to be concerned about freight related issues. In this article, we cover everything from shipping costs and insurances, to Incoterms, FCL, and LCL shipping.
Shipping Incoterms are international standard codes that decide and states when and where cargo shall be transferred between the supplier and the importer.
For example, FOB (Free on Board) includes transportation from the factory, to the port of destination. FOB also includes all export procedures, which are required to ensure that the cargo can be legally exported. However, from the port of destination, the importer must arrange to forward to the final destination. On the other hand, the importer can book DAP (Delivered at Place), which includes shipping from the factory in China, to a specified address overseas, such as importer’s warehouse.
FCL and LCL Shipping
Sea freight is not excluding importers from importing small volumes from China. If importer buys by the container load, then FCL (Full Container Load) shipping is the right choice. FCL is also the cost-effective freight method available if counted by cost per volumetric unit and weight unit.
However, many smaller buyers don’t buy full container loads. As already said, Air freight is then a viable solution for importing small volumes. However, some shipments are stuck in the twilight zone between air freight and FCL cost viability.
Then the solution spells LCL, or Less (than) Container Load which is basically shared container freight. Cargo from multiple buyers gets stored in the same container.
Insurance is included, by default, when importer select the incoterm CIF, standing for Cost Freight (and) Insurance.
If importer orders according to DAT (Delivered at Terminal) or DAP (Delivered at Place) then, the importer must inform his shipping company that the cargo must be insured. As shipping insurance is cheap, and rarely costs more than US$50 to US$100. Shipping insurance generally covers the value of the cargo, in case of transportation damage. It will not cover lost sales or product development costs.
Cargo must be sufficiently protected, from the dusty factory floor to a damp warehouse, and finally stacked in a container for up to a month.
A lot can happen in this time, an importer needs to be sure that his export packaging is up for the task. To ensure that cargo is protected during transportation, the importer can use the following checklist:
- Inner cartons layers – 5
- Outer cartons layers – 5
- Plastic wrapping (on Outer carton)
- Pallets (ISPM 15 EU Standard)
- Freight remark (Printed on outer carton)
Be sure to provide the supplier with explicit and clear export packaging specifications and do not leave anything to their interpretation.
But there is more to export packaging. There are various export packaging regulations to take into consideration, such as ISPM 15 and Lithium battery restrictions.
Before shipping from China, the importer needs to confirm which shipping regulations apply in this country, and to the product.
Should importer get a Freight forwarder or let the Supplier manage the freight process?
The importer has basically two options, either the supplier administers the shipping process, or importer itself do it via a freight forwarder.
Letting the supplier administer (i.e., book the shipment) the shipping process gives less transparency. However, then importer is far better off working directly with a reputable freight forwarder.
Freight forwarders are normally part of international trade, but many have their own offices in major Chinese port cities, such as Shanghai and Hong Kong.
A freight forwarder generally offers a wide range of shipping services, including FCL, LCL, and air freight. They also provide a designated contact person that keeps informed importer and answers his questions.
Do importers need to pay any taxes in China?
No, importer doesn’t need to pay any “export tax” when importing from China. However, they need to pay for transportation to the port of loading in China and the cost for export clearance papers. Both of these costs are included if importer order shipping according to the following terms: FOB, CIF, DAT, and DAP.
What happens after the cargo arrives at the destination port? And how it can be accessed?
The importer will be notified a few days before the arrival. After the container vessel arrives, the containers are first unloaded. In some cases, some container may be inspected by the local customs authorities, but most are not.
Regardless of whether importer or the supplier managed the freight, importer’s forwarder or customs broker starts customs clearance procedures. This process takes 1 to 3 days, depending on the cargo and the applied process.
The importer has two options: either pick it up by them or by asking their shipping agent to load it on a truck and deliver it to a specific location. When the cargo arrives at the Port of Destination importer will be notified by the port agent. In most cases, the importer can book the transportation directly through the port agent.
Shipping Documents to Import Cosmetics from China
Bill of Lading
It is the main freight document issued by the transportation company that specifies the shipping company, exporting company (seller), consignee (buyer), products, volume, and incoterm.
The Bill of Lading is mandatory when shipping from China and shall be delivered (along with the Commercial invoice and the Packing list) to the importer within 2 weeks from the shipment date.
It is a document specifies the order value, types of products, and the details of the consignee. This document is used by the forwarder or customs broker for customs clearance and calculation of import duties and other taxes (i.e., Value added tax). This is also mandatory and shall be delivered together with the Bill of lading.
It is a document which specifies the volume, different types of products and quantity per type of product. The Packing List is mandatory and should be delivered together with the Bill of Lading.
Certificate of Origin
A document specifies the origin of the material or the imported products. This document is used to determine the import duty rate, but also for statistics and enforcement of embargoes.
Customs and taxes when Import Cosmetics from China
Importing from China involves various taxes. The applied taxes are calculated, vary depending on which country the products are imported to.
Customs duty is a variant of Indirect Tax which is applicable on all imported goods and a few goods exported out of the country. Duties levied on import of goods are termed as import duty. Many countries levy customs duties on import/export of goods as a means to raise revenue and/or shield domestic institutions from predatory or efficient competitors from other countries. Customs duty is levied as per the value of goods, weight, and other such criteria according to the goods.
What is the Customs Duty in India:
Customs duty in India is defined under the Customs Act, 1962 and enables the government to levy duty on exports and imports, prohibit export and import of goods, procedures for importing/exporting, penalties etc. All matters related to customs duty fall under the Central Board of Excise & Customs (CBEC). The CBEC is a division of the Department of Revenue of the Ministry of Finance. CBEC formulates policies that concern collection or levying of customs duties, customs duty evasion, smuggling prevention, and administrative decisions.
Types of Customs Duty:
Customs duties are levied almost on all goods imported into the country. Import duties are not applicable on items including lifesaving drugs/equipment, fertilizers, food grains etc. Import duties are further divided into basic duty, additional customs duty, true countervailing duty, protective duty, education cess and anti-dumping duty or safeguard duty.
Basic Custom Duty
Basic customs duty is levied on imported items that fall under the ambit of Section 12 of the Customs Act, 1962. These duties are levied at the rates prescribed in First Schedule to Customs Tariff Act, 1975, under the terms specified in Section 2 of the act. The levied rates may be standard or preferential as per the country of import. In India basic customs duty levied on import of goods is depends on the HSN codes of the goods. The HSN code of beauty products is given in chapter 33. Basic customs duty on import of beauty products in India is 10%.
Additional Customs Duty (Countervailing Duty (CVD)):
This duty is applied on imported items under Section 3 of Customs Tariff Act, 1975. It is equal to the Central Excise Duty that is levied on goods produced within India. This duty is calculated on the aggregate value of goods including BDC and landing charges. The CVD on Import Cosmetics from China is 12%. And special customs duty is levied at 4%.
Protective duty is imposed to shield the domestic industry against imports at a rate recommended by the Tariff Commissioner.
This duty is levied at 2% and higher education cess at another 1% of the aggregate of other customs duties.
Anti-dumping duty may be imposed if the imported goods are at below fair market price; however, the Chinese government has provided certain industries and/or domestic manufacturers with subsidies. This means that the relevant Chinese manufacturers are allowed to sell products below the market price.
These practices are not liked by the EU and US – which often react with Anti-Dumping Duty measures. The Anti-Dumping Duties sometimes target entire industries, and sometimes individual manufacturers.
An Anti-Dumping Duty must be taken seriously since these are often in the range of 40 – 60% (as a comparison, the average duty rate is around 5% in most western countries).
Safeguard duty is applied if the government feels that a sudden increase in exports can potentially damage the domestic industry.
Customs Duty Rates:
Custom duty rates can be specific. In general, duty varies anywhere from 0% to 150%, with the average rate lying around 11.90%. Other fees related to customs duties include:
- Landing Charge (LC) – 1% CIF
- Countervailing Duty (CVD) – (0%, 6% or 12% (CIFD + LC))
- CEX (Education and Higher Education Cess) – 3% CVD
- CESS (Education + Higher Education) – 3% (Duty + CEX (Education and Higher Education Cess) + CVD)
- Additional CVD – 4% (CIFD + LC + CVD + CESS + CEX)
IGST (Integrated Goods and Services Tax) is a component under GST law. Which is levied on goods being imported into India from another country. It has been subsumed various customs duties including Countervailing Duty (CVD) and Special Additional Duty of Customs (SAD).
GST rate is mapped to HSN code to enable standardization of tax rates across India. GST is levied under five tax rates, namely 0%, 5%, 12%, 18%, and 28%. Following are the GST rate for beauty products that fall under chapter 33 and 85 of the HSN code.
- Menthol and menthol crystals, Peppermint (Menthe Oil), Fractionated / de-terpinated mentha oil (DTMO), De-mentholated oil (DMO), Spearmint oil, Mentha piperita oil .
- Tooth powder 
- Odoriferous preparations which operate by burning 
- Essential oils (terpeneless or not), including concretes and absolutes; resinoids; extracted oleoresins; concentrates of essential oils in fats, in fixed oils, in waxes or the like, obtained by enfleurage or maceration; terpenic by-products of the deterpenation of essential oils; aqueous distillates and aqueous solutions of essential oils; such as essential oils of citrus fruit, essential oils other than those of citrus fruit such as Eucalyptus oil, etc., Flavouring essences all types (including those for liquors), etc..
- Mixtures of odoriferous substances and mixtures (including alcoholic solutions) with a basis of one or more of these substances, of a kind used as raw materials in industry; other preparations based on odoriferous substances, of a kind used for the manufacture of beverages; such as Synthetic perfumery compounds [other than Menthol and menthol crystals, Peppermint 
- Kajal pencil sticks 
- Hair oil [33059019, 33059020, 33059030, 33059040, 33059050, 33059090, 33059011]
28% GST on Import Cosmetics from China
- Pre-shave, shaving or after-shave preparations, personal deodorants, bath preparations, depilatories and other perfumery, cosmetic or toilet preparations, not elsewhere specified or included; prepared room deodorizers, whether or not perfumed or having disinfectant properties; such as Pre-shave, shaving or after-shave Preparations, Shaving cream, Personal deodorants and antiperspirants 
- Preparations for oral or dental hygiene, including and powders; yarn used to clean between the teeth (dental floss), in individual retail packages [other than dentifrices in powder or paste from (tooth powder or toothpaste)] [other than 33061010, 33061020]
- Preparations for use on the hair such as Shampoos; Preparations for permanent waving or straightening; Hair lacquers; Brilliantines (spirituous); Hair cream, Hair dyes (natural, herbal or synthetic) [other than Hair oil] [other than 33059011, 33059019].
- Beauty or make-up preparations and preparations for the care of the skin (other than medicaments), including sunscreen or sun tan preparations; manicure or pedicure preparations [other than kajal, Kumkum, Bindi, Sindur, Alta]
- Perfumes and toilet waters 
- Other: Professional beauty care equipment .
For Chinese exporters, timely, and full payment is the top priority. As long as all the documents have been handed to the importer, the exporter would regard the goods as being handed to the importer as well. There would be mainly 3 ways to send money to China suppliers:
Telegraphic Transfer (T.T)
This is probably the oldest payment method in international trade and the most popular for low to medium end transactions. Normally an advance payment is sent before production and the balance as per the payment terms. The main risk for the importer is losing the advance in case things go wrong. In Telegraphic Transfer, the importer has to make the payment directly to the bank by telegraphic to the exporter’s bank account. To carry out the T.T, the exporter needs to open a USD account and inform importer about account information in advance (the bank will charge a fee for T/T remittance).
T/T Payment process
- Deposit payment (30%)
- Production starts
- Completion of production
- Quality Inspection / Compliance testing
- Buyer approves batch
- Delivery to the Port of Loading
- Bill of Lading
- Loading & Shipment
- Balance payment (70%)
- Exporter sends original Bill of Lading and other freight documents (required to release cargo in
Port of Destination)
Letter of Credit
It is the most secure payment method in terms of “Payment Risk” and also a popular option for transactions exceeding $50,000. However, LC’s are not always feasible for small importers, due to
- Exorbitant Bank Charges
- Complex procedures & paperwork which can be difficult to understand initially and it is advisable to use a Certified Documentary Credit Specialist for consultation and compliance at least for a couple of transactions. Once importers grasp the concepts, everything becomes a lot simpler.
- Small & many medium-end factories are not always comfortable with LC’s due to the complexity & language barrier.
However, one benefit of using a Letter of Credit is that it opens up a lot of “financing options”.
Paypal as a payment method has gained more and more acceptance in the last few years. And is a commonly accepted payment method now, especially with tech-savvy e-commerce sellers. But it is not feasible for larger transactions as their fee is percentage based. It is a great payment method for sourcing very small quantities and samples.
Majority of the Paypal accounts are either held by individuals or by Hong Kong registered companies managed by mainland China-based individuals.
Cash is big in China and will be for. Even large transactions can take place in cash. Paying in cash works either when the importer is in China or is being represented by a sourcing company/agent on the ground. Cash is definitely the riskiest option from an importers point of view as if things go wrong, there is very little recourse. Cash should only be used for smaller transactions where there is a degree of trust with the supplier.
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