Qualifications for International Freight Forwarding Companies in China
By Rinki Li and Maarten Roos
Despite China’s economy facing challenges, one of the sectors that has grown a lot over the past five years is cross-border e-commerce. Every day approximately nine million parcels are exchanged between China and countries around the world, making it easier and faster for consumers to "buy globally." Over the past five years, the scale of China's cross-border e-commerce trade has grown more than tenfold.
Against this background, we are seeing a growing interest from foreign investors to get a foothold in the international freight-forwarding industry in China. The country welcomes this kind of investment. In 2019, China abolished specific restrictions on the establishment of international freight forwarding enterprises by foreign investors and simplified the approval procedures for setting up a foreign-invested international freight forwarding business in China. The following conditions and procedural requirements remain:
- Establishment Conditions
| Personnel | At least 5 professionals with international freight forwarding qualifications, such as: - Over 3 years' experience - CIFA or equivalent certificate holders |
| Premises and facilities | Fixed business premises and necessary business facilities |
| Market conditions | Stable sources of import and export goods |
| Registered capital | Minimum for companies - CNY 5 million for international freight forwarding business by sea - CNY 3 million for international freight forwarding business by air - CNY 2 million for international freight forwarding business by land and for international express delivery business Note: Companies operating more than one type of business, will be subject to the higher minimum registered capital. For branch establishment Increase minimum registered capital by CNY 500,000 per branch |
| Company name | Shall contain relevant words such as "freight forwarding", "transportation service", "consolidation" or "logistics". |
- Other Relevant Requirements
Many businesses engaging in international freight forwarding will also want to operate related businesses, such as the import and export of goods, import and export agency, Non-Vessel Operating Common Carrier (NVOCC) business, or agency businesses by sea, air, and land (including railway and road transportation). While certain administrative steps need to be completed before a company can do so, this process is now a lot easier than it used to be. Below an overview of the activities that require a simplified filing or are still subject to licensing:
Licensing
| Road (highway) transportation | Apply for Road Transport Business License (not required for general freight transportation with ordinary freight vehicles under 4,500 kg) |
| International road freight transportation | Apply for Road Transport Business License |
| Railway transportation | Apply for Railway Transport License |
| Air transportation | Apply for Public Air Transport Enterprise Operating License |
Filing
| Customs declaration and inspection | After filing with customs, enterprises will simultaneously obtain qualifications for customs declaration and inspection. Can be filed through the "China International Trade Single Window" platform (http://www.singlewindow.cn/) or simultaneously in accordance with the "Multiple Certificates in One" process during enterprise registration. |
| NVOCC | File enterprise name, address, contact information on the "Comprehensive Management Information System for Waterway Transportation Construction" of the Ministry of Transport (http://wtis.mot.gov.cn) or the relevant website of the local transportation authority. The freight rate shall be filed with the transportation authority of the State Council. |
| Sea or water transportation | May need to file for international ship agency, domestic ship agency, and waterway cargo transportation agency according to the corresponding businesses. |
| International road freight transportation | File with the provincial transportation authority. |
- Conclusions
It is much easier than before to establish a foreign-invested company in China engaged in international freight forwarding, with qualifications and filing/approval conditions greatly simplified in recent years. At the same time, to maintain market order, protect national economic security, and adapt to international rules and standards, China has kept several approval restrictions in place. Our expectation is that these will be further relaxed in the coming years, to the full benefit of foreign investors that are interested in this field.
R&P’s corporate and regulatory teams support clients across a broad range of industrial sectors, including players in the Chinese logistics industry. For more information or specific inquiries regarding the establishment or operation of an international freight forwarding enterprise in China, please contact roos@rplawyers.com or your usual contact at R&P.