In 1999, the General Administration of Customs, the Bureau of Foreign Trade and Economic Cooperation and the State Economic and Trade Commission jointly issued “Measures of the Customs of the People’s Republic of China on Management of Enterprises by Category”  (http://www.customs.gov.cn/YWStaticPage/433/faca9e8a.htm), under which processing trade enterprises are classified and supervised under four categories, namely A, B, C and D according to different measures.  The Customs is now considering revising the system in line with the principle of “making things more convenient for enterprises with good law-abiding track record whilst reprimanding enterprises which have broken the law”.

       The Customs is now collecting opinions of Hong Kong manufacturers on the “Management of Enterprises by Category”, in particular the following issues:

1.           The classification system of enterprises: Is the current classification system of enterprises fair and reasonable? Which aspects of the current system are not fair and reasonable?  Is  it easy for a law-abiding company to be listed under the Category A enterprises?  Which criterion should be relaxed?  Which requirements governing the upgrading and downgrading of enterprises deemed unreasonable?

2.           The supervision of enterprises:  Is the supervision of enterprises fair and reasonable?  Which policies should be relaxed?  Are the preferential treatments offered to Category A and B enterprises useful?

3.           The relation between customs duty deposit system and the classification system of enterprises:  Which categories of enterprises should be required to make "actual" payment of customs duty deposit?  If enterprises are required to pay “actual” payment of duty deposit, what percentage of the cash payment is reasonable?

4.           Other comments and recommendations.

       The management of enterprises by category is closely related to the processing trade policies in the Mainland.  For instance, for Category B enterprises engaging in restricted commodities, "actual" payment of customs duty deposit is required. The review and changes of the management of enterprises by category, if any, will have severe repercussion on Hong Kong manufacturers.  

Members please forward your views on the matter to the Federation by 1 December 2006 (our fax no: 2721 3494).  Members’ comments will be collated in the Federation’s submission to the Customs. For enquiries, please contact Jeffreys Tsang at 2732 3197. Details of the current management measures can be viewed from the web site address mentioned in the first paragraph of this circular.