International commodity trading platform and carrier ...



Guidelines for

International commodity trading platform and carrier cooperation

of Dongjiang Free Trade Port of Tianjin

I. Development prospect and target of Dongjiang International Trading Market

Dongjiang Free Trade Port of Tianjin was established by the approval of China's State Council on August 31, 2006, with an area of 10 km2, which is the largest free trade port and the most open economic zone in China, and also the first mover transforming to free trade zone among 14 free trade ports in China. Along with China joining “Trans-Pacific Partnership Agreement” (TPP) and the continuous quickening of construction pace for China, Japan and Korea Free Trade Area (CJKFTA), Dongjiang International Commodity Trading Market will give full play to the advantages as the bridge for connecting international and national markets and the important international open port for high trade liberalization, build up the largest imported goods specialized market platform and Import commodity distribution center in northern China with comprehensive function, standard trading, large scale and strong radiating capacity, which is integrated with purchasing, storage, exhibition, simple processing, financing, testing, trading, and distribution.

II. Comprehensive advantages of Dongjiang International Commodity Trading Market

Relying on the world class port, Dongjiang International Commodity Trading Market has rich hinterland resources and enormous market potentials. At the same time, the advantages of complete market platform function can provide important guarantee for enterprises to expand the market quickly.

I) Distinct regional advantages

1. Sea and land transportation hub extending in all directions. The Dongjiang Free Trade Port is located in Tianjin, which is the northeast of the 4th

largest port in the world. Tianjin Port is at close range from our capital-Beijing from the sea, which has trade contacts with more than 500 ports over 180 countries and regions, with more than 400 flights every month, reaching the ports around the world. With three cross-border links for Eurasian continental bridge, it is the port that has the largest international passageway transportation volume in China continental bridge. While opening Chinese market, the enterprise also strengthens the cooperation among places as Khorgas, Erenhot and Manchuria, runs through the entire Eurasian continental bridge, and promotes the trade contracts with Central Asian, Mongolia and Russia.

2. Rich hinterland resources. Within the scope of 500 km radius around Dongjiang Free Trade Port, there are 11 metropolis with a population over one million, accounting for about 17% of the population of China, including Beijing (the capital city) and Tianjin (Northern Economic Center), in which the amount of population for middle class and high consumption is increasing continuously. The demand for automotive, yacht, fashion and luxurious goods by enormous high-end consumer groups is increasing every day.

II) Perfect specialized facilities

1. Wharf. Dongjiang Free Trade Port is designed to be 17 container berths, 1 sea-railway reloading center and 4 general cargo wharfs, 6 container berths have been constructed with a handling capacity of 4 million TEU per year and 2 general cargo wharfs have been completed.

2. Warehouse. The standard warehouse of 580,000 m2 and container yard of 600,000 m2 have been completed; the freezer with imported German advanced equipment has a refrigerated ability of 25,000 tons, the refrigerated ability will be up to 100,000 tons after it is fully completed; the constant temperature and humidity warehouse is 18,000 m2.

3. The International Commodity Exhibition Center. With a floor area of 86,000 m2 and total construction area of 137,200 m2, it is integrated with international commodity bonded exhibit, sales exhibition, leisure and entertainment. The merchants that have entered the center deal with private planes, luxury cars, RV, yachts, grape wine, foodstuff and etc.

4. Vehicle inspection line. There are three vehicle inspection lines in the port, with a daily inspection capacity of more than 1,000 vehicles.

5. Alcohol test laboratory. With features as alcohol preliminary review, label approval, quality inspection, organic inspection and alcohol exhibition, provides a professional assurance for imported alcohol consumption market of Tianjin Port.

6. Other facilities. Facilities as completed Tianjin International Cruise Home Port, Dongjiang Beach and International Yacht Club as well as Golf Club in planning and construction will certainly bring many high end customer group from home and abroad.

III) Advanced domestic financial innovation model

1. Finance lease. Dongjiang Free Trade Port has various kinds of about 400 registered leasing companies, becomes the largest gathering place in China for finance leasing of airplanes, ships and large equipment, the leasing business of 170 airplanes and 40 ships had been carried out, taking up more than 80% of that in China, the total leasing assets is approximate US $7.2 billion. Dongjiang International Commodity Trading Market will give full play to the domestic leading position in finance leasing in Dongjiang Free Trade Port, expand financing and sales modes for enterprise.

2. Other financing modes. More and more guarantee institutions, small loan companies and factoring companies have entered the Dongjiang Free Trade Port, together with the special fund for international commodity market development, and provide innovative and diversified financing means for enterprises.

3. Offshore account. The companies registered in Dongjiang Free Trade Port can establish offshore account, providing convenient assistance for the free transfer of foreign exchange fund of the enterprises.

4. Aspiration settlement of exchange in capital item. Dongjiang Free Trade Port is the first region that allows aspiration settlement of exchange in capital item. After capital verification of capital fund, the foreign invested enterprise can apply the settlement of exchange to the bank, allowing the enterprise to effectively avoid the risk of exchange rate fluctuation.

(IV) High effective trade liberalization platform

1. Convenient customs clearance. By utilizing the advantage of the zone and neighboring port integration of the Dongjiang Free Trade Port, minimize the logistic cost of the enterprises. Meanwhile, with close cooperation of customs, inspection and quarantine authorities to allow quick approval, quick inspection and quick release, the efficiency of customs clearance of the commodity has been improved continuously. For the key commodities, establish specific Customs Declaration and Commodity Inspection Guide and set green channel for customs clearance. (Refer to Customs Clearance Guide of Dongjiang Free Trade Port for part of the commodity customs clearance procedure. ）

2. Trade supporting service. There are hundreds of registered logistic supporting companies in the region for logistics, shipping, customs declaration and commodity inspection, freight forwarding, providing full range logistic solutions for enterprises.

3. Administrative services. Provide quick approval service for the proposed projects, help enterprises not familiar with China laws to complete various procedures conveniently.

4. E-commerce platform and quality traceability system. Dongjiang international commodity trading network can provide the enterprises with services as exhibition fair, inquiry and quotation, electronic contract, electronic clearing. Establish nationwide quality assurance and traceability system for imported commodity that the inspection and quarantine is acceptable in a way of anti-counterfeiting identification by 2D code.

(V) Diversified policy support measures

1. Specific policy for free trade port zone. The cargo entering the zone from abroad shall be exempted from import duties and value added tax at import linkage; The cargo entering the zone from home will enjoy export rebates; the business intra the zone shall be exempted from processing linkage VAT; the cargo entering the zone shall be “Quarantine, no inspection”, and without limitation on quota, permit and storage time.

2. Special fund support from local government. The local government sets up special fund for enterprise development, the business tax, VAT, business income tax paid by the enterprise, and the individual income tax to be paid by senior and middle level managers, as well as storage, exhibition sales rent will be derated. ① Acceptable international trading companies, will be exempted from four tax as VAT, enterprise income tax by enterprise; ② as an acceptable important market company, within five years, will be given fund support of 70% to its paid business tax, value added tax and enterprise income tax for the part to be shared by local government; within five years, it will be given fund support of 100% to its paid stamp tax; those registered and lease warehouse in the bonded port by the end of 2014 will be given 30% rental subsides for three years (the maximum subsided area will not exceed 2,000 m2); if leasing office building in Dongjiang, it will be given free rental in the first year, and maximum 50% rental subsides in the following two years. ③ The merchants that settled in the Dongjiang international commodity exhibition and sales center and registered in Dongjiang Free Trade Port will be given a policy support of free rent by the end of 2013 and half rent from 2014 to 2016. ④ For senior management and technical personnel of the enterprise, within five years, will be given fund support of 100% to individual income tax for the part to be shared by local government; for the middle level management personnel, within five years, will be given fund support of 50% to individual income tax for the part to be shared by local government.

III. Market classification of key imported commodities

Dongjiang International Commodity Trading Market focuses on bulk commodity sector as dairy products, frozen products, metallic mineral products, solid chemicals and agricultural products, as well as high end consumer goods as automobiles, grape wine, yacht, luxurious goods, RV, general purpose plane and etc. It is possible to develop the bonded delivery business of the partial futures varieties, form the linkage of futures and goods in stock to allow interactive mode of physical transaction and

electronic commerce trade. In this way, it enables Dongjiang to become the important bulk commodity and high end consumer goods distribution base and trading market cluster in northern China, even in Northeast Asia.

1. Dairy products trading market

To build the largest dairy products raw material import trading market in our country, introduce the dairy products industrial raw material as whey powder and milk powder, expand the import commodity trading of infant formula, butter, cheese and etc., develop auxiliary businesses as overseas procurement, import agent, bonded storage, logistic, sales and sales settlement.

2. Frozen products trading market

Relying on the refrigeration and freezing base to build up northern international frozen products trading platform in China, carry out bulk frozen products trading as meet of imported pork, beef and mutton as well as aquatic products as fishes and shrimps. Construct specialized inspection, quarantine and examination platform for frozen products, provide both sides of the deal with related businesses as customs clearance, refrigeration storage, cold chain logistics, trading and settlement.

3. Agricultural products trading market

Develop the bulk agricultural products import and export trades of corn, tapioca, soybean and sugar that are imported from countries and areas as America, Brazil, Southeast Asia and etc. and various vegetable oils by taking palm oil as the representative. Actively developing the a series of auxiliary businesses as overseas procurement, customs clearance, bonded storage, quality inspection, sales settlement and financing, build up important international trading center for imported agricultural product in northern part of China.

4. Automobile trading market

Import high grade brands passenger cars from Europe, America and Japan, develop the logistic distribution, expand the value added services as car financing, maintenance, retrofitting and disassembly, gather the cars that are to be Central Asia, Russia and Mongolia oriented import and intermediary trade, form the specialized import market for finished automobile and base for vehicle import and re-export.

5. Grape wine trading market

Getting together the middle and top grade original bottle grape wine of import vintage wine and vineyards wine from grape wine regions and famous chateaus, actively introduce member enterprises of grape wine traders and distributors, encourage the enterprises to establish direct sales center; use the brand of Dongjiang Free Trade Port, coordinate and establish unified and formal Dongjiang import grape wine exhibition and sales center outside the port, help the enterprises to improve their distribution channels; cooperate with world famous alcohol exchanges, and set up grape wine distribution center in the Dongjiang; by using alcohol test laboratory, constant temperature and humidity bonded warehouses, build up an import service platform integrated with procurement, transportation, customs declaration, storage, sales, distribution, financing and quality inspection, and construct the international grape wine trading market with the most perfect features.

6. Yacht trading market

Gathering with ace yacht brands from Italy, Britain, America and etc., attract famous foreign yacht manufacturers and agents, build the sales service park and comprehensive industrial function service for yacht and related industries, launch the relevant businesses as yacht exhibition and trade, driving training, maintenance, yacht leasing, develop a series yacht sport leisure and entertainment projects as racing, cruise and diving; form a yacht industrial chain including yacht manufacturers, service providers, clubs and customers; build the largest yacht reception base and yacht trading center in northern China.

7. Fashion and luxury trading market

Cooperate with the world famous fashion and luxury manufacturers and top agents, sell the fashion and luxury as high grade cosmetics, perfume, fashion, jewelry, watch, leather products and so on through direct sales, agency, chain and franchisees modes. Endeavour to implement policies as tax refund when departure and tax exemption when withdrawing from the zone, use the bonded warehouse features to

realize imported commodity exhibition and trading mode by combination of inside and outside of the zone, reduce the sales cost and enlarge the consumer group, form exhibition and trade platform and one stop procurement platform with world famous brands.

8. RV trading market

Gathering types B and C self-propelled RV (recreational vehicles) and types A, B and C trailer RV from European and American countries, actively attract overseas RV manufacturers and domestic and foreign RV distributors, develop exhibition and trade, RV lease, export trade related businesses, enabling continuous growth of RV import and relevant value added business.

9. General purpose plane trading market

Aiming at the general purpose plane sector, gathering the manufacturers and member enterprises to carry out exhibition and sales, plane lease and charter businesses; by means of the mode of combination of physical exhibition with modern electronic commerce, set up a comprehensive platform integrated with multi service features as plane sales and exhibition, plane lease, general purpose aviation materials import consultation, customs clearance, transportation, and build the biggest general purpose plane exhibition and trade center in northern China. Provide with subsequent supporting services as flight experience, plane management, after sales repair, pilot training, form an industrial chain including the fields as plane manufacturing, distribution and repair as well as financial leasing.

10. Construction machinery trading market

With the particular policies in Dongjiang, build the market mode of “financial lease + service base + bonded exhibition + online trading”. Gathered with manufacturers and agents of American, Japanese and German well known construction machinery products as well as sales organization and agencies of leading enterprises of

Chinese construction machinery, and by using the financial leasing means to enlarge the trade scale, form a integrated service system with exhibition, trading, leasing, distribution and customs clearance of construction machinery as large type excavator, shield tunneling machine, pushdozer, loader and autocrane; construct a perfect machinery after sales service system including product repairing, spare parts supply, second hand machinery trade and refabrication.

IV. Diversified market business mode

Encourage the enterprises to carry out and open up innovative business model. Encourage the large scale transnational and competent enterprises to set up operation centers, procurement centers, allocating centers, sales centers, distribution centers, settlement centers; encourage the international trading enterprises to deal with offshore trade, intermediary trade. Establish supply chain at linkages as supply, manufacturing, distribution and retail among enterprises, set up sales chain concerning the linkages as exhibition and trade, electronic commerce, entity chain and credit consumption, and build logistic chain including storage and transportation, processing and distribution.

1. Futures bonded delivery. Carry out futures delivery by taking the commodity defined in the futures contract in bonded (tax free) sate in the Dongjiang Free Trade Port as delivery subject matter.

2. Spot trading. By using the various kinds of storage, exhibition and trade facilities, based on the way of payment and delivery agreed between the enterprise and customer, carry out physical commodity spot delivery.

3. Web shop. Provide online sales and online procurement services for the enterprises. It mainly includes management of web shop, member management, order management, stock management and online payment, etc.

4. Cross border electronic commerce. Build logistic and distribution base for international famous brands in Dongjiang. E-business enterprise, distributors and etc. establish bonded warehouses in Dongjiang, after placing an order online by the

customer in China, the goods will be delivered to the customer directly from Dongjiang warehouse. In this way, the delivery speed is improved, the logistic cost is minimized, satisfying the demand on speed and quality by the customers.

5. Settlement center. Domestic and overseas famous exchanges, trade companies, distributors and etc. can set up financial settlement center in Dongjiang Free Trade Port, the Dongjiang local government will give the enterprises finance and tax supports.

6. International Commodity Procurement Center. Encourage the enterprises to establish international commodity procurement centers to purchase the commodities necessary for enterprise production and management, for example, Carrefour Regional Global Procurement Center in Tianjin. At the same time, attract transnational purchasers and domestic suppliers to gather, negotiate and trade in Dongjiang.

7. Domestic direct sales center. The enterprises can set up Dongjiang international commodity direct sales center in key customer source cities, build commodity sales networks around the country, expand the distribution channel and improve the sales performance.

8. Bonded storage sales center. By taking the bonded warehouse in Dongjiang Free Trade Port as commodity storage and exhibition base, and using the bonded feature of the imported commodity in the zone, develop high end commodity exhibition and sales. Thus, reducing the operation cost, minimizing funds tied up, improving price competitiveness of enterprise’s product.

9. Proxy service. Tianjin Dongjiang International Trading Service Co., Ltd. deals with services as storage, exhibition, trading, logistics, customs declaration and commodity inspection and consignment sales. This can help the enterprise successfully complete various linkages of selling its goods within the territory of China without going abroad.

10. Various kinds of regular and irregular fairs. The local government in Dongjiang Free Trade Port will organize bidirectional international commodity fairs

both within the territory of China and overseas, manage and plan various kinds of marketing activities for foreign invested transnational enterprises in China so as to enlarge their popularity and sales volume of enterprises’ products.

11. Spot commodity exchanges. By means of electronic commerce platform, set up an open, transparent, convenient and rapid electronic trading platform. Through the participation of large amount of traders, the bargain price is generated by electronic quotation and deal matching, eliminate the problems in conventional spot trading as high trade cost, opaque price, high credit risk and less trade access and etc.

V. Cooperative partners concerned by Dongjiang International Commodity Trading Market

Various kinds of international and domestic manufacturers, traders, distributors, industrial association and commerce chambers as well as their representative offices in China, commercial representative office of embassies in China, and Chinese Embassy. [pic]

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