Processing trade is the customs procedure for Chinese manufacturing companies to import raw materials, spare parts, components, packaging materials, process or assemble them domestically and export value-added finished processed products to overseas. China’s Government offers tariff reduction or tariff exemption for the processing trade business.
In China, the processing trade regime includes two business types:
1. Toll Manufacturing: As raw materials/parts are provided by a foreign company, the manufacturing company doesn't need to pay for the import materials and only charges for processing or assembling. Finished processed products are sold by the foreign company.
2. Contract Manufacturing: Raw materials/parts are imported by the manufacturing company with foreign exchange payment. Finished processed products are exported for sale abroad.
Data source: http://www.customs.gov.cn/
To know more about processing trade in China, AWA AUSSENWIRTSCHAFTS-AKADEMIE GmbH offers the following workshop on 23rd May in Munich: