August 01st sees the introduction of a new 6% VAT charge that will be applicable when importing from China on both sea and air freight shipments.
It is a known fact that in the last 12 month growth has slowed across China while at the same time manufacturing costs have continued to rise and this is all related to the introduction of the new VAT tax.
The decision to introduce this new tax has basically increased the charges of importing from China by 6% overnight and freight forwarders in China will have to adapt to the new VAT charges in order to keep operating.
Almost one third of the export market in China is currently on a CIF basis and any Chinese forwarders who deal mainly in this shipping term will struggle as they may not be able to pass on the charge to their customer base but will have to absorb it into their running costs.
It also hands the global players who are importing from china an advantage as they have the global networks in place to ensure they can just switch the shipping terms from CIF to FOB and absorb the costs internally.
Freight forwarding organisations and importers based overseas could also suffer as they will not be happy to find out their rates for importing from China has just increased by 6% and may look to their service provider to take on this charge.
The decision to add this charge when importing from China may have not been thought out properly in some peoples opinion as it will have a direct effect on the China export market during a period of slow growth and could force some companies to move production to other neighboring or emerging countries as DDP and EXS costs will now be higher and you will be paying 6% more than before.
Maersk introduced the new 18000 TEU vessels for importing from china and as a result, combined with other factors, the market has weakened.
This means contract rates are now available at a much lower levels than before and the lines are then pulling it back through peak season surcharges and general rate increases.
The only organisation benefiting from this is the government and feelings are that it could have been implemented in a fairer way lessening the impact on the Chinese export market.
The only people who appear to be benefiting from this decision is the government and we will wait to see the real impact on this decision for people importing from China through August and the rest of 2013.