Equipment from China: how to pay, clear customs and deliver

Almost every industry buys equipment from China: manufacturing, packaging, food production lines, machine tools, warehouse equipment. The deal runs along three parallel lines: money, documents and cargo. A failure in any one of them stops the others. Let’s go through each.

The contract and delivery terms

Everything starts with the foreign trade contract. For equipment, the following points matter:

• Specification. Model, configuration, technical characteristics, country of origin. The description for customs is later taken from it.
• Delivery terms under Incoterms. EXW and FCA: you collect the goods from the supplier and organize all the logistics yourself. FOB: the supplier loads the goods onto the vessel at a Chinese port; from there the costs are yours. CIF: the supplier pays the freight and cargo insurance to the port of destination. DAP: the supplier delivers to the named place, but customs clearance in Russia is on you.
• Payment terms. A common scheme: an advance payment on signing, the balance before shipment or against copies of the shipping documents. For expensive equipment, it makes sense to tie the balance to acceptance at the supplier’s factory.
• Installation, commissioning, training. If they are included in the price, state their cost separately. These are services, and both the bank and customs treat them differently from goods.
• Warranty and spare parts. Who supplies spare parts during the warranty period, and how.
• Price and currency. Suppliers often quote a price that is valid until a certain date. Fix the price and currency in the contract so that the balance is not recalculated before shipment.

Before signing, check who you are dealing with: the factory or a trading company. For complex equipment, acceptance at the factory before shipment makes sense: by your own specialists, by video or through an independent inspection. This is cheaper than sending back equipment that does not start.

Paying the supplier

Chinese suppliers most often invoice in yuan (CNY) or in US dollars. A direct payment from Russia does not always go through: the supplier’s bank may refuse money from a Russian payer, and some payments are returned while already on the way.

What to do in advance:

• agree on the payment currency: for settlements with China, yuan are usually simpler than dollars;
• check that the beneficiary on the invoice matches the supplier in the contract. A payment to the account of “another of the supplier’s companies” without documents will raise questions at your bank;
• understand the route: who pays, from which jurisdiction and with what payment purpose.

If the payment goes through an agent, the agent pays the supplier under your payment order, and you settle with the agent in roubles. Sometimes the supplier’s bank accepts money only from a specific payer. In that case the agent may engage a sub-agent, but only with your consent. More about payments to China on the China page.

Documents for customs and the bank

Customs clearance usually requires:

• the contract and specification;
• the invoice and packing list;
• a transport document: a bill of lading, a CMR consignment note or a railway bill;
• technical documentation: the equipment’s technical passport, a description, photos of the nameplates;
• a certificate or declaration of conformity under the technical regulations of the EAEU (Eurasian Economic Union), if the equipment falls under them.

The key thing for customs is the TN VED code, the EAEU commodity classification code based on the HS. It determines the import duty, import VAT and the permits required. Relief is available for some process equipment, but whether it applies is checked against the code and the official lists before import, not after.

For currency control, your bank expects the contract (above the threshold amount it is registered with the bank), an invoice for each payment and then information on the import.

Logistics: how to choose a route

• Sea. A full container or consolidated cargo. Usually the cheapest option, but slower.
• Rail. Container trains from China, direct or via Kazakhstan. Faster than sea and suitable for heavy equipment.
• Road. Through border crossings or via Kazakhstan. Flexible for small and urgent consignments.
• Air. For urgent spare parts and expensive compact items.
• Multimodal schemes. For example, sea to a port, then rail or road.

The choice depends on dimensions and weight, urgency, where in China the shipment starts and where in Russia the cargo is going. Discuss oversized cargo with your logistics provider before signing the contract: both the timing and the price depend on it.

Discuss packaging separately. Equipment travels in crates and on pallets, and wooden packaging must be treated to meet phytosanitary requirements. Securing the cargo inside the container and protecting it from moisture is the shipper’s responsibility, so it is worth writing into the contract rather than leaving it to the warehouse. More on how international logistics works.

Common mistakes

• The invoice and the specification describe the equipment differently. Both customs and the bank will have questions.
• The wrong TN VED code. The result: additional duty, delayed release or refusal.
• The conformity documents are not ready when the cargo arrives.
• The balance was paid before the equipment was checked at the factory.
• Logistics was left out of the budget. Freight and the Chinese forwarder’s services also have to be paid abroad. See the article on how to pay for freight.
• Nobody checked in advance whether the supplier may sell this item to Russia. Some equipment is subject to the supplier country’s export restrictions, and the refusal comes after the advance payment has been made.

VEDmost selects an agent from its own network for the payment to China and follows the payment through to execution. You sign the agency agreement and the payment order with the agent: the execution term is set in the agreement, the rate and fee in the payment order before the roubles are debited. On request, the roubles wait for execution in a special escrow account at a Russian bank, for an additional fee. The agent provides the completion certificate and the report; we assemble them into a package for your bank. More on the import payments and freight payments pages.