Prices Rising in External Agent Purchase of Milk Powder with China Customs Levy of Import Duties from Sept. 2010

As announced by the General Administration of Customs of China (GACC), as of Sept 1, 2010, import duties shall be levied on entry mailed articles with duty amount payable no less than CNY 50. As to personal articles mailed to or from Hong Kong, Macao and Taiwan regions, the value shall be limited within CNY 800 each time; As to those mailed to or from other countries and regions, the value shall be limited within CNY 1,000 each time. Where the prescribed limits are exceeded, any articles concerned shall be subject to return or Customs clearance formalities as stipulated.

As per the GACC's "price list", the duty-paid price of milk powder is CNY 200 per kilogram with a duty rate of 10%, that is, milk powder per kilogram shall be subject to the duty amount of CNY 20. As to milk powder mailed from Hong Kong region, the tax-free amount shall be CNY 400 as per current regulations on personal articles; In other words, duty payment is required only for mailing more than 20 kilogram of milk powder from Hong Kong prior to Sept. 1, 2010. However, under the new regulation of "applying exemption to value below CNY 50", the import duties shall apply to the quantity more than 2.5 kilogram. Such policy increases the costs in external agent purchase of milk powder, thus leading to a further rise in the prices.