On November 11 2010 the General Administration of Customs issued the Measures for the Administration of Enterprise Classification (Order 179), which came into effect on January 1 2011. Order 179 supersedes the old regulations that were issued by Customs on January 30 2008.

Order 179 maintains the same five categories of enterprise classifications: AA, A, B, C and D. However, it changes certain criteria for each category. In some cases the criteria are easier to achieve than before - for example, to achieve status as a Class A import and export enterprise pursuant to Order 179, one of the criteria is that the customs declaration error rate of the previous year is below 5%, whereas the old regulations stipulated a rate of below 3%. In other cases the criteria are more stringent - for example, if in one year the products imported by a customs agent are confiscated by Customs due to three instances of IP infringement, the agent will be categorised as a Class D enterprise, not Class C as under the old regulations.

Enterprises in higher categories may enjoy greater benefits in terms of customs declaration lead times and levels of supervision. For certain contract manufacturers, a better enterprise classification will also reduce the amount of deposits required to be placed with Customs. It is understood that the Chinese authorities intend Class AA enterprises to be given 'authorised economic operator' status in China, although the implementing rules have yet to be promulgated.

Order 179 sets out procedures for enterprises to apply for upgrades in their enterprise classifications. In light of the benefits associated with better classification, enterprises should follow Order 179, secure the highest possible enterprise classification category and avoid a classification downgrade as a consequence of customs audits and investigations.


Key criteria



• Compliance with Grade A requirements

• Grade A for at least one year

• Previous year's errors in customs declaration below 3%

• Pass customs inspection/investigation

• Satisfies customs, enterprise and trade compliance requirements

50% deposit if contract manufacturing restricted products

Customs clearance procedures simplified


• Less than 5% customs declaration error rate in previous year

• Sound accounting system

• Cooperate with Customs on customs compliance matters

• 50% deposit if contract manufacturing restricted products

• Customs clearance procedures simplified


• On registration with Customs

• 50% deposit if contract manufacturing restricted products


• Engaged in administrative smuggling

• Committed more than three breaches of customs regulations, with the number of violations exceeding 1% of the number of its customs declarations in one year

• Delay in paying outstanding penalties of up to Rmb500,000

• Customs deposit required for contract manufacturing

• Full deposit if contract manufacturing restricted products


• Convicted of criminal smuggling activities

• Engaged in smuggling more than twice in one year

• Administrative penalty imposed for three violations of IP regulations

• Delay in paying outstanding penalties of up to Rmb500,000

• Prohibited from contract manufacturing

For further information on this topic please contact Eugene Lim at Baker & McKenzie's Hong Kong office by telephone (+852 2846 2413), fax (+852 2845 0476) or email ([email protected]).