Radical changes are occurring in China regarding standards and testing requirements, at the same time as U.S. companies recognize China as a key export market, not just a low-cost source of suppliers. To avoid problems with customs clearance in China and to ensure their products reach their Chinese buyers, exporters interested in selling to China need to understand China's new and changing standards and testing regulations.

STANDARDS AND TODAY'S CHINA

For a century, the United States and other developed countries have recognized product standards as a facilitator for the global economy, creating trade and assuring safety and quality. At the same time, as countries have reduced tariffs and other barriers to trade, standards and testing requirements have sometimes proven to be obstacles to trade—a way for countries to protect their own industries and put foreign companies at a competitive disadvantage.

From 1979 to 2000, China's rank as a trading power rose from 27th to seventh largest in the world, in terms of total value of trade. At the same time, China began to recognize the importance of product standards as a lubricant for international trade. In 1984 and 1989, China enacted landmark laws establishing a modern-day standards and testing regime. Additionally, individual government agencies in China, such as its health ministry and environmental protection agency, adopted new standards and regulations affecting importers and domestic companies.

In the 1990s, as China implemented its standards and testing laws, and as companies began to see China as a market for exports, foreign companies experienced China's standards regime firsthand, and reported that the system was in some cases costly, burdensome, and applied more stringently to foreign imports than domestic products. When China negotiated WTO accession in the late 1990s, it was conditioned in part on an agreement to revamp its standards system so it would apply equally to domestic manufacturers and foreign importers.

A SEA CHANGE FOR CHINESE STANDARDS

In conjunction with China's WTO entry in 2001, the country reorganized its standards and testing systems. It merged two standards agencies—one focused on domestic standardization and one focused on imported goods—into a single entity, the State General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ). China also combined its two prior "safety marks"—the Commodities Inspection Bureau's mark and the "Great Wall" safety mark—into a single safety mark, one that applies equally to domestic and imported products. In the area of transparency, China must now, like all WTO members, notify the WTO of its draft technical standards in any cases when mandatory standards differ from existing international standards and impact trade.

UNDERSTANDING CHINESE STANDARDS

The Chinese standards system can be viewed as a three-legged stool. The first leg of the stool is China's set of mandatory, national "GB standards." The second leg is China's "China Compulsory Certification," or CCC mark, a safety mark that is required for 133 categories of products sold in or imported in to China. The final leg is agency-by-agency technical regulations and testing requirements that vary by product.

GB Standards. AQSIQ oversees China's so-called GB standards. Currently more than 19,200 GB standards are in force, and they range from standards for jet fuel to green tea to truck tires to fertilizer. Compliance with GB standards is mandatory. This means that if a certain product is sold in China, it must meet the relevant standard, or its manufacturer can be assessed fines or other administrative penalties. The standards can be enforced at Chinese Customs, for imported products, and once the product has entered the market, for both imports and domestic products. Additionally, some GB standards are used in the CCC mark system, described below.

Notably, many GB standards are similar to or identical to international standards widely used in other countries. For example, GB electrical standards are often equivalent to IEC standards, a set of international standards for electrical products. If a company is already familiar with IEC or other international standards, it will often find that it already meets China's own standards.

For a U.S. exporter, finding out whether products are subject to GB standards can be challenging, and then obtaining the GB standards themselves can also prove taxing. One place to start is the Standardization Administration of China, the body under AQSIQ that develops China's GB standards. Exporters unable to find answers to their questions about GB standards can contact the author at (202) 482-5316.
CCC Mark. The China Compulsory Certification (CCC) mark was announced in 2001 and was fully implemented on August 1, 2003. The quality and safety mark is required for products in 133 categories, ranging from electrical fuses and toaster ovens to automobiles and information technology equipment. About 20 percent of U.S. exports to China are on the product list. If an exporter's product is on the CCC mark list, it cannot enter China until CCC registration has been obtained, and the mark physically applied to individual products as an imprint or label. The CCC mark system is administered by the Certification and Accreditation Administration of China.

Obtaining the CCC mark involves an application to Chinese certification bodies. The application process can take three months or more, and can cost $5,000 to $15,000 in application fees. The process includes sending testing samples to a Chinese laboratory and testing in those labs to ensure the products meet safety and/or electrical standards. A -factory inspection of the applicant's factories, to determine whether the product line matches the samples tested in China, is also required. Finally, Chinese testing authorities approve the design and application of the CCC mark on the applicant's products. Some companies, especially those with a presence in China and with a dedicated certification/standards staff, are able to manage the application process in-house. Other exporters tap the expertise of standards consultants based both in the United States and in China who can provide application management services and handle all aspects of the application process.

The U.S. Department of Commerce maintains a comprehensive CCC mark Web site to help U.S. exporters determine whether they need the CCC mark and how to apply. Your first step in learning about the CCC mark should be the CCC mark Web site at www.mac.doc.gov/china/cccguide.htm. The Department of Commerce also regularly sponsors CCC mark seminars in cities across the United States. For more information, visit http://export.gov/china/ .

Other Regulatory Requirements. Like all countries, China has numerous government agencies that mandate standards or testing requirements for products under their jurisdictions. Even if a given product has no specific GB standard requirements and is not subject to the CCC mark, that product may still be subject to particular standards or testing requirements at various Chinese government agencies.

A general rule of thumb for exporters is that if their products are subject to sector-specific regulations in the United States or other markets, such as the Environmental Protection Agency, Federal Communications Commission, or Food and Drug Administration, it is possible that China maintains similar regulations for those products. To find out whether you are subject to Chinese regulatory requirements, first evaluate what requirements you have in other markets. Then talk to standards and testing consultants here in the United States, or your Chinese partners. You can also check with the Commerce Department at (202) 482-5527 or http://export.gov/china/.

THE FUTURE

As China continues to open its markets and modernize its standards system, U.S. exporters can expect to see increasing use by China of international standards, and increasing similarities between testing procedures used by China and other countries. WTO rules requiring transparency in the drafting process for mandatory standards will also help exporters by giving advance warning of changes and the opportunity to actually comment on draft standards before they are finalized. But at the same time, China's standards system is still in transition, and China will add new products to the CCC mark list and draft new standards. The challenge for exporters will be to keep abreast of those changes. Ensuring that those changes comply with multilateral trade agreements will be the U.S. government's challenge. One thing will be certain as China's importance as an export market grows: understanding standards issues is critical to any successful exporter's China export strategy.

ADDITIONAL RESOURCES ON CHINA

• Marketing in China: Opportunities and Challenges  - The opportunities present in the China market are real; as real as the challenges the market presents to American companies looking to grow sales.

• Turley's Tips - Written by former US Senior Commercial Officer, Alan Turley, this handy series of tips will help assure your success in this difficult market.

• China WebGuide -  A web-based overview of the Chinese Market.