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Survey for improved logistical

efficiency of Japanese-affiliated

firms in China and Republic of

Korea

Report

March 2017

Japan External Trade Organization (JETRO)

Overseas Research Department

Contents

Chapter 1 Survey Summary .............................................................................................. 1

1. Survey of Japanese-affiliated firms in China and Republic of Korea ....................... 1

(1) Survey Subjects ............................................................................................................ 1

(2) Survey Method ............................................................................................................. 1

(3) Response ....................................................................................................................... 1

2．Interviews with Japanese-affiliated firms in China and Republic of Korea ........... 1

(1) Interview Target .......................................................................................................... 1

(2) Interview Contents ...................................................................................................... 5

3. Identifying supply-chain problems in China and Republic of Korea, and

establishing proposals for improvement .......................................................................... 6

Chapter 2 Japanese-affiliated firms in China .................................................................. 7

1. Current logistical practice of Japanese-affiliated firms in China ............................. 7

(1) Profile of respondent firms .......................................................................................... 7

(2) Survey Conclusions .................................................................................................... 10

２． Supply Chain Problems, Issues and Requiring Improvement of Japanese

Companies in China ........................................................................................................ 19

(1) Unification of HS Code Classification Criteria ........................................................ 19

(2) Thorough Standardization of Customs and Quarantine Procedures at Coastal and

Inland Locations .............................................................................................................. 31

(3) Faster Imported Foods Customs & Inspection Procedures .................................... 33

(4) Promotion of Joint Transportation ........................................................................... 35

(5) Improvement of Cold Chain Logistics Infrastructure Development and Control

Technologies ..................................................................................................................... 37

(6) Development of Fair Competitive Environment ..................................................... 40

(7) China-Japan Mutual Recognition of Authorized Economic Operators (AEO) ...... 42

(8) Thorough Advance Notices and Provision of Advance Information ....................... 43

(9) Lack of Import and Storage Infrastructure for Dangerous Chemicals .................. 44

Chapter 3. Japanese-affiliated firms in Republic of Korea .............................................. 46

1. Current logistical practice of Japanese-affiliated firms in Republic of Korea ........ 46

(1) Profile of respondent firms ........................................................................................ 46

(2) Survey Conclusions .................................................................................................... 48

2. Supply Chain Problems, Issues and Requiring Improvement of Japanese

Companies in Republic of Korea .................................................................................... 55

(1) Unification of Container Maximum Loading Weight Standards ........................... 55

(2) Establishing a Fair Competitive Environment ....................................................... 58

Chapter 4 Best Practices .................................................................................................... 60

(1) Unification of HS Code Classification Criteria (Japan) .................................... 60

(2) Joint Transport – Example of Joint Transport of a Built-in Kitchen (Japan) . 63

(3) Port of Busan ........................................................................................................ 65

1

Chapter 1 Survey Summary

1. Survey of Japanese-affiliated firms in China and Republic of Korea

(1) Survey Subjects

The survey targeted Japanese-affiliated firms (with a direct or indirect Japanese

investment ratio of at least 10%) and branch offices (excluding representative offices) of

Japanese firms operating in China (including Hong Kong and Macau) and Republic of

Korea, in both manufacturing and non-manufacturing industries. However, the survey

excluded businesses not directly involved with supply chain activities such as Banking,

Insurance, Securities, Real estate, Legal/Tax and Communications/Software among the

non-manufacturing category.

(2) Survey Method

Responses were obtained directly via online form, from respondents who received the

survey URL in an E-mail sent from JETRO.

(3) Response

Table: Number of response by country

Country No. of firms

contacted

No. of firms

targeted

No. of firms

that replied

Valid replies (%)

China 896 859 474 55.2

Republic of

Korea

171 42 37 88.1

Total 1,067 901 511 56.7

Note: Of which firms contacted, the “targeted” firms are based on the firms that are able to

identify the target respondent (China), and the firms indicate the intention to

contribute (Republic of Korea). The “valid replies” rate is based on the number of firms

replied against the total number of firms contacted.

2．Interviews with Japanese-affiliated firms in China and Republic of Korea

(1) Interview Target

The survey targeted Japanese-affiliated firms and branch offices of Japanese firms

(in sectors such as Manufacturing, Wholesale/Retail and Logistics) operating in

China (including Hong Kong and Macau) and Republic of Korea. A total of 41 firms

2

were targeted in China, and 9 in Republic of Korea. The business of the firms is

summarized as follows:

Table: Business summary of the interview target

Country/Region Name Industry Remarks

Beijing/China

(5 firms)

A Logistics Operating import/export forwarding

services and domestic storage and

distribution systems.

B Trade Operating domestic and international

logistical services with subsidiaries

and joint venture companies.

C Logistics Operating general logistic services

with multiple regions including

Europe and ASEAN countries.

D Trade Mainly operating import/export

services for parts and materials for

smart-phones and automobiles; also

providing extensive services

including logistics for convenience

stores.

E Logistics Mainly providing air cargo logistical

services.

Shanghai/China

(9 firms)

A Logistics/Warehouse Operating general logistic services ;

also providing cooperative

distribution services for parts and

materials of electric-appliances and

automobiles for Japanese-affiliated

manufacturers.

B Manufacturing Manufacturing electrical equipment

and products.

C Logistics Operating general logistic services.

D Logistics Operating general logistic services.

E Trade Mainly providing import/export

services for food products and

wholesaling for supermarkets and

restaurants in the domestic market.

3

F Trade Operating import/export services for

food products.

G Logistics Operating general logistic services

(excluding food and beverage).

H Logistics/Warehouse Operating general logistics, and other

extensive services such as removal

and 3PL.

I Logistics Providing logistical services for

hazardous materials, etc.

Liaoning

Province/China

(3 firms)

A Logistics Operating refrigerated storage

transportation services.

B Manufacturing Manufacturing electrical equipment

and other products for automobiles.

C Logistics Mainly providing air cargo handling

services.

Shandong

Province/China

(3 firms)

A Logistics/Warehouse Operating logistic services for seafood

related goods.

B Manufacturing Manufacturing parts and materials

for automobiles.

C Retail Providing retail services for general

merchandise and food products.

Guangdong

Province/China

(6 firms)

A Logistics Operating logistical services for

automobiles and electrical-appliances

in partnership with trading firms.

B Manufacturing Producing electrical equipment with

processing trade. Providing

import/export service for multiple

regions.

C Consultation Providing consultation services to

support Japanese-affiliated firms in

China with legal and practical

aspects of business in the local

market.

D Manufacturing Producing electric equipment and

providing import/export services for

hazardous parts and materials.

4

E Consultation Providing consultation services to

support Japanese-affiliated firms in

China involved in processing and

trading.

F Manufacturing Producing parts and materials for PC

related equipment.

Hubei

Province/China

(4 firms)

A Retail Operating import/export services

with its subsidiary and retail services

in the domestic market.

B Logistics Operating general logistic services

and transportation services from

coastal to inland regions.

C Logistics Operating logistical services for goods

related to air and sea cargo.

D Manufacturing Manufacturing automobiles

Sichuan

Province/China

(5firms）

A Restaurant/Retail Providing restaurant and retail

services for general merchandise and

food products.

B Logistics Providing logistical support services

for retail businesses as well as

food/refrigerated transportation

services.

C Logistics Providing general logistic services for

multiple regions including Africa and

Australia.

D Manufacturing Manufacturing electrical

parts/components and products.

E Logistics Mainly providing air cargo logistical

services.

Hong Kong

(6 firms)

A Trade/Logistics Trading firm with logistical services,

providing goods transportation and

storage services within the region.

B Logistics/Warehouse Operating general logistic services.

C Logistics Mainly providing air cargo handling

services.

D Logistics/Warehouse Operating general logistic services

5

E Warehouse Providing warehouse services.

F Logistics/Warehouse Operating general logistic services.

Republic of

Korea

(9 firms)

A Logistics Providing forwarding services.

B Logistics Providing forwarding services.

Globally exporting goods imported

from South East Asia.

C Logistics/Warehouse Import and storage of wood materials

from Europe and North America;

export to Japan when required.

D Logistics/Warehouse Based in a Republic of Korean hub

port, globally importing goods and

exporting them to various regions in

Japan.

E Logistics Providing forwarding services for the

Japanese market for tires and other

products.

F Warehouse Storage of goods from Republic of

Korean, Japanese-affiliated and

European firms. Providing

refrigerated warehouse services.

G Heavy Industry Selling boilers manufactured in

Japan, and other goods in Republic of

Korea.

H Logistics/Warehouse Providing forwarding/warehouse

services.

I Logistics Providing e-commerce services from

Republic of Korea to Japanese

consumers.

(2) Interview Contents

1. Current practice of logistics-related businesses in China and Republic of Korea.

2. Logistics-related problems currently being experienced

3. Logistics-related problems caused by legal systems (including the legal details)

4. Specific causes that may account for logistics-related problems

5. Inquiries or suggestions to local government intended to improve logistics-related

problems

6

6. Others

3. Identifying supply-chain problems in China and Republic of Korea, and establishing

proposals for improvement

We identified critical problems based on the frequency of mentions, rate of response,

and free comments elicited during interview and from the survey regarding the

supply-chain in China and Republic of Korea.

Where necessary, we then examined applicable laws and related regulations and

established a proposal to address the problems.

7

Chapter 2 Japanese-affiliated firms in China

1. Current logistical practice of Japanese-affiliated firms in China

(1) Profile of respondent firms

A total of 474 Japanese-affiliated firms in China responded to this survey, -a response

rate of 55%. The distribution of the survey with respect to industry and size of

headquarters is as follows.

Regarding industry, 321 firms (67.7%) were involved in Manufacturing, and 153 firms

(32.3%) Non-manufacturing. Under a more refined 15 industry categorization, the

survey received responses from a broad range covering 14 categories with the exception

of the Construction industry. 33 firms (7%) were involved in Transportation, and mainly

engaged in logistics and/or wholesale business.

Regarding size of headquarters, 283 firms (60.3%) were large-sized firms, and 186

firms (39.7%) were small-to-medium sized firms.

Characteristics of Companies that Answered the Survey

(Japanese companies in China)

Regarding number of employees, 236 firms (49.7%) had at most 100 employees, and

238 firms (50.2%) had more. The largest group had between 101 and 300 employees,

accounting for 113 firms (23.8%).

(Multiple answers allowed, Top: Number of valid response, Bottom：Composition ratio)

By industry

Manufacturing

Total

Manufacturing Subtotal

Foods Textiles Wood/Pu

lp

Chemical/

Pharmaceutical

Rubber/ Leather

Iron/Nonferrous/ Metals

General machiner

y

Electric machine

ry

Number of valid response

474 321 22 18 5 36 9 37 19 71

Composition ratio

100 67.7 4.6 3.8 1.1 7.6 1.9 7.8 4.0 15.0

By industry By size of firm

Manufacturing Non-Manufacturing

Motor vehicles

Precision

machinery

Other Manufac

turing

Non-Manufacturing Subtotal

Wholesale/ Retail

Construction

Transportation

Other Non-Manufacturi

ng

Large-sized

firms

Medium-small sized firms

Number of valid response

58 11 35 153 115 - 33 5 283 186

Composition ratio

12.2 2.3 7.4 32.3 24.3 - 7.0 1.1 60.3 39.7

8

Characteristics of Companies by number of employee

Considering sales volume by region, the domestic market (China) accounted for the

highest proportion (64.1%), followed by Japan (23.4%), other regions (11.7%), and

Republic of Korea at 0.7%.

12.0

23.4

14.3

23.8

17.3

7.0

2.1

3.7

16.2

16.5

28.3

24.0

8.1

3.1

29.4

38.6

9.8

14.4

3.3

4.6

0.0

0 10 20 30 40 50

10 or fewer

11 to 50

51 to 100

101 to 300

301 to 1000

1001 to 3000

3001 or more

(%) Total (N=474) Manufacturer (N=321) Non-manufacturer (N=153)

9

Percent of Sales by Region in Year until Most Recent Accounting Year End (Q5)

Regarding purchasing volume by region, the domestic market (China) accounted for

the highest proportion (61.1%), followed by Japan (29.5%), other regions (8.5%), and

Republic of Korea at 0.9%.

64.1

23.4

0.7

11.7

64.1

23.4

0.7

11.7

62.2

25.0

0.7

12.2

69.0

16.6

0.8

13.6

70.5

18.4

0.8

10.3

57.9

32.5

0.6

9.0

0 10 20 30 40 50 60 70 80

Local area

Japan

Republic of Korea

Others

Local area

Japan

Republic of Korea

Others

Rat

io o

f sa

les

des

tin

atio

n 【

Typ

e o

f

bu

sin

ess】

Rat

io o

f sa

les

des

tin

atio

n 【

Size

of

com

pan

y】

(%)

(Number of valid responses: 404 compamies. Ratio of sales destination represents the average of all enterprises responded.)

Total (N=404)

Manufacturer (n=308)

Non-manufacturer (n= 96)

Total (N=404)

Large-sized company (n=229)

Small and medium-sized company (n=171)

10

Ratios of Suppliers by Region in 1 Year until Most Recent Accounting Year End (Q6)

(2) Survey Conclusions

The survey on issues related to logistical infrastructure received replies from 473

firms, of which 228 firms (48.2%) answered “There is no particular issue”. This may be

attributed to the recent large scale investments made by both the government and

private sectors into maintenance of the transport infrastructure. However, 93 firms

(19.7%) suggested problems caused by “Insufficient motorways”, -the most frequently

mentioned of all modes of transportation.

Specific issues were indicated as free comments and during interviews conducted by

JETRO. These included insufficient highway connectivity beyond main cities, lack of

infrastructure in terms of traffic information such as highway closures, alerting system

for overloading, and chronic traffic congestion due to insufficient parking space.

61.1

29.5

0.9

8.5

61.1

29.5

0.9

8.5

65.0

26.9

1.0

7.1

57.7

30.0

0.8

11.5

49.1

37.6

0.6

12.6

65.3

29.0

1.0

4.7

0 10 20 30 40 50 60 70

Local area

Japan

Republic of Korea

Others

Local area

Japan

Republic of Korea

Others

Per

cen

tage

of

sup

plie

s p

rocu

red【

Typ

e o

f b

usi

nes

s】

Per

cen

tage

of

sup

plie

s p

rocu

red

【

Size

of

com

pan

y】

(%)

(Number of valid responses: 402compamies. Percentage of supplies procured from each area represents the average of all enterprises responded.)

Total (N=402)

Manufacturer (n=304)

Non-manufacturer (n=98)

Total (N=402)

Large-sized company (n=228)

Small and medium-sized company (n=169)

11

Infrastructure Problems and Issues (Q1,Multiple Answer)

In addition, 101 firms (21.4%) mentioned “Insufficient and inefficiently operated

logistical facilities and distribution centers”. This was the most frequently mentioned

issue within the infrastructure category of the survey.

The responses especially underlined a lack of trucks and storage providing logistical

services for refrigerated and frozen products, a lack of trucks and storage for

transportation of hazardous materials, and a jump in warehouse rental fees due to a

lack of available warehouses.

Regarding hazardous materials, in addition to a long-standing shortage in the supply

of services, the supply has been further limited due to very strict control and regulation

in relation to hazardous materials enforced by the government following the explosion

incident in Tianjin port. Many respondents expressed the need for expansion in the

service infrastructure for hazardous materials including warehouses and

transportation, because non-licensed warehouse providers went out of business, and the

few remaining warehouse providers with legitimate licenses able to handle such

materials are limiting their services by refusing to handle new materials.

Regarding logistics for refrigerated and frozen products, it is suggested that the

21.4

19.7

14.4

10.4

7.4

6.3

48.2

7.0

17.2

20.3

12.8

10.0

7.2

6.6

50.0

7.2

30.1

18.3

17.6

11.1

7.8

5.9

44.4

6.5

0 10 20 30 40 50 60

Inadequately depelopment and

operation of logistics facilities

Inadequate development of

roads

Inadequately depelopment and

operation of free trade zones and

bonded zones


railways


airports

Inadequate development of ports

No problems or challenges in

particular

Others


12

insufficient availability of trucks and the management system requires improvements

such as temperature control throughout the chain from manufacturing to sale.

Problems and Issues in Operation of Legal System (Q2, Multiple Answer)

Regarding problems related to legal systems, “Consistency of policies for import and

export permit” ranked highest at 45% with 213 of 473 firms, followed by 204 firms

(43.1%) selecting another customs issue, “Efficiency of customs clearance”. 165 firms

(34.9%) selected “Inspection & quarantine”.

More firms shared the common view that customs clearance issues are problematic,

than any other category.

According to free comments from the survey and interviews conducted by JETRO,

the majority indicated inconsistent criteria for HS codes classification according to

region or personnel as a problem. For example, the following was reported in various

regions: when customs personnel are transferred or replaced due to an organizational

45.0

43.1

34.9

33.4

17.1

9.5

8.2

7.6

3.6

13.5

3.4

48.6

44.9

31.8

34.0

17.4

10.6

9.3

6.5

3.4

10.3

3.1

37.5

39.5

41.4

32.2

16.4

7.2

5.9

9.9

3.9

20.4

3.9

0 10 20 30 40 50 60

Consistency of policies for import

and export permit (n=213)

Efficiency of customs clearance

(n=204)

Inspection & quarantine (n=165)

Business customs (n=158)

Policies on foreign-capital

enterprise (n=81)

Regulation of energy and

environment protection (n=45)

Safety regulations (n=39)

FTA use (Certificate of origin

procedures, etc.)(n=36)

Standardization of pallets and

chassis (n=17)

No special problems or

issues(n=64)

Others (n=16)


13

reshuffle, new customs personnel may claim tax shortages for previously handled cases

by stating that the HS code was not applied correctly in the past.

A similar case was reported by a trade and processing firm that owns two factories in

separate regions within a single province. While a component from one factory was

verified as applicable for bonded processing trade at the factory’s regional customs office,

the same component with the same manufacturer and lot number but produced by the

other factory was categorized differently by another regional customs office in the same

province. The firm incurred about 30% extra cost at one factory, which was required to

pay extra duty and value-added tax on the component. The inconsistent application of

HS code classification criteria is therefore cited as a critical issue in need of

improvement, as it imposes a great risk of increased costs for Japanese-affiliated firms

operating businesses in China.

The “Yu Gui Lei” system was implemented to improve the speed of customs clearance

in China. This is equivalent to the advance ruling system of Japanese customs. However,

the system is yet to be fully adopted among Japanese-affiliated firms as there are

practical problems. These problems include the very limited number of “written

decisions” issued by customs officers as a form of advanced approval of HS code, and the

limited acceptance of approval forms to the customs office at which the application was

submitted.

Considering the responses by industry, among food and beverage firms 54.5%

indicated that “Efficiency of customs clearance” is a problem followed by 45.5%

indicating “Consistency of policies for import and export permit”. The extended

waiting time for the issuance of sanitary certificates is mentioned as the main

background.

More specifically, many respondents claimed that it takes about 10 days for food

products to be processed by customs, after which an additional 3 to 4 weeks are required

for a sample check procedure by the inspection and quarantine department. Some

respondents commented that it is practically impossible to handle fresh produce.

The lack of clarity regarding the system for hazardous materials was commonly

recognized by many firms. In particular, 61.1％ of Chemical/Pharmaceutical firms

indicated that “Consistency of policies for import and export permit” is a problem.

Specific cases include warehouses for hazardous materials altering their policy without

warning, reporting that hazardous chemical materials are no longer accepted at the

warehouse nor in the region.

Many firms cited the need for improvement regarding advanced warning and

provision of information regarding legal systems.

14

"Survey of current conditions with the objective of facilitating logistics for Japanese companies in China and South Korea in 2015" cross-tabulation table (industry-classified)

Q2．Problems and issues related to legal system

(Multiple answers allowed, Top: Number of valid response, Bottom：Composition ratio)

Total Manufacturing

Non-manufacturing

Food Textiles Wood

& pulp

Chemicals & pharma- ceuticals

Rubber &

leather

Iron, steel, and

non-ferrous metals

General machinery

Electrical machines

& equipment

Transport machines

Precision machines

Other manu-

facturing

Whole shale & retail

logistics Other

non-manufactureing

Total 473 321 22 18 5 36 9 37 19 71 58 11 35 152 114 33 5

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0


204 144 12 5 2 17 4 14 8 33 31 5 13 60 42 17 1

43.1 44.9 54.5 27.8 40.0 47.2 44.4 37.8 42.1 46.5 53.4 45.5 37.1 39.5 36.8 51.5 20.0

Inspection & quarantine

165 102 10 3 1 13 3 12 4 19 20 3 14 63 46 15 2

34.9 31.8 45.5 16.7 20.0 36.1 33.3 32.4 21.1 26.8 34.5 27.3 40.0 41.4 40.4 45.5 40.0

Consistency of policies for import and export permit

213 156 7 7 1 22 5 18 6 33 35 7 15 57 38 17 2

45.0 48.6 31.8 38.9 20.0 61.1 55.6 48.6 31.6 46.5 60.3 63.6 42.9 37.5 33.3 51.5 40.0

Use of free trade agreements (FTAs) (procedures for certification of origin etc.)

36 21 4 - - 1 - 1 - 4 5 1 5 15 12 3 -

7.6 6.5 18.2 - - 2.8 - 2.7 - 5.6 8.6 9.1 14.3 9.9 10.5 9.1 -

Standardization of chassis and pallets

17 11 - - - - 1 - 1 2 2 1 4 6 3 3 -

3.6 3.4 - - - - 11.1 - 5.3 2.8 3.4 9.1 11.4 3.9 2.6 9.1 -

Policies on foreign-capital enterprise

81 56 1 3 2 3 2 11 1 13 12 2 6 25 23 1 1

17.1 17.4 4.5 16.7 40.0 8.3 22.2 29.7 5.3 18.3 20.7 18.2 17.1 16.4 20.2 3.0 20.0

Safety regulations

39 30 3 - 1 4 2 4 - 7 5 - 4 9 7 2 -

8.2 9.3 13.6 - 20.0 11.1 22.2 10.8 - 9.9 8.6 - 11.4 5.9 6.1 6.1 -

Regulation of energy and environment protection

45 34 3 - 1 4 1 2 - 10 8 1 4 11 11 - -

9.5 10.6 13.6 - 20.0 11.1 11.1 5.4 - 14.1 13.8 9.1 11.4 7.2 9.6 - -

Business customs

158 109 6 5 3 10 4 11 4 25 22 3 16 49 35 13 1

33.4 34.0 27.3 27.8 60.0 27.8 44.4 29.7 21.1 35.2 37.9 27.3 45.7 32.2 30.7 39.4 20.0

No special problems or issues

64 33 3 5 - 1 1 3 2 8 3 - 7 31 26 3 2

13.5 10.3 13.6 27.8 - 2.8 11.1 8.1 10.5 11.3 5.2 - 20.0 20.4 22.8 9.1 40.0

Others 16 10 - - 1 2 1 - 1 4 - 1 - 6 4 2 -

3.4 3.1 - - 20.0 5.6 11.1 - 5.3 5.6 - 9.1 - 3.9 3.5 6.1 -

15

Here are the results for some of the responding companies when asked about their

level of satisfaction.

Problems and Issues related to Legal System (Q2, Single Answer)

Satisfied Somewhat

satisfied

Normal Somewhat

dissatisfied

Dissatisfied

Efficiency of customs

clearance（N=95）

3 14 29 35 14

Inspection &

quarantine（N=95）

1 7 38 34 15

Consistency of policies

for import and export

permit（N=95）

2 8 22 33 30

FTA use (Certificate of

origin procedures, etc.)

（N=93）

4 6 60 17 6

Standardization of

pallets and chassis

（N=95）

5 5 66 16 3

Policies on

foreign-capital

enterprise（N=95）

3 7 44 26 15

Safety regulations

（N=95）

4 8 45 30 8

Lagging energy

conservation and

environmental

systems（N=94）

4 4 49 29 8

Business Customs

（N=95）

2 4 42 32 15

The combined responses of “Somewhat dissatisfied” and “Dissatisfied” for “Consistency

of policies for import and export permit” came to 66% (63 companies), much greater

than the 10% total of “Satisfied” and “Somewhat satisfied.” The company responses of

“Somewhat dissatisfied” and “Dissatisfied” were also much higher than “Satisfied” and

“Somewhat satisfied” for “Inspection & quarantine” and for “Efficiency of customs

clearance.”

16

With regard to the problems and issues concerning techniques and human

resources, 172 companies (36.6%) that selected “fostering of human resources for

logistics” made up the largest proportion. The related item “fostering of customs

officers” was answered as the problem by 132 companies (28.1%).

Pointed out as specific cases on the items in the entry fields for free comment in the

survey and the hearing conducted by JETRO were a problem of the scarcity of

designated analytical bodies for special items such as hazardous chemicals relative

to the demands, a problem of incapability of accurate analysis and determination

due to insufficient ability of the laboratory technicians despite the possession of

advanced testing and analytical equipment, etc.

A large number of companies, especially in Hong Kong and the coastal areas,

indicated the serious shortfall in human resources for truck drivers, warehouse

laborers, etc. and the difficulty in securing the human resources.

Technology and Human Resource related Problems & Issues (Q3, Multiple Answer)

In common with the problems and issues concerning the operation of the legal

systems, a number of indications made it clear that the problem of the difference in

the judgment on HS codes among officers in charge or competent customs was

desired to be relieved through the fostering of the customs officers and the customs

36.6

28.1

27.4

21.9

31.1

2.1

32.0

28.8

27.0

23.8

31.3

1.9

46.4

26.5

28.5

17.9

30.5

2.6

0 10 20 30 40 50

Fostering of humanresources for logistics

Forestering customsofficers

Visualization of dynamiclogistics information

Technique for handlinglogistical containers

(freight containers, etc.)

No problems orchallenges in particular

Others


17

persons.

For other items, 103 companies (21.9%) selected “technique for handling logistical

containers (freight containers, etc.).” Specifically, there were an indication stating

that “it is impossible for traders other than the designated traders to enter into the

freight services in airport-designated sheds” and that ” the designated traders are

rough in the freight services” and others.

Regarding measures demanded for the improvement in the connectivity among

the supply chains in Japan, China, and Republic of Korea, 173 companies (40.4%)

that selected “promotion of joint delivery/logistics” made up the largest proportion.

In the second place, the promotion of EDI system was selected by 149 companies

(34.8%).

As for the background behind the selection of “promotion of joint delivery/logistics”

by the lot of companies, it is conceived from indications in the entry fields for free

comment in the survey and the interviews conducted by JETRO that there was

influence of the following factors. To begin with, in China, there is a current need

to reduce the management costs for the logistics because the logistics costs are

higher than those in other countries and because the personnel costs have

continued increasing with the economic development. In addition, there have

occurred constraints in terms of the legal systems with limitations on the

obtainment of licenses, authorization, etc. on the delivery into the cities and

limitations on the delivery time, the problem of one-way transportation in the

logistics between the coastal areas and the inland areas, etc. The reduction in the

costs by the individual companies, however, has its own limits and the improvement

in the logistical efficiency through the joint delivery and/or the like is therefore

required. It is thus considered that the joint delivery and the joint logistics are

demanded as effective means for reducing the costs for logistics management.

18


Concerning the promotion of EDI system, there were some indications noting that

the simplification and acceleration of the customs declaration procedures had

progressed although differing among the areas. On the other hand, some indications

still pointed out the problem of requirement of much time for data rectification, and

others.

40.4

34.8

21.3

19.6

11.2

32.0

39.6

36.1

21.2

20.5

6.6

29.1

42.1

32.1

21.4

17.9

20.7

37.9

0 10 20 30 40 50

Promotion of joint delivery/logistics

(n=173)

Promotion of EDI systems (n=149)

Promotion of the introduction of

electronic tags (RF-ID) (n=91)

Promotion of green logistics

(making materials used in…

Establishment of cold chain

systems (n=48)

Others (n=137)


19

２．Supply Chain Problems, Issues and Requiring Improvement of Japanese Companies

in China

The major items indicated in the survey of supply chain problems and issues for

Japanese companies in China were “Inadequately development and operation of

logistics facilities”, “Consistency of policies for import and export permit”, “Efficiency of

customs clearance”, “Regional regulations (permit certifications, inspections, etc.

relating to export and import)”, “Fostering logistic personnel”, and “Fostering customs

personnel.”

Among these items, the following were specified as requiring improvement based on

comparison with proposals in the “2015 White Paper on Japanese Companies and the

Chinese Economy” issued by the Japanese Chamber of Commerce and Industry in

China due to the strength of requests for improvement by companies and groups and

the universality of problems and issues

(1) Unification of HS Code Classification Criteria

Issue Unification of HS code classification criteria

Outline Views on HS code classification differ (are inconsistent)

depending on the customs location and officer.

Current status and

problems There have been many requests from Japanese companies

in China for improvements in the problem of HS code

classification criteria, submitted to related authorities

through organizations such as The Japanese Chamber of

Commerce and Industry in China. In these interviews, we

also heard many opinions that views on HS code classification

differ due to changes in customs staff, and depending on the

customs office with jurisdiction, creating many problems. In

particular, there were many cases of retroactive collection of

the difference between the customs tax based on an HS code

that was once said to be correct, and customs tax based on an

HS code declared in the past. In such cases where the

customs tax difference was collected, damages to companies

were large, and it is difficult to take countermeasures in

advance, so this greatly affects a company’s business.

From a legal viewpoint, the principal of unification of

classification for HS codes is established in provisions of

20

Rules of the General Administration of Customs of the

People's Republic of China on the Commodity Classification

of Import and Export Goods.

On the other hand, currently, in import/export customs

rules related laws and regulations, there are no clear rules

that authorize HS code authorization at the free discretion of

each area’s customs office and officers.

For the reasons written above, in WTO regulations and

China’s related laws and regulations established with

ratification of those regulations, one can interpret that

unification of HS code related authorization is a basic

principle, but the problem is that this is not thoroughly

implemented in practical operations. There are demands for

more unified HS code related judgements.

Related institutions,

related laws and

regulations, etc.

① Unification of HS code classification criteria



of Import and Export Goods(General Administration of

Customs Decree No. 158), Articles 1 to 4, Article 21

Customs import and export tariff of the People's Republic of

China

② Pertaining to Advance Ruling System



of Import and Export Goods (General Administration of

Customs Decree No. 158), Articles 15, 16, 17

Customs Law of the People’s Republic of China, Article 43

Interim Measures of the People's Republic of China for the

Administration of the Administrative Rulings of Customs

21

Article 2

③ Pertaining to retroactive collection of customs



of Import and Export Goods(General Administration of

Customs Decree No. 158), Articles 25

Customs Law of the People’s Republic of China, Article

Article 62 first part.

Regulations of the People's Republic of China on Import and

Export Duties, Article 51, Section 1 main text.

Rules of the Customs of the People's Republic of China for the

Administration of the Levying of Duties on Imported and

Exported Goods, Article 68.

Measures for the Administrative Reconsideration of the

Customs of the People's Republic of China, Article 9, Section

1, Paragraph 7, and Section 2.

Things that should be

improved Unification of HS code classification criteria,

advance instruction system expansion and improvement

① Pertaining to unification of HS code classification criteria

Must thoroughly unify decisions and operations of HS code

classifications under People’s Republic of China Customs

Import and Export Cargo Goods Classification Management

Regulations (General Administration of Customs Decree No.

158), Articles 1 to 4, Article 21, So that there will not be

differences in decisions between customs jurisdictions or

customs agents.

② Pertaining to Advance Instruction System

22

Request thorough issuance of decision documents for

declarations by companies in operations of the customs

advance instruction system under Rules of the General

Administration of Customs of the People's Republic of China

on the Commodity Classification of Import and Export

Goods(General Administration of Customs Decree No. 158),,

Articles 15, 16, 17.

Also, there are many requests to simplify and accelerate

responses to declarations that allow for direct verbal or email

advance inquiries to customs to improve convenience.

③ Pertaining to retroactive collection of customs

It is necessary that HS code classifications be thoroughly

unified so that decisions and operations are unified and

companies not suffer subjective losses by retroactive

collection of customs under Rules of the General

Administration of Customs of the People's Republic of China

on the Commodity Classification of Import and Export

Goods(General Administration of Customs Decree No. 158),,

Articles 1 to 4, Article 21.

Expected benefits Faster and simpler customs procedures

Reduction of customs retroactive collection cases

Improvement

promotion policies and

support policies

Share examples of classification criteria of HS code operation

in Japan, and examples of operation of advance instruction

system. Promote joint research.

Notes In Japan, the “Tariff Rates Table Explanation” and

classification established rules (international established

rules, domestic established rules), etc. are published on the

customs website, and the criteria for classification criteria are

published in detail. There is an advance instruction system,

in which people can consult verbally or by email, and

inquiries in advance by documents are possible.

①Rules of the General Administration of Customs of the People's Republic of China on

23

the Commodity Classification of Import and Export Goods

海关总署令第 158 号（中华人民共和国海关进出口货物商品归类管理规定）

【第 1条】

为了规范进出口货物的商品归类，保证商品归类结果的准确性和统一性，根据《中华人

民共和国海关法》（以下简称《海关法》）、《中华人民共和国进出口关税条例》（以下简称

《关税条例》）及其他有关法律、行政法规的规定，制定本规定。

These Rules are formulated in accordance with the Customs Law of the People’s Republic of

China (hereinafter referred to as the Customs Law), the Regulations of the People’s Republic of

China on Import and Export Duties (hereinafter referred to as the Regulations on Duties) and

other relevant laws and administrative regulations with a view to standardizing the commodity

classification of import and export goods and ensuring the accuracy and uniformity of commodity

classification.

【第 2条】

本规定所称的商品归类是指在《商品名称及编码协调制度公约》商品分类目录体系下，

以《中华人民共和国进出口税则》为基础，按照《进出口税则商品及品目注释》、《中华

人民共和国进出口税则本国子目注释》以及海关总署发布的关于商品归类的行政裁定、

商品归类决定的要求，确定进出口货物商品编码的活动。

The term “commodity classification” as referred to in these Rules means the activities of

determining the commodity codes of import and export goods, on the basis of the Customs Import

and Export Tariff of the People’s Republic of China, the Explanatory Notes to Commodities and

Their Headings in the Customs Import and Export Tariff, the Explanatory Notes to the National

Subheadings of the Customs Import and Export Tariff of the People’s Republic of China, and the

administrative rulings and decisions on commodity classification issued by the General

24

Administration of Customs, under the commodity nomenclature of the International Convention

on the Harmonized Commodity Description and Coding System.

【第 3条】

进出口货物收发货人或者其代理人（以下简称收发货人或者其代理人）对进出口货物进

行商品归类，以及海关依法审核确定商品归类，适用本规定

These Rules apply to the commodity classification by the consignee and the consignor of import

and export goods and the agent thereof (hereinafter referred to as the consignee, consignor, or the

agent thereof), and to Customs’ examination and verification, in accordance with law, of

commodity classification.

【第 4条】

进出口货物的商品归类应当遵循客观、准确、统一的原则。

The commodity classification of import and export goods shall follow the principles of

objectiveness, accuracy and uniformity.

【第 21条】

海关总署可以依据有关法律、行政法规规定，对进出口货物作出具有普遍约束力的商品

归类决定。进出口相同货物，应当适用相同的商品归类决定。

The General Administration of Customs may, in accordance with the provisions of relevant laws

and administrative regulations, issue a decision on commodity classification that is generally

binding for import and export goods.

中华人民共和国海关进出口税则

25

Customs import and export tariff of the People's Republic of China

http://www.customs.gov.cn/publish/portal0/tab67735/

②Rules of the General Administration of Customs of the People's Republic of China on


中华人民共和国海关进出口货物商品归类管理规定

【第 15条】

在海关注册登记的进出口货物经营单位（以下简称申请人），可以在货物实际进出口的 45

日前，向直属海关申请就其拟进出口的货物预先进行商品归类（以下简称预归类）。

An entity engaging in the trade of import or export goods that is registered with Customs

(hereinafter referred to as the applicant) may, 45 days before the actual importation or

exportation of the goods, file an application with the competent regional Customs for advance

commodity classification of the goods to be imported or exported (hereinafter referred to as

advance classification).

【第 16条】

申请人申请预归类的，应当填写并且提交《中华人民共和国海关商品预归类申请表》（格

式文本见附件 1）。预归类申请应当向拟实际进出口货物所在地的直属海关提出。

Where an applicant applies for advance classification, it shall fill out and submit an Application

Form for Advance Commodity Classification of the Customs of the People’s Republic of China (see

Annex 1 for its format).

The application for advance classification shall be filed with the regional Customs

at the place where the goods are to be imported or exported.

【第 17条】

http://www.customs.gov.cn/publish/portal0/tab67735/

26

直属海关经审核认为申请预归类的商品归类事项属于《中华人民共和国进出口税则》、《进

出口税则商品及品目注释》、《中华人民共和国进出口税则本国子目注释》以及海关总署

发布的关于商品归类的行政裁定、商品归类决定有明确规定的，应当在接受申请之日起

15 个工作日内制发《中华人民共和国海关商品预归类决定书》（以下简称《预归类决定书》，

格式文本见附件 2），并且告知申请人。

Where, upon examination, the regional Customs believes that the items of commodity

classification contained in the application for advance classification have been explicitly covered

in the Customs Import and Export Tariff of the People’s Republic of China, the Explanatory Notes

to Commodities and Their Headings in the Customs Import and Export Tariff, the Explanatory

Notes to the National Subheadings of the Customs Import and Export Tariff of the People’s

Republic of China, or the administrative rulings and decisions on commodity classification issued

by the General Administration of Customs, it shall, within 15 working days as from the date of

acceptance of the application, issue a Decision of Advance Commodity Classification of the

Customs of the People’s Republic of China (hereinafter referred to as the Decision of Advance

Classification; see Annex 2 for its format), and inform the applicant.

Customs Law of the People’s Republic of China

中华人民共和国海关法

【第 43条】

海关可以根据对外贸易经营者提出的书面申请，对拟作进口或者出口的货物预先作出商

品归类等行政裁定。

进口或者出口相同货物，应当适用相同的商品归类行政裁定。

27

海关对所作出的商品归类等行政裁定，应当予以公布。

Customs may issue administrative rulings on pre-classification, etc. in respect of

goods intended to be imported and exported subject to the written application by

importer of import goods and exporter of export goods.

The administrative rulings on pre-classification of certain goods, etc. shall apply to

other identical import and export goods.

The administrative rulings on classification made by Customs shall be publicized.

Interim Measures of the People's Republic of China for the Administration of the

Administrative Rulings of Customs

中华人民共和国海关行政裁定管理暂行办法

【第 2 条】

海关行政裁定是指海关在货物实际进出口前，应对外贸易经营者的申请，依据有关海关

法律、行政法规和规章，对与实际进出口活动有关的海关事务作出的具有普遍约束力的

决定。行政裁定由海关总署或总署授权机构作出，由海关总署统一对外公布。行政裁定

具有海关规章的同等效力。

Customs administrative rulings shall refer to the decisions with general binding

force on actual import and export activities, which shall be made by the customs

office, before the actual import and export of goods, at the request of the foreign

trade operators and in accordance with the relevant customs laws, administrative

regulations and rules.

Administrative rulings shall be made by the General Administration of Customs

(hereinafter referred to as the GAC) or the agencies authorized by the GAC, and

shall be uniformly promulgated to the public by the GAC.

28

Administrative rulings shall have the same force as that of the customs

regulations.

③Rules of the General Administration of Customs of the People's Republic of China on


中华人民共和国海关进出口货物商品归类管理规定

【第 25 条】

因商品归类引起退税或者补征、追征税款以及征收滞纳金的，按照有关法律、行政法规

以及海关总署规章的规定办理。

Where, due to the reason of commodity classification, any duties and/or taxes are

to be refunded or recovered, or any late fine is to be collected, the formalities shall

be handled in accordance with the provisions of relevant laws, administrative

regulations and rules formulated by the General Administration of Customs.

Customs Law of the People’s Republic of China

中华人民共和国海关法

【第 62 条】前段

进出口货物、进出境物品放行后，海关发现少征或者漏征税款，应当自缴纳税款或者货

物、物品放行之日起一年内，向纳税义务人补征。

Where the Customs finds that the duties are short-levied or not levied on a

consignment of import or export goods or on inward or outward articles after the

release, the Customs shall collect the money payable from the obligatory duty payer

within one year of the previous duty payment or the release of the item.

Regulations of the People's Republic of China on Import and Export Duties

29

中华人民共和国进出口关税条例

【第 51 条】第 1 項本文

进出口货物放行后，海关发现少征或者漏征税款的，应当自缴纳税款或者货物放行之日

起 1 年内，向纳税义务人补征税款。

Where the customs finds the duties underpaid or missed after the clearance of the

import or export goods, it shall, within 1 year as of the day when the duties are paid

or when the customs clearance is made, demand the obligatory duty payer to make

up the duties.

Rules of the Customs of the People's Republic of China for the Administration of the

Levying of Duties on Imported and Exported Goods

中华人民共和国海关进出口货物征税管理办法(2014 修改)

【第 68 条】

进出口货物放行后，海关发现少征或者漏征税款的，应当自缴纳税款或者货物放行之日

起 1年内，向纳税义务人补征税款。

Where Customs detects any duties and/or taxes underpaid after the imported or

exported goods are released, it shall, within one (1) year as from the date on which

the original duties and/or taxes are paid, recover the unpaid part of the duties

and/or taxes from the duty and/or tax payer.

Measures for the Administrative Reconsideration of the Customs of the People's

Republic of China

中华人民共和国海关行政复议办法

【第 9 条】第 1 項第 7 号、第 2 項

30

有下列情形之一的，公民、法人或者其他组织可以向海关申请行政复议：

（七）对海关确定纳税义务人、确定完税价格、商品归类、确定原产地、适用税率或者

汇率、减征或者免征税款、补税、退税、征收滞纳金、确定计征方式以及确定纳税地点

等其他涉及税款征收的具体行政行为有异议的（以下简称纳税争议）；

前款第（七）项规定的纳税争议事项，公民、法人或者其他组织应当依据海关法的规定

先向海关行政复议机关申请行政复议，对海关行政复议决定不服的，再向人民法院提起

行政诉讼。

Under any of the following circumstances, a citizen, legal person or other

organization may apply to the customs for administrative reconsideration:

7. being objectionable against the customs' specific administrative act of

determining the taxpayer, duty-paying value, classification of goods, place of

original, applicable tax rate or exchange rate, tax deduction or exemption, overdue

tax payment, tax rebate, collection of overdue fine, collection ways, tax payment

place or other tax-related issues (hereinafter referred to as taxation dispute);

When it comes to a taxation dispute as mentioned in the preceding paragraph, the

citizen, legal person or other organization shall firstly apply to the administrative

reconsideration organ for administrative reconsideration, and bring a lawsuit to the

people's court if he/it refuses to accept the decision made by the administrative

reconsideration organ.

31

(2) Thorough Standardization of Customs and Quarantine Procedures at Coastal and

Inland Locations

Issue Thorough standardization of customs and quarantine

procedures at coastal and inland locations

Outline There are cases where there are multiple customs and

quarantine procedures at coastal and inland locations, which

prevent smooth transport of cargo to inland locations.

Current status and

problems

The Standing Committee of State Council decided in July

2013 on measures to promote stable growth of trade where

growth was lagging by making it mote convenient by

standardization of customs and which was introduced to all

regions as an economic development strategy in 2014. The

measure was introduced initially in Beijing and Tianjin, then

to Shijiazhuang, Yangtze River region, Guangdong Province,

as well as Wuhan, Changsha, Chongqing, Chengdu, Guiyang

and Kunming in the upper Changjiang River, all customs

facilities in succession in Guangzhou, Shenzhen, Gongbei

Port, Shantou, Whampoa, Jiangmen, Zhanjiang in

Guangdong Province, and is expected to make customs

procedures much easier and quicker and to reduce the cost of

customs.

Meanwhile, according to interviews with Japanese

companies in China, when transporting cargo through coastal

locations such as Shanghai to inland locations such as

Chongqing, there have been multiple cases of there being

different customs and quarantine procedures in the 2

locations.

In addition, regarding cases where HS code criteria differ

between the customs locations, it is necessary for the

importer to adjust the coastal customs, and it can take an

additional 3 to 5 days just to fix the HS code.

Causes for this kind of incident are considered to include

inadequate information provided to the related agencies and

to Japanese companies in China pertaining to the new

system, and that after introduction of the system to coastal

32

locations, operations during deployment at inland locations

have not thoroughly followed the system.


related laws and

regulations, etc.

Announcement on Developing the Integrated Customs

Clearance Reform in Beijing-Tianjin-Hebei(Announcement

No. 45 [2014] of the General Administration of Customs)


Clearance Reform in Changjiang Economic Belt

(Announcement No. 65 [2014] of the General Administration

of Customs)


Clearance Reform in Guangdong region (Announcement No.

66 [2014] of the General Administration of Customs)


improved

Resolve multiple procedures for customs and quarantine at

coastal and inland locations

Expected benefits Smoother customs procedures, faster distribution

Improvement


support policies

Expand provision of information pertaining to

implementation of the new system to related agencies and to

Japanese companies in China.

After initial introduction of the new system at coastal

locations, ensure that operations fully follow the system

during deployment to inland to inland locations.

Notes It has been announced that the reform measure for

national customs standardization is to begin on a trial basis

in Shanghai in June 2016, with the intent to deploy the

measure to the entire nation, but it is necessary to fully follow

the system when it is deployed to all regions, while making

greater effort to provide information on the system

implementation process to related agencies and to Japanese

companies in China.

33

(3) Faster Imported Foods Customs & Inspection Procedures

Issue Simpler and faster procedures for food imports, customs and

inspections.

Outline Food customs and post-inspection by the Inspection And

Quarantine Bureau take 3 weeks to a month, so we cannot

export fresh foods.

Current status and

problems In China, higher incomes and consumption behavior in

different lifestyles have brought increased consumption of

foreign cuisine such as Japanese food, and of processed foods.

Demand for imported food is increasing greatly. In 2015, the

value (dollar basis) of China’s food imports from Japan

increased 21.3% over the previous year, to US$ 512.42

million. China has high demand for Japanese foods.

Initiatives for simpler and faster customs have begun in

some places such as in pilot free trade zones. For example,

since July 1, 2015, the China (Shanghai) Pilot Free Trade

Zone has implemented paperless customs certificates for

imports and exports, other than solid waste imports, and 24

reform items for quarantine inspections, as simplification of

procedures is steadily progressing. On the other hand, on a

national level, there are many comments from Japanese

companies such as “When we import foods in China, normal

customs procedures take 10 days for international trade, and

after customs, food inspection (sample check) by the

Inspection and Quarantine Bureau takes 1 month.” Their

view is that customs still takes a long time, and they hope for

simpler and faster customs.

Simpler and faster import, customs and inspection

procedures help both producers and consumers, in terms of

maintaining quality and safety, especially for foods where

freshness is important. Therefore, these lead to increased and

more diverse consumption, so Japan, China and Republic of

Korea must mutually cooperate to work on this.


related laws and

regulations, etc.

“Announcement of further standardization of inspection and

quarantine certificates issuance operations for imported foods

and cosmetics”

34

“Notice on opinions pertaining to promoting development of

China’s modern logistics industry”

“People’s Republic of China, China Import and Export Goods

Inspection Act, Implementation Regulations”


improved Simpler and faster import, customs and inspection

procedures for foods

Expected benefits

Improvement


support policies

The introduction of national unified operation of the

preliminary examination system and advance instruction

system implemented in Japan could be a specific initiative

towards improvement. According to the “10th Import

Procedures Required Time Survey” by Japan’s Ministry of

Finance, if the pre-arrival examination system is used, the

average time required for customs is 1.1 days less than if the

system is not used. Especially in the process from cargo

loading to declaration, a reduction of about 25 hours is

possible. Also, even for cargo that is subject to applicable laws

and regulations other than customs-related laws and

regulations, an average of 82.0 hours in customs is achieved.

We can contribute to faster and more efficient customs by

sharing and studying the Japanese system and knowhow for

faster customs among the 3 countries.

Notes

35

(4) Promotion of Joint Transportation

Issue Promotion of joint transportation

Outline Promotion of joint shipping can make logistics more efficient,

for example by improving on problems of containers

returning empty (cutting costs). If traffic volume can be

reduced, this also contributes to reducing environmental

impacts (air pollution problems).

Current status and

problems In China, domestic logistics costs are said to be high.

According to the Logistics Industry Development Medium

and Long Term Plan (2014-2020) of the China State Council

logistic expenses were 18% of GDP in 2013, about twice the

level of the average for developed countries, and even higher

than for developing countries such as Brazil and India. The

major causes of the high costs are that manufacturers’ own

logisticsare heavily weighted, logistics companies are small in

scale, standardization is not fully advanced in logistics, and

trucks are often empty on the return trip, etc., making

logistics inefficient.

And especially in big cities, the sudden increase in vehicles

on the road is creating serious traffic congestion, which is also

a cause of air pollution problems. In the plan mentioned

above there is a policy to develop a modern logistics system of

joint delivery in order to have specialized companies do

logistics and to improve efficiency, which will not only be of

benefit to Japanese companies in China, but should

contribute to more efficient logistics and reduced costs for all

of China, and so can be called a very important issue. If the

amount of transportation can be reduced through joint

transportation, then it can contribute to improving

environmental problems such as air pollution.


related laws and

regulations, etc.

Logistics Industry Development Medium and Long Term Plan

(2014-2020), Road Traffic Safety Law, Beijing City Air

Pollution Prevention Regulations, Notice on Pollutant

Exhaust Reduction through Traffic Management of Some

Vehicles

36


improved Accelerate promotion of joint shipping (including trial runs)

Expected benefits More efficient logistics operations, relieve traffic congestion,

reduce environmental impacts

Improvement


support policies

Implement a joint shipping model business, provide priority

measures for joint transport businesses (issue priority

transportation permits, shorten restricted traffic hours, etc.).

Share examples of joint shipping in Japan.

Notes Joint transportation is logistics performed by multiple

shippers and logistics companies cooperating with the

objective of more efficient logistics. There are a number of

types of joint transportation, including combined loading/

obtaining return loads in area shipping, and combined

loading/ obtaining return loads on main trunk shipping.

When promoting joint transportation, Japan can share its

experience, in which even shippers who are competitors can

improve shipping efficiency through mutual cooperation, and

it is necessary to unify formats and build information

systems, top review business practices, and for not just

logistics departments but also top management to approach it

strategically. In order to determine the level that might be

promoted in China, they should first establish trial regions

(cities), select industries, and shippers, logistics businesses,

government agencies should all thoroughly exchange ideas,

while engaging in trial runs, and planning on expanding to

other regions and industries.

37

(5) Improvement of Cold Chain Logistics Infrastructure Development and Control

Technologies

Issue Expansion and improvement of infrastructure, and

improvement of control technologies, for refrigerated, frozen

and constant temperature transport.

Outline For refrigerated, frozen and constant temperature transport,

in addition to expansion and improvement of infrastructure

such as storage warehouses, trucks, etc., we want the level of

management to be raised in each distribution stage from

manufacture to sale.

Current status and

problems With economic growth in recent years, income levels have

risen, consumption increased, food safety awareness has

improved, etc. This environment has brought increased

consumption demand and logistics demand in Asian countries

for cold supply chains that require temperature control

(refrigerated, cold, constant temperature, etc.), especially for

agricultural and seafood products and refrigerated and frozen

foods. Especially in China, there is remarkable growth in the

size of the refrigerated and frozen foods market. The Chinese

government announced the “Agricultural Products Cold

Chain Logistics Development Plan” (National Development

and Reform Commission [2010] No. 1304) in 2010, and

designated development goals to reach by 2015, main

missions of the government sector such as cold chain related

basic infrastructure development, and priority projects such

as cold transport processing center construction, etc. And in

2014, it announced the “Logistics Industry Medium and Long

Term Development Plan (2014-2020) (State Council Issued

[2014] No. 42)” which is the plan for developing the logistics

industry as a productivity service industry comprised of

transport, warehousing, forwarders, IT industry, etc. by 2020.

China has a policy to expand, standardize, and modernize its

cold chain logistics.

In this policy environment, logistics facility development

projects (refrigerated, frozen, etc.) are being carried out

38

nationally, and infrastructure is being expanded and

improved.

However, in interviews with Japanese companies in China,

while some said that they value such infrastructure

expansion and improvement, others said that consumption

and logistics is growing much faster than the infrastructure

can accommodate, so even more expansion and improvement

of refrigerated, frozen and cold transport related

infrastructure is needed. Many also voiced the opinion that

the level of management needs to be improved, for such

matters not maintaining a constant cold temperature at

every logistics stage from production to sales.

Cold chain infrastructure expansion and improvement

and improved management levels would contribute to food

safety, and would increase and diversify consumption. These

would also lead to lower logistics costs as a percentage of GDP

as targeted by the Chinese government. Therefore, it is

desirable that Japanese, Chinese and Republic of Korean

governments, private sector companies and related

organizations cooperate to improve these.


related laws and

regulations, etc.

National Development and Reform Commission Issues

Agricultural Products Cold Chain Logistics Development

Plan Notice (National Development and Reform Commission)

[2010] No. 1304).

Medium and Long Term Plan for Development of Logistics

Industry.

Logistics Industry Medium and Long Term Development

Plan (2014-2020) Notice (State Council Issued [2014] No. 42).


improved For refrigerated, frozen and constant temperature transport,

further develop and expand infrastructure such as trucks and

storage warehouses. Develop and thoroughly implement

operational rules and certification, to improve the

management level at each distribution stage from

manufacture to sale (standardize reference temperature

ranges, etc.).

Expected benefits Maintain food safety, improve infrastructure and control

39

technologies to guarantee safety.

Reduce attrition rate in the supply chain and reduce costs

Increase and diversify food related consumption.

Improvement


support policies

Share cold chain related best practices between Japan, China

and Republic of Korea, and do joint research.

Notes In Japan, we have an industry organization such as the

Japan Frozen Food Association serve as a third party

certification agency, and establish a “Frozen Food

Certification System”, to ensure food safety, and have each

business establish its unique service menu for setting precise

temperature range controls. In addition, by supporting and

implementing this kind of effort where businesses, industry

groups, government and consumer groups that are related to

the supply chain upstream and downstream work together,

we have improved food safety and diversified the foods that

are distributed.

The major companies that handle frozen foods have

standardized a electronic commerce format based on the

industry’s own control standard of minus 18℃, and have

achieved joint shipping in the frozen foods sector.

By having the 3 countries share such examples and

knowledge of training human resources for logistics, we hope

to contribute to proper development of the cold chain.

40

(6) Development of Fair Competitive Environment

Issue Development of fair competitive environment (thorough

compliance)

Outline Many businesses violate laws, by Converting or overloading

vehicles, mixing loads with dangerous goods, etc. This harms

fair competition.

Current status and

problems There are currently legal violations such as overloading,

and vehicle conversion to make trucks that are longer than

the standard, etc. The following regulations pertaining to

overloading are stipulated in the Road and Traffic Safety

Law, but there are businesses that believe that it is cheaper

to pay the fines. We want appropriate actions to prevent the

occurrence of cases where these illegal actions create price

disadvantages (higher prices) for companies that obey laws

and regulations.

There are businesses that present fees that assume

overloading, and businesses that present delivery estimates

that discount the cost of tax by assuming they don’t issue a

receipt.

The Road Traffic Safety Law Fines for loading cargo trucks

beyond regulated levels are between 200 to 500 Yuan (about

¥3,400 to ¥8,500). When exceeding 30% above the regulated

weight the fine is between 500 to 2,000 Yuan (about ¥8,500 to

¥34,000).

In Japan, The Road Traffic Law stipulates fines for exceeding

regulated weights, at ¥30,000 for less than 50% in excess,

¥40,000 for 50% to 100% above regulated weight, and loss of

license plus a fine of ¥100,000 or 6 months in jail for weights

in excess of 100% over regulated weight.

The low transparency of overloading control standards is a

problem. In the China Logistics Development Report

(2014-2015), it states that regarding highway toll booths,

“Even at the same toll gate, the weight displayed differs

depending on the toll window, and there is no end to

businesses that return to overloaded status after they are

weighed and paid their toll; overloading controls are not

41

effective.” Improve transparency of overloading control rules.

In the “China Logistics Development Report”, regarding

control of overloading, three of the top five questionnaire

responses were about transparency of overloading controls.

China must implement nationally unified standards and

appropriate operations, and thoroughly inform the public.


related laws and

regulations, etc.

Public Roads Law

The following regulations pertain to overloading in the Road

Traffic Safety Law.

When loading cargo trucks beyond regulated levels fines are

between 200 to 500 Yuan. When exceeding 30% above the

regulated weight the fines are between 500 to 2,000 Yuan


improved Control businesses that break laws, and strengthen

penalties. Unify implementation of controls and penalties.

Expected benefits Achieve a proper and fair market environment, and reduce

social costs.

42

(7) China-Japan Mutual Recognition of Authorized Economic Operators (AEO)

Issue China-Japan mutual recognition of Authorized Economic

Operators (AEO)

Outline If a company obtains certification in the AEO system, then it

can expect reduced examinations and inspections in customs,

so we want discussions to start soon between the Chinese and

Japanese governments.

Current status and

problems While both Japan and China are in the AEO system, in

order to enjoy the benefits of the system, it is necessary for

each country to go through application procedures.

Japanese companies are requesting mutual AEO

certifications because they expect that to make logistics go

more smoothly.

If AEO mutual certification is achieved, then AEO certified

companies of Japan can enjoy the same convenience as

“certified companies (two levels, high and general)” in the

Chinese system. If Japanese AEO certified companies are

seen to be the same as Chinese “high-level certified

companies” then they can enjoy reduced cargo inspections,

simplified examinations, as well as customs clearance before

HS code classification, acknowledgment of customs price, and

place of origin procedures are completed, and exemption from

the bank deposit account management system if the company

is engaged in processed goods international trade.


related laws and

regulations, etc.

Customs Companies Credit Management Interim Measures

Act,

Customs Certified Company Standards


improved Have AEO mutual approvals by China and Japan

Expected benefits Improve security levels and achieve smoother logistics for

China-Japan logistics, and promote trade

Notes Agreements on AEO mutual recognitions are already signed

by Japan-Republic of Korea, Republic of Korea-China, and

China-EU.

43

(8) Thorough Advance Notices and Provision of Advance Information

Issue Thorough advance notice and provision of advance

information

Outline System changes are implemented suddenly without advance

notice, etc. Even when there is advance notice, the time until

implementation is too short, so response is very difficult.

Current status and

problems Transit of vehicles loaded with dangerous goods may

suddenly be prohibited on a road without advance notice,

which hinders smooth logistical operations.

Customs changes its regulations frequently, but notices

only arrive in regional customs offices, and their intentions

and operations are not implemented thoroughly in local

customs, so responses are uncertain, and handling customs

declarations is very difficult. In China, the tendency for laws

and regulations such as pertaining to customs, is that after

the notice, logistics companies must watch the situation as

the changes are slowly applied in operations; this makes it

confusing for logistics companies to handle.


improved When a system changes, always provide advance notice and

enough time prior to implementation. Also, standardize

implementation times and operations.

44

(9) Lack of Import and Storage Infrastructure for Dangerous Chemicals

Issue Lack of infrastructure that can handle import, shipping and

storage of dangerous chemicals, and their higher logistics

costs

Outline Since the Tianjin explosion in August 2015, there has been a

shortage of ports and specialized trucks and warehouses that

can handle the import, shipping and storage of dangerous

chemicals. This has increased their logistics costs, and made

it difficult to handle short delivery times.

Current status and

problems For example, in Waigaoqiao Free Trade Zone, they have

not received new dangerous chemicals into the zone nor into

warehouses (bonded imports) as a temporary measure since

October 19, 2015. They say the goal is to strengthen safety

management of dangerous chemicals in that free trade zone,

but the temporary measure has not been lifted now after even

a half-year has passed, which is hindering logistics

operations, etc.

And in Guangdong, conditions are forcing companies to

change from procurement (shipping) routes that they have

used for dangerous chemicals, which increases shipping times

and creates tight supply/demand for trucks that can

transport dangerous chemicals. These result in high shipping

costs.

Similar problems are also occurring in other regions,

hindering smooth logistics operations.


related laws and

regulations, etc.

Waigaoqiao Free Trade Zone October 10, 2015 Notice (posted

in customs office).

Dangerous Chemicals Safety Management Regulations,

Dangerous Chemicals Management Permit Management

Methods, etc.

Logistics Industry Medium and Long Term Development

Plan (2014-2020) Notice (State Council Issued [2014] No. 42).


improved Early end to temporary measures, to restore conditions.

Implementation of thorough nationally standardized

dangerous chemicals management.

Expected benefits Smoother logistics operations, and contribute to services

45

industry development.

46

Chapter 3. Japanese-affiliated firms in Republic of Korea

1. Current logistical practice of Japanese-affiliated firms in Republic of Korea

(1) Profile of respondent firms

37 Japanese companies in Republic of Korea answered the survey. Viewed by industry

and by size of headquarters company, the respondent companies are distributed as

follows.

Characteristics of Companies that Answered the Survey

(Japanese companies in Republic of Korea)

Looking at the year the corporation was established, “1996-2000” and “2001-2005”

were the most common at 10 companies each, followed by “Since 2011” 6 companies, and

“1991-1995” 4 companies. Looking at the number of employees, “11-50” and “101-300”

had 11 companies each, followed by “51-100” 8 companies, “1-10” 5 companies, and

“301-1000” 2 companies.

Looking at sales percentages by region for respondent companies, “Local” was the

most common response by far, with “Japan” and “China” around 10%.

(Upper: number of valid responses, Lower: Composition ratio %)

By industry

Manufacturing

Total

Manu- facturin

g subtotal

Food Textiles

Wood & pulp

Chemicals &

pharma- ceuticals

Rubber &

leather

Iron, steel, and

non-ferrous metals

General machinery

Electrical

machines &

equipment

No. of valid responses

37 18 1 - - 7 1 - 1 3

Percentage 100.0 48.6 2.7 - - 18.9 2.7 - 2.7 8.1

By industry By company size

Manufacturing Non-Manufacturing Large Enterprises SMEs

Transport

machines

Precision

machines

Other Manufac

turing

Non-Manufacturing Subtotal

Wholesale/

Retail

Construction

Transportation

Other Non-Manufactur

ing

Transport machines

Precision

machines

No. of valid responses 1 1 3 19 15 - 4 - 29 8

Percentage 2.7 2.7 8.1 51.4 40.5 - 10.8 - 78.4 21.6

47

Percent of Sales by Region in Year until Most Recent Accounting Year End (Q5)

(Number of valid responses: 29compamies. Ratio of sales destination

represents the average of all enterprises responded.)

Note: This survey does not include distribution companies, trading companies,

transportation companies, and warehousing companies.

The respondent companies’ suppliers are mostly in Japan, followed by local suppliers.

Large enterprises especially rely on Japan. Few suppliers are from China.

75.6

10.1

7.9

6.5

75.6

10.1

7.9

6.5

69.4

11.8

11.0

7.8

82.7

8.0

2.8

6.6

85.6

7.3

2.9

4.2

53.1

16.7

24.0

6.1

0 20 40 60 80 100

Local

Japan

China

Other

Local

Japan

China

Other

Pe

rcen

t o

f Sa

les

by

Ind

ust

ryP

erc

ent

of

Sale

s b

y C

om

pan

y Si

ze

(%)

Total （N=29）

Manufacturing （N=18）

Non-Manufacturing（N=11）

Total （N=29）

Large Enterprises （N=22）

SMEs （N= 7）

48

Ratios of Suppliers Procured by Region in 1 Year until Most Recent Accounting Year End

(Q6)

(Number of valid responses: 27compamies. Percentage of supplies procured

from each area represents the average of all enterprises responded.)

Note: This survey does not include distribution companies, trading companies,

transportation companies, and warehousing companies.

Average percentages of sales by domestic logistics vs. international logistics

(distribution, trading companies, transport, warehousing) are 25.8% for domestic

logistics, and 74.2% for international logistics. We see it is mostly international

logistics.

(2) Survey Conclusions

Regarding infrastructure, 70% of respondent companies replied “No special problems

or issues”. Japanese companies in Republic of Korea seem generally satisfied with the

status of infrastructure development in Republic of Korea. This result indicates that

28.5

49.8

7.2

14.6

28.5

49.8

7.2

14.6

40.3

37.6

7.5

14.7

16.3

59.5

8.2

16.2

11.4

67.6

6.6

14.4

63.4

22.3

4.3

10.0

0 20 40 60 80

Local

Japan

China

Other

Local

Japan

China

Other

Rat

ios

of

sup

plie

rs p

rocu

red

by

Ind

stry

Rat

ios

of

sup

plie

rs p

rocu

red

by

Co

rpo

rate

Siz

e

(%)

Total （N=27）

Manufacturing （N=16）

Non-Manufacturing（N=11）

Total （N=27）

Large Enterprises （N=20）

SMEs（N= 7）

49

Republic of Korea has well developed logistics infrastructure. Manufacturing and

non-manufacturing both indicate the same.

Infrastructure Problems and Issues (Q1,Multiple Answer)

Regarding operation of the legal system, only 22% of all respondent companies replied

“No special problems or issues”. Many companies indicated some problems or issues.

This tendency is greater in manufacturing. However, compared to Japanese companies

in China, a larger percentage of Japanese companies in Republic of Korea replied “No

special problems or issues”, so there are relatively few problems and issues.

Problems and issues indicated by relatively many companies were “FTA use

(Certificate of origin procedures, etc.)”, “Business customs”, “Inspection & quarantine”.

All of these were indicated by about 20% of companies. And in the free entry field later,

a company pointed out that it did not feel benefits of the Republic of Korea-China FTA,

which came into force in December 2015. Also, companies pointed out in interviews that

other companies in the same industry do not obey compliance regulations, creating an

unfavorable competitive situation.

Still, regarding the over 40% of Japanese companies in China that indicated that

14.3

11.4

8.6

5.7

5.7

0.0

68.6

14.3

17.6

17.6

11.8

5.9

11.8

0.0

58.8

17.6

11.1

5.6

5.6

5.6

0.0

0.0

77.8

11.1

0 10 20 30 40 50 60 70 80 90

Ports are not developed

Logistics facilities, logisticscenters, etc. (Operations or not

developed)

Roads are not developed

Railways are not developed

Free trade zones, duty freezones, etc. (Operations or not

developed)

Airports are not developed


Other

(%)Total(N=35) Manufacturing(N=17) Non-Manufacturing(N=18)

50

customs related items such as “Efficiency of customs clearance” are problems or issues,

the response rate was relatively low.


21.6

18.9

18.9

13.5

13.5

8.1

2.7

2.7

0.0

21.6

13.5

16.7

22.2

27.8

16.7

16.7

16.7

0.0

0.0

0.0

11.1

11.1

26.3

15.8

10.5

10.5

10.5

0.0

5.3

2.7

0.0

31.6

15.8

0 5 10 15 20 25 30 35

FTA use (Certificate of origin procedures, etc.)

Business Customs

Inspection & quarantine

Consistency of policies for import and exportpermit

Safety regulations


Standardization of pallets and chassis

Regulation of energy and environmentprotection

Policies on fereign-capital enterprise


Other

(%)Total(N=37) Manufacturing(N=18) Non-Manufacturing(N=19)

51

Here are the results for some of the responding companies when asked about their

level of satisfaction.

Problems and Issues related to Legal System (Q2, Single Answer)

N=4

Satisfied Somewhat

satisfied

Normal Somewhat

dissatisfied

Dissatisfied

Efficiency of customs

clearance

1 1 2 0 0

Inspection & quarantine 0 1 2 0 1

Consistency of policiies

for import and export

permit

0 0 2 1 1

FTA use (Certificate of

origin procedures, etc.)

0 0 2 1 0

Standardization of

pallets and chassis

0 0 2 1 0

Policies on

foreign-capital

enterprise

0 0 2 0 1

Safety regulations 0 0 2 1 0

Lagging energy

conservation and

environmental systems

0 0 2 2 0

Business Customs 0 0 1 1 2

Regarding technology and human resources, under half of respondent companies

replied “No special problems or issues”. Items indicated as problems or issues are

relatively dispersed in various categories.

52

Technology and Human Resource related Problems & Issues (Q3, Multiple Answer)

As policies sought for improving supply chain linkage between Japan, China and

Republic of Korea, “Other” was most common, followed in order by “Promotion of joint

delivery and joint logistics”, “Promotion of EDI systems” and “Promotion of RFID tags

introduction”.

18.9

18.9

18.9

8.1

45.9

5.4

22.2

11.1

16.7

11.1

44.4

5.6

15.8

26.3

21.1

5.3

47.4

5.3

0 10 20 30 40 50

Development of customsstaff

Development of logisticshuman resources

Visualization of logisticsmovement information

Technology for handlinglogistics containers, etc.

No special problems orissues

other

(%)Total (N=37) Manufacturing(N=18) Non-Manufacturing(N=19)

53

Policies Sought for Improving Supply Chain Linkage between Japan, China and

Republic of Korea (Q4, Multiple Answer)

We asked companies to write free text replies for their trade, logistics and

distribution related problems, issues and improvement requests. 17 of the 37 companies

replied. 5 of these 17 companies wrote “Nothing special”. Only 12 companies wrote some

problem, issue or improvement request.

The main replies were as follows.

Main Replies for “Trade, logistics and distribution related problems & issues and

improvement requests” (Q6)

(Trade with China, Trade with Japan)

• Few forwarders in Republic of Korea have good experience in China’s complex

customs and duties, etc.

• Import/export with China takes time due to conditions in China.

• Need to improve so logistics don’t stop on holidays in Republic of Korea, Japan and

China.

(Transport of dangerous goods and chemicals)

• Chemicals safety management standards are progressing in both China and Korea,

30.0

20.0

16.7

10.0

3.3

43.3

33.3

20.0

20.0

6.7

0.0

33.3

26.7

20.0

13.3

13.3

6.7

53.3

0 10 20 30 40 50 60

Promotion of joint delivery and jointlogistics

Promotion of EDI systems

Promotion of RFID tags introduction

Promotion of green logistics (Makelogistics materials returnable, etc.)

Cold chain system construction

Other

(%)Total (N=30) Manufacturing (N=15) Non-Manufacturing (N=15)

54

but unrealistic regulations are being considered for trading companies also.

• Some businesses have low awareness of compliance, sending dangerous goods

samples by writing “Common goods”.

(Other)

• Labor unions are strong in Republic of Korea, which hurts recruitment of logistics

human resources in some cases.

• Nothing special (5 companies)

When asked to freely write their opinions and requests for improving supply chain

linkage between Japan, China and Republic of Korea, 13 of the 37 companies replied. 6

of those 13 companies wrote “Nothing special”. Only 7 companies wrote some opinion or

request. From this, seen overall, one can assess that few Japanese companies in

Republic of Korea are dissatisfied with supply chain linkage between Japan, China and

Republic of Korea.

The main replies were as follows:

Main replies for “Opinions and requests for improving supply chain linkage between

Japan, China and Republic of Korea (Free entry)” (Q7)

• Benefits of FTAs are not felt enough.

• A ferry operates Kyushu-Republic of Korea-North China, so trucks should be able to

ride both ways between these countries.

• Japan and Republic of Korea both have regulations, but it would be good if we can

construct a seamless logistics network like with Europe and Southeast Asia.

• Should simplify approvals of each country, and shorten the number of days in

customs.

• Nothing special (6 companies)

55

2. Supply Chain Problems, Issues and Requiring Improvement of Japanese Companies

in Republic of Korea

In interviews with Japanese companies in Republic of Korea, the following are all of

the Republic of Korea supply chain problems and issues pointed out: “Container loading

weight standards are not unified”, “Development of fair competitive environment should

be needed”, “AEO mutual recognition is not common,” “Workers dispatched from the

harbor transportation union”, “Busan Port’s road infrastructure is lacking,” “Lack of

land for warehouse use near Seoul,” “Weakness of Gimpo Airport’s customs system,”

“Low safety awareness”, “Pallet taxation,” “Land price rise at the time of contract

renewal”, “Handling of Incheon Port’s e-commerce dedicated logistics processing center”,

“Issues of double number system of containers and chassis”. And these items were

pointed out regarding Japan “High cost and logistics warehouse scalability limitations”,

“Customs takes a long time”. Among these items, considering the strength of the

companies’ requests for improvements in interviews, the universality of the problems

and issues, and comparison with the survey results, we present the following as

improvement request items.

Also, the Seoul Japan Club (SJC) is an organization of Japanese companies in

Republic of Korea, especially in the Seoul metropolitan area. Each year, it summarizes

recommendation items for the business environment improvement, and submits this to

the Republic of Korean government. Most recently, it recommended all 49

recommendation items to the Republic of Korean government in December 2016, but

the only logistics related item was “Improvement on the sample submission at import

customs clearance of a Japanese product”.

(1) Unification of Container Maximum Loading Weight Standards

Issue Unification of Container Maximum Loading Weight

Standards

Outline The International Organization for Standardization (ISO)

standard container maximum loading weight does not

match the Road Act’s maximum loading weight, so ISO

standard containers cannot be fully loaded. The Road Act’s

maximum loading weight should be aligned with the ISO

standard.

Current status and The ISO standard container total weight is 30.48 tons. The

56

problems container’s own weight is generally within 4 tons, so the

maximum loading weight is about 26 tons. On the other

hand, in Republic of Korea, under the Road Act, the upper

limit for total weight during road transport is 40 tons. At

our company, considering that the trucks’ own weights can

change, we keep the loading weight to 23 tons or less. Thus

the maximum loading weight is 10% less than the ISO

standard container. Thus, the ISO standard container’s

maximum loading weight does not match the maximum

loading weight under the Road Act, so we cannot fully load

freight in an ISO standard container, creating inefficiency.

(Republic of Korea, Company C)


related laws and

regulations, etc.

Ministry of Land Infrastructure and Transport, Road Act,

Article 77, Paragraph 1, and Enforcement Decree of the

Road Act, Article 79, Paragraph 2, Number 1.


improved

Align the Road Act’s maximum loading weight with the ISO

standard.

Expected benefits It can make logistics more efficient, and reduce logistics

costs. As a result, it would help make Republic of Korea’s

container ports more competitive internationally.

Improvement


support policies

Investigate if raising the upper limit value for total vehicle

weight would affect vehicle structures and roads, and if

there are no problems, then the standard should be relaxed.

Notes For logistics efficiency and international competitiveness, in

2015 Japan unified permit standards for drive axle weights

of van type semi-trailer road trains. Specifically, the upper

limit (11.5 tons) on drive axle weights was only permitted

for semi-trailer road trains that load international marine

containers until then, but were then applied to all van type

semi-trailer road trains (only for 2 axle tractors). This

resulted in raising the drive axle weight for van type

semitrailer road trains from 10 tons to 11.5 tons, and the

maximum load weight from about 24 tons to about 30 tons.

57

Road Act, Article 77, Paragraph 1

Article 77 (Restriction on Operation of Vehicles, and Operation Permits) (1) If it is deemed necessary in order to preserve the structure of roads and prevent

danger during driving, a road management agency may restrict the operation of vehicles,

as prescribed by Presidential Decree: Provided, That the same may not apply to the

operation permitted by a management agency on account of the characteristics of the

structure of a vehicle or loaded freight.

(2) (Hereinafter omitted)

Note: JETRO tentative translation (same hereinafter)

Enforcement Decree of the Road Act, Article 79, Paragraph 2, Number 1

Article 79 (Restrictions on Operation of Vehicles)

(2) Vehicles on which a management agency may restrict the operation, as referred to in

Article 77, Paragraph 1 of the Act shall fall under any of the following subparagraphs:

1. Vehicles whose axial weight exceeds ten tons or gross weight exceeds forty tons;

2. (Hereinafter omitted)

Bonded transport limit system implementation for import/export overloaded freight:

Question and answer example (Excerpt)

Question 2: What are the grounds for restricting the weight to 25 tons in the

container freight Bill of Lading (B/L)?

Answer: In our country’s Road Act, if a vehicle operates with the total weight

exceeding 40 tons, then it is punished as a Road Act violation. In this case, if

vehicle weight is approximately 14.5 tons, and empty container weight is (20

foot container 2.3 tons, 40 foot container 4 tons), then if the freight weight is 25

tons, the total weight is 41.8 tons to 43.5 tons, and under the Road Act, this is

considered an excess load, and bonded transport is restricted.

Source: Korea Customs Service, Overseas Customs Support Center website

Japan’s related laws and regulations

Ministerial Ordinance that Establishes Procedures for Permits of Transit of Vehicles

Article 7, Ro

Article 7, Ro: Axle Weight: In the case of semi-trailer road train such as van type,

tilt-type semi-trailer road train, stanchion-type semi-trailer road train, ship bottom

type semi-trailer road train, or semi-trailer trailer for marine containers provided for

international maritime container transport (only for cases of 2 automobile axles, with

matters established in a notice by provisions of road transport vehicle’s safety

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standards (1951 Transportation Ministerial Ordinance Number 67) Article 4-2,

Paragraph 1), it shall be 11.5 tons; in the case of other vehicles, it shall be 10 tons.

Regarding Unification of Drive-axel Permit Standards for Van-type Semi/Tractor-trailers

Source: Website of the Ministry of Land, Infrastructure, Transport and Tourism.

www.mlit.go.jp/common/001085050.pdf

(2) Establishing a Fair Competitive Environment

Issue Establishing a Fair Competitive Environment

Outline There are laws and regulations needed to maintain safety,

but some companies do not have thorough legal and

regulatory compliance. There should be thorough legal and

regulatory compliance for a fair competitive environment, to

achieve the original intentions of laws and regulations for

long lives of road structures, and to prevent traffic dangers.

Current status and

problems

Specifically, in company interviews and surveys, the

following examples were pointed out.

• I have doubts that other companies always comply with the

Road Act, and I also get the impression that controls are

not necessarily sufficient. I think our company may be

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losing because we comply with laws and regulations.

(Republic of Korea, Company C)

• Previously, we received a request to ship a 200 ton machine

facility. We must apply to the police for transport, but when

we asked a business, we were told “If you submit an

application to the police, it takes a long time until approval,

and it may not be approved. There’s no problem if you

transport at night.” This creates a problem for compliance,

so we rejected that work, but one can think that there is a

tendency to view compliance lightly (Republic of Korea,

Company H)

• Some businesses have low awareness of compliance,

sending dangerous goods samples by writing “Common

goods”. (Survey Conclusions, sales company)


improved

Thorough legal and regulatory compliance by companies, etc.

to prepare a fair competitive environment

Expected benefits By thorough legal and regulatory compliance, maintain the

goals of laws and regulations for long lives of road structures,

and to prevent transport dangers by establishing a fair

competitive environment.

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Chapter 4 Best Practices

(1) Unification of HS Code Classification Criteria (Japan)

Japan has undertaken a variety of efforts to ensure that criteria for tariff classifications,

customs evaluations, and place of origin, etc., are unified.

For example, the system for ensuring that criteria for tariff classification are unified

has 3 levels of authority, the customs agents, the Bureau of Customs classification

center, and the Ministry of finance Bureau of Customs. Based on this, if there is a

disagreement over a customs decision for any item, it is possible for higher departments

to quickly gather information and issue a decision, thus avoiding different decisions by

different customs locations.

Furthermore, all examples, and all documents, data, and images, etc., from the time of

declaration are collected and stored in a database, and are referred to as the basis for

decisions that are issued, to ensure consistency with past decisions. There is centralized

control via the same database when there are inquiries to upper level departments for

declarations where there may be disagreement over tariff classification.

Effort is made to train customs personnel in order to make this system and operations

even more effective. In practical terms, each customs region sends about 5 staff

members to the Classification Center in Tokyo each year for a year of training. During

the Classification Center training period they receive training on all classifications, and

gain experience working in sections that handle everything from Type 1 to Type 97, thus

making it possible to achieve unified decisions over a wide range.

After that the personnel who have received training take on supervisory roles at each

customs location, ensuring that personnel can make unified decisions.

In addition, each customs location, including branches, conducts “One-point Training”,

which are case studies used to learn the concepts of classification,

As a result of such effots, they made about 7,000 written responses in 2015 to users of

the advance instruction system pertaining to tariff classification. In addition, they are

able to make about 85,000 basically same-day responses to email and verbal inquiries in

a year.

They respond to virtually all written, email and verbal inquiries, except for those that

are in court or being disputed.

In addition, they ensure transparency by releasing these kinds of inquiries using the

advance instruction system, as well as examples of classifications that may easily cause

disagreement, on the Customs website.

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Reference material: Advance instruction response flow for tariff classification

Source: Customs website

http://www.customs.go.jp/osaka/news/20140423_shiryo01.pdf

Reference material: Tariff rate explanation – Classification illustrative rule example

Windshield bag for motorcycle Heading 42.02

Brief description of goods

Leather bag designed to be attached to the windshield of a motorcycle.

The bag is fixed on the rail of the windshield by using bolts and a metal mount on the

back of the bag. The mouth of the bag is of a type that can be closed with a catch.

Size: 255 mm (W) x 135 mm (H) x 75 mm (D)

Application: Storage of personal belongings during touring

(Front) (Back)

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Classification

4202.91-000

Reason for classification

Parts and accessories of motorcycles are prescribed in heading 87.14. Since the

windshield bag can be removed from the windshield easily and be used to bring

goods in a similar way as a second bag, it is not considered that it is solely or mainly

used for motorcycles and is not classified in heading 87.14 according to the

provisions of Note 3 to Section VXII. Therefore, it is classified as stated above as a

container whose outer surface is leather.

♠ ♠ ♠

Note:

The nature of the goods to be the basis for customs duty assessment depends on the conditions

at the time of the import declaration of the goods with some specific exceptions (Article 4 of the

Customs Law).

This classification example describes general replies based on the certain condition and do not

necessarily represent all cases. Therefore, the classification decision on your actual importation

may be different from that described here according to its condition.

If you wish to have a reply about the tariff classification and duty rate of specific goods that

will be respected at the examination of import declaration, please ask Customs for Advance

Ruling in writing.

Source: Customs website

http://www.customs.go.jp/english/classification/index.htm

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(2) Joint Transport – Example of Joint Transport of a Built-in Kitchen (Japan)

Both shipper A (Cleanup) and shipper B (TOTO) are both major Japanese

manufacturers and distributors of system kitchens. While they both compete in terms of

their business and the products that they handle, due to changes they made to their

business practices in terms of relaxing shipping time specifications and truck

specifications, they were able to reduce the number of trucks required and improve load

factors by cooperating in joint transport using Company A’s transport network to handle

Company B’s goods. Before such implementation Company B’s load factor was 40%,

which was improved to 90% by joint transport. The shipping conditions are ① ordering

shipping time ranges, ② one truck visits multiple sites, and ③ the number of one-man

trucks increased.

While improving logistics efficiency, CO2 emissions were also reduced by 340.5 tons

(from 1,634.7 tons to 1,294.1 tons), a 20.8% reduction in CO2 emissions, thus reducing

the burden on the environment.

As a secondary effect, it is an example of efforts to change existing business practices,

and we can expect it to have an impact as a model case of shippers cooperating in joint

transport. In addition, it is highly evaluated as proof that even large shippers can

achieve joint transport.

(Source) Created from “Collection of Green Logistics Partnership Committee Examples”

(December 2015)

64

65

(3) Port of Busan

Against a background of a large number of shipping routes and enhanced government

support, the Port of Busan has raised its position to the level of a hub port for Northeast

Asia. Looking at the ranking of the number of containers handled by ports around the

world, the ranking for Port of Busan rose from 16th in 1980 to 6th in 2015.

Japanese logistics firms are expanding various operations at the Port of Busan, which

has become increasingly dominant.

Table: Examples of expansion of operations by Japanese logistics companies at the Port

of Busan (after 2012)

Date of

announcement

Company

name

Overview

19 June 2012

Maruzen

Showa Unyu

Co., Ltd.

・Established an office in Busan with the aims of

harnessing the convenience of Busan as a hub port,

and strengthening its network functions in East

Asia.

7 September

2012

NRS

Corporation

・Established CALT Logis BUD Co., Ltd. as a joint

capital venture with three Republic of Korean

companies: Korea City Air Terminal, Orient

Shipping, and Sinokor Merchant Marine, and

concluded an agreement to engage in the

transportation, warehousing, and handling of

chemicals at Busan New Port.

・It will build a full-fledged constant-temperature

warehouse for hazardous goods and a

normal-temperature warehouse for hazardous

goods, and provide high quality international

logistics services for chemicals to Japanese

chemicals manufacturers and leading Republic of

Korean companies.

11 July 2013

SENKO Co.,

Ltd.

・Established the joint venture company KO-SENKO

Logistics Co., Ltd. with two Republic of Korean

companies (Capital: 4 billion won, with SENKO

providing 35% of the capital). Commenced the

construction of a logistics center in the Ungdong

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district of Busan New Port. This will offer logistics

services by harnessing the functions of the free

trade zone.

・Aims to expand and strengthen logistics services

in East Asia, including within Republic of Korea,

and between Japan and Republic of Korea, and

China.

23 April 2015

Seino

Holdings

Co., Ltd.

・Commenced operation of the second logistics center

in Busan. As Seino Transportation, the company

provides customers with logistics strategies that

utilize Busan New Port as Japan’s backyard, in

order to bring about cost reductions and shorter

lead times.

1 August 2015

Shimonoseki

Kairiku

Unso Co.,

Ltd.

・Established SKU KOREA in Busan City with the

aim of further improving logistics quality for

intermodal transportation services between Japan

and Republic of Korea.

5 August 2015

Nippon

Express Co.,

Ltd.

・The local subsidiary, Nippon Express Korea,

conducted the groundbreaking ceremony for Busan

Global Logistics Center in the free trade zone

(FTZ) in the complex area behind Ungdong, Busan

New Port. As a “multi-country consolidation” base

that ties Japan with countries around the world,

the Center provides various logistics services that

offer a high level of convenience.

Source: Drawn up based on press releases from the respective companies

One of the elements that supports the predominance of the Port of Busan is its

cutting-edge port IT system. The Ministry of Maritime Affairs and Fisheries has built

the Port Management Information System (Port-MIS). Based on Article 89 of the

Harbors Act and Article 88 of the Enforcement Decree of the same Act, this System has

been introduced in phases after 1992.

Through Port-MIS, users are able to carry out all procedures for the entry and exit of

ships into and out of ports through Internet submissions. These include applications for

ships to enter and exit ports, applications to use port facilities, cargo declarations, and

declarations of hazardous goods. Since February 2011, users have also been able to use

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the system through their smartphones (Smart Mobile Port-MIS).Port-MIS has enabled

24-hour response, and significantly reduced the time required to complete the necessary

procedures.

Alongside Port-MIS, congestion at the entrance to the container terminal has also

been eliminated through the realization of management for entry and exit through

gates, with the introduction of RFIC (Radio Frequency Identifier) cards. This has also

contributed to the realization of smooth port logistics

Documents

Survey for improved logistical efficiency of Japanese ... · Japan External Trade Organization (JETRO) Overseas Research Department . ... services and domestic storage and distribution