Is Entrepot Trade Counted in the Aggregate of China's Current National Economic GDP Statistical System?

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I am the owner of a small and medium-sized enterprise doing Southeast Asia entrepot trade based in Shanghai. Recently I encountered a confusing question: last month, we completed an entrepot business of purchasing rubber from Thailand, re-exporting via Shanghai Yangshan Port to Rotterdam, Netherlands, with a profit of about 5%.

However, local logistics and warehousing fees and customs declaration service fees accounted for 2% of the total cost. When the finance department sorted out annual data, it was uncertain whether this entrepot trade is counted in GDP statistics, especially the service fee generated locally. Our company is registered in the Free Trade Zone.

We heard that entrepot trade data will affect the intensity of local policy support, such as whether we can apply for logistics subsidies or tax preferences. But if it is not even counted in GDP, we may not be eligible for these policies. We want to know whether entrepot trade will generate GDP, which links will be counted, and what impact it will have on our actual business operation?

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Grace Wang
Grace WangYears of service：10Customer Rating：5.0

Senior Foreign Trade ConsultantStart a Chat

Whether entrepot trade is included in GDP needs to be distinguished by different links. According to China's current GDP statistical rules，pure cross-border goods circulation (such as goods entering a bonded area from abroad and then being directly exported) is not included in total GDP itself，but local value-added services generated in entrepot trade (such as logistics，warehousing，customs declaration，financial services，etc.) will be included in the scope of GDP accounting.

Taking Shanghai FTZ as an example，when enterprises carry out entrepot trade，if local services such as warehousing，logistics distribution and customs brokerage occur within the zone，the value of these services will be counted into Shanghai's GDP data. This is the core reason why some FTZ enterprises can apply for local logistics subsidies -- their local services contribute to regional economic growth.

For enterprises，to maximize policy dividends，two key actions are required: first，split financial accounts for local services and cross-border transactions，ensure that local service fees are separately accounted and compliant invoices are issued，second，retain complete service process documents (such as warehousing agreements，logistics orders，customs declaration forms，etc.) as the basis for applying for policy support.

Attention should be paid to the compliance red line: if an enterprise includes all the price difference of cross-border goods into local profits，it may trigger tax risks. According to customs regulations，the profit of entrepot trade should match the actual contribution of local services，to avoid inflating local value-added to fraudulently obtain policy subsidies. It is recommended that enterprises cooperate with professional agencies to sort out local service links in the trade process and ensure that statistical data are true and compliant.

Reference: How Hangzhou Enterprises Avoid Tariff Barriers and Supply Chain Risks via Third-Party Entrepot Trade
Michael Zhang
Michael ZhangYears of service：6Customer Rating：5.0

Customs Declaration & Compliance ExpertStart a Chat

From the perspective of customs policy, if entrepot trade goods only circulate within bonded supervision areas (without completing formal import declaration procedures), their cargo value itself is not included in GDP statistics. However, the customs declaration service fee generated during the entrepot trade process, which belongs to the local service industry, will be included in GDP accounting.

Enterprises should note that the trade mode on the customs declaration form must be accurately marked as "Entrepot Trade" (customs code 0110), avoid confusion with "Goods in Bonded Warehouse Entrepot" (1239). Although the latter also belongs to the entrepot category, the statistical caliber is slightly different.

Incorrect marking on the customs declaration form may lead to the failure of correct statistics of local customs declaration service fees, affecting enterprises' subsequent application for relevant FTZ policy support. It is recommended that enterprises confirm the accuracy of the trade mode with the customs broker before declaration, and keep copies of customs declaration forms as the statistical basis.

Andy Guo
Andy GuoYears of service：3Customer Rating：5.0

Supply Chain Management ExpertStart a Chat

The choice of logistics route for entrepot trade directly affects the statistical results of local GDP. If an enterprise chooses to store goods in a bonded warehouse in Shanghai FTZ and uses trailer, distribution and other services provided by local logistics enterprises, the fees for these logistics services will be included in Shanghai's GDP data. For example, for a batch of goods from Singapore to Europe, if it is stored in Shanghai FTZ for 3 days and handled by a local logistics provider, the 3-day warehousing fee and handling fee will be counted as local value-added.

To maximize local GDP contribution, enterprises can prioritize ISO-certified logistics service providers in the FTZ, whose service records are more easily included in the official statistical system and facilitate policy application. At the same time, enterprises need to retain logistics service contracts, expense invoices and other documents as supporting materials for applying for logistics subsidies.

Eric Zhou
Eric ZhouYears of service：6Customer Rating：5.0

Senior Manager of Foreign Exchange & Tax RebatesStart a Chat

From the tax perspective, the local value-added part in entrepot trade (such as logistics and customs declaration service fees) is subject to value-added tax, and the service value corresponding to this tax amount will be included in GDP. Enterprises can optimize cash flow through the VAT deferral policy, but need to ensure that VAT invoices for local services are authentic and valid, and the invoice content is consistent with the actual services.

For example, a warehousing service invoice should indicate details such as storage location, duration, and fee standard, to avoid the value-added part not being counted due to incomplete invoice information. In addition, the profit distribution of entrepot trade needs to be reasonable -- if all the price difference of cross-border goods is included in local profits, it may attract attention from tax authorities. It is recommended that enterprises consult professional tax advisors to design a profit distribution plan that matches the contribution of local services.

Cindy Chen
Cindy ChenYears of service：3Customer Rating：5.0

Key Account ManagerStart a Chat

Compliant operation of payment and settlement for entrepot trade is the key to ensure that local value-added is counted. When making and receiving payments, enterprises need to declare via CIPS or SWIFT system, and clearly distinguish "cross-border goods trade" and "local service trade" in the declaration remarks. For example, if the received payment includes local logistics service fees, this part should be separately declared as income under "trade in services", instead of all being included in "goods trade".

This not only complies with foreign exchange management regulations, but also ensures that local service income is included in the scope of GDP statistics. It is recommended that enterprises sort out payment and settlement accounts regularly to ensure separate accounting for the two types of income, avoiding missing statistical data caused by declaration errors.

Jason Wu
Jason WuYears of service：10Customer Rating：5.0

International Logistics & Supply Chain ManagerStart a Chat

From the legal perspective, the content, location and fee standard of local services need to be clearly defined in the entrepot trade contract, which is an important basis for identifying local value-added. For example, a warehousing agreement should specify that the service location is in Shanghai FTZ, the service time matches the cargo transit cycle, and the fee calculation method is clear. Vague contract terms may lead to the inability to effectively count the value of local services, affecting the enterprise's application for policy support.

In addition, enterprises need to pay attention to intellectual property protection -- if the entrepot goods involve patents or trademarks, they should ensure that relevant authorization documents are complete, to avoid trade interruption caused by infringement problems, which in turn affects the continuity of GDP statistical data. It is recommended that enterprises cooperate with legal advisors to review service clauses in trade contracts to ensure compliance.

Daniel Xu
Daniel XuYears of service：10Customer Rating：5.0

Director of Import & Export OperationsStart a Chat

Optimizing the supply chain structure of entrepot trade can significantly improve local GDP contribution. Enterprises can set up regional operation centers in Shanghai FTZ, integrate local logistics, customs declaration, finance and other service resources to form a complete entrepot trade service chain. For example, by setting up a branch in the zone to be responsible for warehousing management and logistics coordination, more service links are retained locally, increasing the proportion of local value-added.

This structure can not only improve operational efficiency, but also make it easier for enterprises to obtain policy support from the FTZ (such as logistics subsidies, tax preferences, etc.). It is recommended that enterprises cooperate with supply chain planning experts to design the optimal supply chain structure according to their own business characteristics, so as to maximize economic benefits and policy dividends.

Note: We respect all users' expressions; however, user comments represent their personal views only.

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