Q: I had understood that there was a structural problem on the Chinese side, that to export you needed a special license which is not easy/inexpensive to get, hence the need to use a trading company. Is that not the case?
A: If the manufacturer is newly opened or small scale, they may not have made the investment in time and capital to get their own export license. Also, during the first years of a new company, they are generally classed as “small scale tax payer” and only once they have a track record of paying tax and exporting well, does the government move them to “normal tax payer” status. Once at normal tax payer status, they can get the full VAT rebate at export. Since the trading company may be mature and at normal tax payer status, it sometimes saves money in the beginning for mfg to outsource the export if the mfg is small or recently opened.
A hand full of sensitive industries are highly regulated and a trading company may be required. But those industries are few and far between.
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