1. The trade
Materials enter a park or zone under a preferential regime.
Finished goods leave, usually for export.
2. The customs treatment
Different from general trade and from processing trade.
The materials may enter duty-free. The finished goods may enter the domestic market subject to duty on the imported content, or leave for export without further duty.
3. The conditions that matter
Value added
Some regimes set a minimum domestic value added for the finished goods to enjoy the regime’s treatment on domestic sale.
Approved catalogue
Not every product is eligible.
Accounting
Material consumption has to be tracked against output.
4. The origin question
Again separate.
Zone treatment is a duty regime. Preferential origin at destination is a different question.
The two commonly diverge in the same way as processing trade: the goods qualify for the zone treatment and fail the destination’s origin test.
5. The documentation
Entry records.
Processing records.
Consumption ratio.
Exit declarations, with domestic sale and export distinguished.
6. The risk of domestic sale
In an economic zone oriented toward export, domestic sales of finished goods are subject to controls and to duty on imported content.
Some companies overstate domestic sales to meet local market demand and understate them elsewhere, which creates a reconciliation problem.
7. A scenario
A company in a bonded and processing zone imported materials duty-free, assembled, and sold part of the output domestically.
It calculated the imported content duty on the finished unit price rather than the material value, and the assessment was disputed on audit.
8. The lesson
The rule for domestic sales is specific, and the calculation basis is not the same as the imported material’s declared value.
9. Closing view
Special zones change the duty flow. They do not change the origin rules.
Keeping the two separate in the file is what makes an audit manageable.
*This article is based on China’s special customs supervision zone rules. Exporters should confirm requirements with China Customs.*