What is the Difference Between Formal Import and Small Import?
2 Answers
The differences between formal import and small import include their nature, characteristics, and the responsibilities they entail. Formal import generally refers to vehicles imported through formal customs channels, sold by authorized dealers, with purchase taxes paid and licensed, allowing for immediate name transfer. Small import refers to vehicles imported under a special policy to encourage investment, offering certain tariff discounts to foreign investors, overseas students, overseas Chinese, or foreign-invested enterprises that meet specific investment thresholds. These vehicles are known as small import vehicles in the industry. Characteristics of Formal Import and Small Import: Formal import requires an import license for customs declaration (foreign-invested enterprises possess import licenses), along with a customs goods import certificate and a commodity inspection certificate from the import port. Currently, the process from import to personal purchase involves tariffs, value-added taxes, and consumption taxes, with the combined tax rate for an imported vehicle roughly equivalent to 70% of the vehicle's total price. This is why the price of formally imported vehicles remains high. Small import vehicles can be 10% to 15% cheaper than formally imported vehicles, but they can only be registered under the name of the foreign investor or foreign-invested enterprise within one year of import. Only after one year can the vehicle's ownership be transferred normally. Responsibilities of Formal Import and Small Import: Formally imported vehicles must comply with China's mandatory national regulations, including original manufacturer warranties; otherwise, the importer may face penalties such as suspension of import rights. Small import vehicles are imported by applicants or importing units based on their own usage principles, requiring approval from national import regulatory authorities. Before import, the applicant must declare that they will bear all risks associated with the vehicle's use, meaning they are responsible for maintenance, warranty, and whether the vehicle can be licensed.
When choosing an imported car, there is an essential difference between official imports and parallel imports. Official imports go through regular official channels, such as Mercedes-Benz and BMW being imported directly by the brand, with complete documentation, enjoying manufacturer warranties and after-sales services. If any issues arise, authorized 4S shops can handle them quickly, ensuring safety and reliability. Parallel imports, on the other hand, come through gray markets, possibly at lower prices, but without original manufacturer warranties, difficulty in sourcing parts for repairs, and potential disputes over import taxes and fees—any problem can become a headache. I recommend prioritizing official imports, especially for safety-critical models, to avoid future troubles. In daily use, resale value and insurance coverage are also more reliable. Though the overall cost may be higher, it's worth it.
