The market for importing Personal Protective Equipment (PPE) and other medical supplies from China remains in chaos, much of which is caused by unclear government regulation in China. In advising clients on importing face masks and other PPE products from China, our PPE team advises that one of the biggest risks is that the export/import rules constantly change.
It is not uncommon for a foreign company to enter into a purchase agreement with a Chinese PPE supplier, and then make an advance payment, only to have the rules change by shipment time to the point where the previously authorized transaction is now unauthorized or will be indefinitely delayed. Dealing with that risk is critical in any purchase transaction. Chinese sellers virtually always seek to push these risks of their own government entirely onto the shoulders of the foreign buyer. Since this risk is considerable, it makes all China PPE transactions “tougher”.
In my April 2 post, Buying Face Masks and Other PPE from China Just Got a LOT Tougher, I showed how Order 5 from China’s Ministry of Commerce made the export of masks and other PPE a lot tougher. Eight days later, with foreign complaints about defective Chinese medical supplies increasing, China Customs and issued Announcement 53 to make exporting coronavirus related medical supplies out of China even tougher.
Announcement 53 is quite simple. It states that beginning on April 10, China Customs will be examining for quality “medical supplies such as HS Code 63079000.10 [cloth face masks]”. The Announcement then refers to an attachment that lists 11 products with their HS Code numbers, as follows:
1 Medical Use Face Masks 医用口罩 6307900010
2 Medical Use Protective Clothing 医用防护服 6210103010 3926209000
3 Infrared External Thermometers 红外测温仪 9025199010
4 Ventilators 呼吸机 9019200010 9019200090
5 Medical Use Surgical Caps 医用手术帽 6505009900
6 Medical Use Protective Goggles 医用护目镜 9004909000
7 Medical Use Gloves 医用手套 3926201100, 3926201900, 4015110000, 4015190000
8 Medical Use Shoe Covers 医用鞋套 6307900090, 3926909090, 4016999090
9 Patient Monitor 病员监护仪 9018193010
10 Medical Use Sanitary Wipes 医用消毒巾 3005901000, 3005909000
11 Medical Use Disinfectant 医用消毒剂 3808940010
Note that this list of medical use supplies is much broader than that in Order 5. Items 5 to 11 are not included in Order 5.
As is typical of so many Chinese announcements like this, clarity is not its strong suit. For instance, it is not at all clear to what products this order actually applies. For many of the products, the Announcement uses the term “medical use”, but the HS codes provided by China Customs are general codes normally used for consumer products, not for medical use products. This then leads to the question as to how China Customs will determine what shipments to inspect and what shipments not to inspect. The HS Code will not tell them anything. So how will they decide?
Take for example the issue of face masks. Announcement 53 refers to HS Code 63079000. This is a textile products code that normally applies to NON-MEDICAL use cloth masks. Medical grade N95 type masks are normally exported using HS code 9020 or 9018. But neither of those codes are on the China Customs list. Technically, Announcement 53 applies to all non-certified cloth face masks exported from China, but it does not apply to medical grade N95 masks. But in the listing, China Customs says Announcement 53 applies to medical use masks: a contradiction. All we can say now is that our PPE customs lawyers are handling these sorts of issues on a case by case basis, usually by contacting the relevant Chinese government authorities and just flat out asking them how they are treating specific items.
The same uncertainty applies to other products on the list. When does a cotton gown become regulated medical use protective clothing? When does a cloth head cap worn by a house painter become a medical use surgical cap? When do shoe covers worn by plumbers who fix water heaters become medical use shoe covers? And on down the list. You get the idea. The answer is that there is no way to know without testing the waters with Chinese government officials or by having seen those waters tested a sufficient number of times to be able to predict what Chinese customs will likely do the next time. China’s PPE waters are more shark invested today than a week ago.
If Announcement 53 is intended to assure foreign buyers purchasing Chinese manufactured medical supplies. it fails. Instead of adding stability to the PPE market, this confusing order just adds to the chaos and confusion by making it tougher for China’s honest players while enabling its dishonest players to use the increased confusion as a device to trap their victims.
This is China PPE today.