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Trust Lane: Removing China Food Regulatory Barriers and Expediting Market Access

1. TrustLane is a priority border clearance channel that fast tracks the China AQSIQ import clearance process resulting in China health certificates typically being issued in 2 – 3 days rather than the traditional 2–3 weeks needed for border clearance. 2. It has been calculated that the cost of each day’s delay in border clearance is equal to 1% of the shipment’s CIF ( cost, insurance and freight) cost. 3. The implementation of China's New food safety law and the new food safety law implementation rules have placed a great emphasis on regulating the quality and safety of imported foods. 4. AQSIQ is in the process of refining its approach to customs supervision and will place heightened emphasis on high risk products (infant formula, meat, aquatic products, dairy, foods for special medical purposes etc.) and products associated with frequent non-compliance and safety issues. 5. During the first half of 2015 a total of 1255 batches of imported food worth 14.52 million USD failed AQS

Trustlane: An Interview with Grant Verry (Director at Peloris Global)

Q.Can you explain how Trustlane expedites customs clearance, how it compares with standard import and what this translates to in terms of saved time and finances?

A.The ‘Trust Lane’ is a priority border clearance channel that fast tracks the China AQSIQ import clearance process resulting in China health certificates typically being issued in 2–3 days rather than what is traditionally a 2–3 week process using the standard AQSIQ border clearance channel. For producers and exporters, this really opens up the China export market. China retailers generally will not accept imported products with less than 50% of shelf life remaining; for fresh milk for example, they are receiving the product within 5 days of bottling with 14 days commercial shelf life remaining. This is a longer commercial shelf life than some Australian retail outlets get In terms of value chain efficiency, the saving in transit time is also a significant benefit. It has been calculated that the cost of each day’s delay in border clearance is equal to 1% of the shipment’s CIF cost.

Q. How unique is this service and are there any other comparable services available to international companies?

A. The ‘Trust Lane’ is truly unique. We understand this to be the only CIQ officially endorsed priority border clearance channel open to China food imports. PGS worked directly with regional AQSIQ authorities to ensure all the necessary protocols were in place to mitigate any health and safety risks from this expedited border clearance. In fact, China AQSIQ considers the ‘Trust Lane’ channel to be more secure than the standard clearance channel.Sure, there are other importers promoting the fact that they can and do manage expedited border clearance but how they manage this is typically opaque with a strong reliance on personal ‘relationships’. As a consequence the producer, brand owner and/or exporter is exposed to significant risk, both commercially and to their brand and reputation.

Q. Is the service regional or can you cover all of China?

A. Currently the ‘Trust Lane’ is operational through Shanghai sea and airports and Chongqing airport. PGS is also working closely with AQSIQ to expand this service to other China ports but in the interim we have developed a very cost effective and efficient China domestic cold chain logistics solution that allow fresh food imports to be delivered to retail outlets from Beijing down to Guangzhou on the same day the China health certificate is issued.

Q. Can you cover goods imported from everywhere or do you only provide the service for certain countries?

The ‘Trust Lane’ channel is not geographically constrained. So long as the required cold chain management protocols are in place then AQSIQ will automatically apply the priority border clearance process. We recently successfully cleared a shipment of yogurt from Germany in less than 10 days where the Producer’s previous Chinese based importer was only able to clear shipments in one month and even then not consistently.

It should be noted however that it is the ‘Trust Lane’ that has been endorsed by AQSIQ, not the producer or brand owner. That means PGS must be the importer for producers and brand owners to be able to access priority border clearance for their products. As this delivers the total ‘end to end’ transparency and audited controls that deliver the confidence of handling for CIQ to allow the accelerated clearance.

Q. You are working with both Assure quality and Authenticateit traceability; can you outline what value they bring to this service?

A. Excellent question. When we initially started working with China AQSIQ on the concept of a priority border clearance solution (for fresh milk at that stage), AQSIQ stressed their requirement for product traceability and data integrity. In fact nothing has changed since, these are still AQSIQ’s primary objectives, reinforced more and more by increasingly tougher regulatory requirements.

We therefore searched the market for a cost effective traceability solution and came across Authenticateit, a relatively new start up business like ourselves at that point but with what we still consider to be the best solution in the marketplace. We have worked closely with Authenticateit ever since and their solution is an integral part of the ‘Trust Lane’ priority border clearance solution. We were introduced to Asure Quality about two years ago and again recognized that they could provide the product and process data validation that CIQ required. As a NZ government owned entity they also provided China CIQ with enhanced comfort around the independence and credibility of our process and the data provided.  

Q. Is this service available to companies involved in CBEC (crossborder ecommerce) and are there any specific benefits for market entry through crossborder ecommerce?

A. Our service is of course available to CBEC provided the ‘Trust Lane’ solution protocols are followed. Counterfeit products are a real concern for China AQSIQ and is a big problem for CBEC. Brand owners and manufacturers are also concerned by counterfeits due to the lack of transparency on quality assurance or traceability on the product being imported. The ‘Trust Lane’ solution provides the transparency and traceability on both product authenticity and quality assurance which delivers assurance to AQSIQ on the providence of the product as well as ensuring for the brand owner there brand is not being counterfeited at any point in the supply chain.

Q. How do international companies looking to target the Chinese market go about taking advantage of the Trust lane system?

A. PGS has understandably been inundated with inquires from exporters on how to get faster border clearance for their products. So we have had to develop a disciplined and streamlined ‘on boarding’ process to manage the workload!The process of taking clients from initial inquiry through to commercial shipments typically takes about six weeks although this can be quicker if it is a category we are already importing. After the initial inquiry we would arrange a meeting (ideally face to face) to ensure alignment between the client’s expectations and the PGS service offering. If both parties were aligned, then we would work closely with the client over the next four weeks to ensure manufacturing, product and label compliance. Once these were in place commercial shipments would then commence.   

Q. I think a major concern for many will be the endorsement of Chinese authorities; can you speak a little more about how this system is officially sanctioned?

PGS worked closely with regional CIQ agencies to develop an import solution that would mitigate the health and safety concerns they had. The subsequent solution that was jointly developed took over 18 months bring to fruition.In May 2014, after a series of trials, the CIQ Director and Management team formally met and signed off on the new process. This is officially documented and registered. Further to this official authorization, in March 2015 PGS hosted an official CIQ delegation to Australia and NZ (at their request) to demonstrate the systems and processes we had in place were working effectively. The delegation inspected farms, processors and our partners to assure themselves of the integrity of the PGS supply chain management solution. AQSIQ will continue to conduct periodic audits of the PGS solution going forward

Q. Can you give a basic mechanistic overview of the Trustlane process from upstream to downstream in the supply chain?

A. There are a couple of options available to the producer, firstly they can engage PGS as the exporter/importer (FOB basis) or alternatively as just the importer (CIF basis).From the producer’s perspective, the first option is extremely straightforward and risk free. The producer simply arranges delivery of the export shipments to the PGS nominated delivery point and, as long as the product quality is as per predetermined specification, receives full payment. PGS manages export packaging, documentation, transit border clearance and delivery to their nominated China customer, whether that be a distribution center or retail outlet.The alternative process increases the risk to both PGS and the producer somewhat in that we do not have control over shipment until it arrives in China therefore we do impose some strict packaging and handling SOPs on the client to ensure CIQ product handling protocols are met prior to border clearance. We explain the product and process protocols at our initial client meeting and discuss their implications.

Q. China’s new food safety law imposes very strict regulatory compliance requirements and supervision and enforcement stringency have been considerably beefed up. A major concern for exporters is having their goods seized at port for compliance and safety issues. Can you speak about how trust lane helps avoids these pitfalls?

A. We have been delivering weekly shipments of product for the past two years through the PGS Priority Border Clearance Solution to customers located from Beijing down to Guangzhou with 100% compliance with temperature management and border clearance requirements.The key to our success is not only the work done after the China border, it is what we do before the shipment arrives at the border. We have strict procedures in place to ensure product quality, process compliance and document validity to ensure clearance before the shipment even arrives in China. This disciplined and transparent methodology has been acknowledged by CIQ and the ‘Trust Lane’ solution opens the door for any manufacturer or brand owner wanting certainty of China border clearance for their exported product. 

Q. China is placing special emphasis on what it designates as high risk foods which in real terms translates to infant formula, dairy, meats,seafood, health foods and foods for special medical purposes. Can Trustlane be used for these product lines? 

A. To answer your question, yes the ‘Trust lane’ can be used for these categories. In fact we recently managed the ‘first time import’ registration of a new Infant Formula brand in China, not an easy task these days! We achieved this border clearance within 20 calendar days. All border clearance requirements are specific to the category of product so need to be assessed by the ‘Trust Lane’ case by case.

Q. What’s next for the Trustlane system and what future offerings can international exporters expect from you?

A. Well, we are working very hard to expand the range of food categories that can benefit from faster and reliable border clearance and have added a comprehensive China domestic cold chain logistics solution to our service. This means that port entry is not a constraint for imports, as we are delivering product as mentioned from Guangzhou to Beijing and now in Sichuan province with clearance time frames the same as product released in Shanghai. In addition our service offering has attracted the attention of producers and exporters from other countries such as the USA and Europe. However I think the next major breakthrough we will be able to offer to producers and brand owners, will be a AQSIQ integrated online ‘paddock to plate’ priority border clearance platform. It is our understanding that this will soon become the benchmark requirement for priority border clearance of perishable food imports, due to China’s mandate for product and process traceability and integrity of the entire supply chain – this type of visibility, accountability and subsequent guaranteed border clearance - is exactly what the ‘Trust Lane’ delivers!

ChemLinked Free Webinar

Trust Lane: A Smart System to Accelerate China Market Access and Enhance Customer Confidence

Date, Time & Language

Date

Language

Time (GMT+8)

Registration Link

3 Mar 2016

English

10:30-11:30

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21:30-22:30

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This webinar will be delivered twice (identical information) to facilitate the attendance of audiences from different time zones. 
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