Normally, import duties are applied to goods and services imported into a country. In manufacturing entity that re-exports all or a portion of it's finished product, the entity can apply for duty drawback.
Duty Drawback provides a credit or refund of a portion(most )of the original duty payment. There is an administrative portion of most country's duty rate, so duty drawback in the best of conditions is never 100%. On top of the administrative portion of duty. It is also very difficult to document and obtain all of the duty drawback you could be entitled to. While it may sound good in concept, it is a difficult task in actual application. The administrative efforts, elapsed time between importation of parts and export of finished product, and the amount of paperwork required are the major problems in minimizing the net impact.
Wherever possible, you should explore the advantages of duty free manufacturing zones or Foreign Trade zones as they are often referred to as. In working within the PRC, consider taking advantage of Buy-Sell contracts. Both duty free zones and Buy-Sell contracts come at the cost of significant administrative requirements. If your operations include both domestic and export sales, significant effort will be required.
Normal duty rates for imported product runs from 40% to 100%. Preferential rates of 25% to 50% are possible if you go through state
