Value added tax (VAT) of 17% is one of the biggest problems faced by Chinese exporters. Like consumption tax of Japan, it is levied on various transactions in China.
When you process a product in China for export, you can import materials in bond by permission of the customs, process them at the factory and re-export. On the other hand, if you purchase components made in China, process them and export the product, you may have to pay the VAT when procuring the components.
 For manufacturers, the 17% tax is a heavy burden. Some manufacturers even export components to Hong Kong, Japan or some other country and import them again to China before sending them to the processing factory to lessen this burden. By exporting and re-importing the components, the manufacturers can keep them in bond while they are made into the final product.
So far in the Waigaoqiao bonded zone and export supervised warehouses (“Kan-Kan warehouse”, in Chinese), procedures for refund of VAT couldn't begin when the cargo was hauled in. It was only possible after the cargo was actually loaded aboard vessels. But if you fully utilize the advantage of WBLZ, you can start procedures for refund of VAT when the cargo has been hauled in. It opens up the possibility of long-term storage of export cargo in China, so far impossible because it costs the exporter too much.
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