China Customs Violations and How to Avoid Jail Time

Their case is becoming a bit of a cause célèbre in Canada as “lawyers and politicians lining up behind the couple describe their detention as outrageous, excessive and a gross violation of personal liberty and security.” The couple own Lulu Island Winery, which before the couple’s arrest claimed its exports accounted “for almost 20 per cent of all Canadian wine exported to China.” “The allegations are that ‘a certain brand of ice wine in Canada’ had been declared at around 10 Yuan a bottle (under $2 Cdn), when it was worth many times that amount.”

Their case is viewed by many in Canada as a political one and calls are going out to get Prime Minister Justin Trudeau to intervene. One Canadian politician is quoted as saying “the Trudeau Liberals are mishandling the case by treating it as a consular issue, instead of a serious trade dispute.” The Canadian lawyers for the couple have also expressed their dissatisfaction with the Canadian government not “holding China customs to account.” Interestingly, the lawyers also submitted a briefing paper to the Canadian government that “hints the couple became a target of Chinese wrath because they maintained their innocence” and further stating that “‘many other foreign wineries…were similarly charged but released shortly after admitting to the under–reporting and paying…fines.’ it says. Mr. Chang and Ms. Lu denied violating Chinese rules and were subsequently denied bail.” The briefing paper also warned that the conviction rate in China for criminal offences is nearly 100 per cent.

We used to write fairly often about foreigners getting caught for China customs violations but we mostly stopped as the number of such incidents went into a precipitous decline as the world economy picked up and as foreigners (at least from the countries from which my firm’s China lawyers get most of our clients — North and Latin America and Europe and Australia) seemed to realize it was not worth the risks to violate China’s customs laws. But since Trump’s election we have seen an uptick in China customs problems — at least for U.S. companies and it appears China is realizing anew that getting tough on customs violations is a good way to earn hard currenices. But in terms of how to avoid China customs problems, what we wrote back then holds true now and I will quote extensively from a 2012 post, entitled, China Customs Problem? Keep Your Mouth Shut!

I try hard not to be an ass, but sometimes it is impossible. The other day it was impossible.

Months ago, a company wrote me because it was having a problem with one of their employees. This employee had left the company and at that moment, the company realized it should have made this employee sign various trade secret agreements long ago. They came to me for some help and I essentially told them that they had left the barn door open and the horse had sprung free and now about all that we could do was try to get the horse back by using a lot of sugar. Well, I didn’t really use such a stupid farm analogy, but you get the point.

At the end of their email, they mentioned that they were also being investigated by Chinese customs. To which I told them that they should stop right there and retain experienced professionals to assist them. I then regaled them with horror story after horror story of clients who had come to us after having cooperated with Chinese customs, only to have Chinese customs “turn” on them and threaten them with criminal actions, after having seen the documents. I stressed that they should treat any Chinese customs investigation as a criminal investigation and act accordingly.  hey assured me that they would. I told them not to reveal anything to China customs as “anything can and would be used against them.” They assured me that they would act accordingly.

Just got an email from them saying that they had spoken with China customs about their problems but they were confident everything will work out just fine. My response was somewhat along the lines of how I had just thrown a lit match into a can of gasoline but everything would be fine. Well, I didn’t really use such a stupid car analogy, but you get the point. Anyway, I cannot reveal more because the matter is still ongoing, but I am a lot less optimistic than they are about how it will all get resolved. Maybe the can won’t explode. Maybe.

So what is the point? The point is that no matter how warm and fuzzy you want to get with China customs, they have zero desire to get all warm and fuzzy with you. Their goal is to fine you as much as they can and then maybe just toss you in jail for good measure.Their goal is to make their quotas and you are their quota. I am not kidding. If China customs comes gunning for you, seek help and fast. Why the weird picture of Kim Jung Un? Two reasons. One, Kim Jung Un looks so warm and fuzzy but he isn’t. Two, I just figured I needed to do something/anything out of the ordinary to get people to listen on this point.  

For more on this, please check out and read China’s Detention Of Foreigner For Alleged Customs Violation Should Be A Strong Warning

So what can you do to avoid a major China customs problem? The following is the bare minimum:

1. Do not underreport or in any other way lie to China customs. China customs has gotten really good at discovering the truth and they — like pretty much everyone else — do not like those who try to dupe them. What always shocks me is not that the companies that come to us after having been caught were caught by China customs, but their shock at having gotten caught. Guess what, if your website says that you sell your widgets for USD$1850 and you declare them with China customs as being worth USD$450, you will get caught, and probably sooner rather than later. That is not to say that you might not have a basis for the widely different pricing as you might. In fact, our China customs lawyers have twice convinced China customs officials that the reason for the widely different pricing was that the product sold imported and sold into China was actually a stripped down version of what China customs saw on our clients’ websites. But if you do not have any basis, you are in trouble. And guess what else: saying that everyone else does it or saying that your Chinese general manager told you to do it will not help you one bit. It actually will hurt you.
2. If China customs seems to be coming after you, you must assume that China customs is indeed coming after you and the odds are good they are thinking about criminally prosecuting you. In other words, if China customs starts hinting that it questions something you did, they are talking to you to gather up evidence to proceed criminally. And at this point there are only two things you should do: shut your mouth and get a good lawyer.
3. Oh, and if you did violate China customs laws, it oftentimes makes sense not to claim innocence because as the article about the winery couple implies, China goes much easier on those who confess and repent than on those who do not. But before you admit anything, get a lawyer because there are right ways to admit to things and wrong ways to admit to things.

Be careful out there.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.