Preparing for China Validation

Custom and Border Protection (CBP) notifies C-TPAT members, who have all or a majority of their foreign supply chain business partner (FSCBP) in China, when they have been selected to be part of the joint validation process with CBP and the Chinese Government. This is in contrast to a non-joint validation which takes place in any country other than China, where the foreign government only participates as an observer when they are seeking mutual recognition or the mutual recognition procedures are being validated by the C-TPAT’s Supply Chain Security Specialist (“SCSS”).

When a factory has been tentatively selected by the SCSS, its name will be submitted to China Customs. This may result in China Customs visiting the facility in order to determine if they would pass an audit by the SCSS.

The Chinese Government will make the final determination if the selected location will receive a validation visit.

CBP will retrieve information from the member’s IOR (Importer of Record) number(s). This will be accomplished by identifying the MID (Manufacturer Identification Code) number(s) for one or more of the member’s foreign vendors which has been designated in and/or located in or nearby the target province(s). A MID code is derived from the name and address of the entity (i.e., factory) performing the origin process.

CBP has either selected companies for validation or has requested the C-TPAT member to create a list of MID numbers for the Chinese provinces listed above.

CBP wants the member to verify that the vendor/supplier is a business partner currently being utilized /selected by the C-TPAT member’s company.

If the C-TPAT member is an importer and is no longer sourcing from the vendor identified by the MID number of the targeted provinces, the member must confirm and notify its assigned SCSS. If necessary, the C-TPAT member must provide updated vendor information as requested below (if applicable).

The C-TPAT member must only provide updated information from the vendor located in the targeted provinces. If the company no longer sources from a particular province, they must advise the SCSS. The C-TPAT member will continue to remain on the C-TPAT internal list until another location in China is targeted.

When a SCSS selects a FSCBP as the validation site to be visited, it must complete a C-TPAT assessment, which will consist of the following:

  • The foreign supplier
  • The consolidation facility, if necessary.
  • The trucking company (which will be requested to be present at the meeting).

The data for the FSCBP to be supplied must provide the following information:

  1. Legal name of the factory/supplier in China.
  2. Complete factory address (complete address with city, zip code and verify province or close proximity to targeted province).
  3. Import volume (Dollar Line Value, number of shipments, etc.) from the factory during prior calendar year.
  4. Percentage or number of Air Shipments/Ocean Shipments from factory.
  5. Percentage of LCL (Less than full container) loads shipped versus FCL (Full container load) from factory.
  6. Importer POC (point of contact) phone number and e-mail address.
  7. China factory point of contact name, phone number and e-mail address.
  8. China factory availability for validation during the above tentative months scheduled for visit.
  9. As the Importer, the C-TPAT member must provide a brief summary of the supply chain from the selected vendor to the foreign port (official name/location of port). This must include the name(s) and addresses with the provinces of all parties (i.e. 3PL’s, NVOCC, Freight Forwarders, Carriers, Local Truckers, Consolidating sites where cargo/container is loaded, and /or links or sites – consolidation site, container depot, feeder vessel, rail station, etc.) where the cargo or container is moved or transported. This will enable CBP to understand the importer’s foreign supply chain from the point of origin, manufacturing, loading/stuffing and/or laden on the vessel for export.

The importer must provide all parties involved in this supply chain, regardless of whether or not the party is selected by the shipper, manufacturer, freight forwarders, and carrier.

The summary should describe the flow of cargo and/or movement of the container from the point of loading to the foreign port to be laden on the vessel relative to FCL’s and/or trucks (LCL’s).

In addition to the China visit, the C-TPAT member will also undergo a domestic visit.  The SCSS will visit the domestic office and warehouse (importer or third party warehouse). This visit will most likely be conducted prior to the foreign visit.

Validation phase requirements have undergone significant changes since the C-TPAT member was initially or last certified. The SCSS requires the C-TPAT member to create written procedures.

The foreign shipper, consolidator, and trucker must be prepared for the C-TPAT validation visit. If they fail to demonstrate compliance with minimum security requirements, the C-TPAT member may be suspended from the program, even if the C-TPAT member demonstrated domestic compliance.

NJA comprehensively prepares its clients for the validation phase with the following steps:

  1. Create a supply chain flow chart in order to analyze company exposure to risk starting with the shipper (foreign) and ending with the importer of record and the domestic consignee, regardless of who is responsible for contracting the business supply chain partner.
  2. Review the participant’s approved security profile to ensure that it is compliant with CBP’s current and more stringent requirements. Strategize with participant’s C-TPAT team in reviewing, updating and creating written procedures in order to implement correct requirements
  3. Verify the security survey questionnaires have been sent and completed by the FSCBP, and in particular, by the companies in China.  The responses will be reviewed/audited by the SCSS during the validation phase.
  4. Thoroughly review the security survey questionnaires to ascertain if the FSCBP is meeting the minimum security requirements and if the written procedures exist and have been implemented.
  5. Review the FSCBP deficiencies identified in the security survey questionnaires, and make recommendations and create written procedures.

In addition to preparing the C-TPAT member in advance of the validation visit, we will also be present at the validation. We will assist the participant in responding to the validation report which they will receive within ninety (90) days after the validation/revalidation has been completed.

Thorough preparation for a validation visit with the SCSS is a mandatory prerequisite in order to maintain C-TPAT membership and to receive the benefits that were the driving force behind joining the program.

Successful completion of a joint validation will make your company eligible for increased        C-TPAT benefits (Tier 2 or Tier 3), according to CBP. Since a lot of work is required in order to prepare for both the foreign and domestic visit by your CBP security specialist, you should start now.

Your CBP security specialist conducts a validation/revalidation visit to determine if you are presently as well as previously meeting the C-TPAT minimum security requirements since you became a Tier 1 Certified member. Please contact Norman Jaspan Associates, Inc. so that we can help you prepare your response to CBP’s request for information relative to a China visit and then help assist you and your FSCBP to prepare for the validation visit.