For foreign businesses looking to export goods from China, navigating the country’s customs classification system is one of the most consequential decisions they will make. Two export declaration models dominate the landscape: Model 0110 (General Trade) and Model 1039 (Market Procurement Export). Each carries distinct implications for tax treatment, compliance burden, procedural complexity, and operational cost. Understanding these differences is not a theoretical exercise — it determines whether your supply chain runs smoothly or gets tangled in regulatory bottlenecks at the border.
At Rheaura Group, we have guided over 2,000 foreign-invested enterprises through the intricacies of Chinese trade compliance since 1994. This article breaks down the practical differences between these two export models, with a particular focus on why Model 1039 has become the preferred choice for growing numbers of small and medium-sized exporters sourcing from China’s wholesale markets. Our goal is to give you a clear, actionable comparison so you can make an informed decision aligned with your business model.
What Is Model 0110 (General Trade Export)?
Model 0110, classified under China’s General Trade framework, is the traditional export declaration model used primarily by manufacturers and large-scale trading companies. Under this model, every export transaction must be accompanied by a formal customs declaration filed by a registered export-import enterprise with a completed commercial invoice, packing list, contract, and proof of origin. The declaring entity assumes full legal responsibility for the accuracy of the declaration and must maintain comprehensive records for subsequent audits.
One of the defining characteristics of Model 0110 is the requirement for a formal commercial invoice issued by a registered Chinese exporting entity. This means that foreign buyers or their intermediary trading companies must either establish a legal entity in China or partner with a registered export company to act as the official exporter on record. For many small-to-medium foreign buyers purchasing from markets like Yiwu, Guangzhou, or Shenzhen, this creates a structural dependency on a third-party export agent — and the compliance risks that come with it.
What Is Model 1039 (Market Procurement Export)?
Model 1039, formally known as the Market Procurement Export model, was introduced by China’s General Administration of Customs in 2014 and later expanded under reforms in 2019 and 2022. It was designed specifically to streamline customs procedures for small-volume exporters purchasing goods from designated market trading areas — wholesale markets where thousands of small vendors sell a wide variety of products to foreign buyers.
The key feature of Model 1039 is that it allows consolidated declaration. Instead of each individual product SKU requiring its own customs entry under a formal commercial invoice, Model 1039 permits a single customs declaration to cover an entire shipment containing multiple product categories sourced from multiple vendors within a designated market area. This dramatically reduces the per-transaction administrative overhead. More importantly, goods exported under Model 1039 are eligible for vAT (value-added tax) exemptions — a significant cost advantage for buyers who would otherwise struggle to recover input VAT on low-margin consumer goods.
Tax Treatment: Where the Real Savings Lie
The most compelling argument for Model 1039 often comes down to tax. Under Model 0110, the exporting entity must either collect and remit VAT on the exported goods or, if VAT-exempt under certain conditions, still undergo a formal zero-rate VAT process that requires submitting extensive supporting documentation to the tax authorities. For goods with a standard 13% VAT rate, this process can be complex and time-consuming, and the actual VAT refund timelines can stretch for months.
Model 1039, by contrast, delivers a cleaner outcome: export VAT is fully exempted at the point of export for goods shipped through designated market procurement zones. There is no refund process to navigate, no documentation backlog to manage, and no working capital tied up in pending tax credits. For a foreign buyer sourcing 200 SKUs from a Yiwu market vendor, this means the difference between paying 13% more for each unit or walking away with the full cost advantage baked into the purchase price.
Procedural Convenience: Model 1039 Has a Clear Edge
Beyond tax, the procedural differences are stark. Under Model 0110, each export shipment requires a full set of trade documents: a formally issued commercial invoice with a registered Chinese company seal, a detailed packing list, a sales contract, a certificate of origin, and a logistics booking confirmation. Any discrepancy between the declared value and supporting documents can trigger a customs inspection, causing delays of several days to weeks.
Model 1039 streamlines this significantly. The model is specifically designed to accommodate consolidated shipments from wholesale markets, which means individual vendors do not need to issue separate commercial invoices for each SKU. Instead, a designated market procurement operator aggregates the shipment and files a consolidated declaration. For foreign buyers who are purchasing mixed-product orders from multiple vendors in a single market visit, this consolidation model can cut customs preparation time from days to hours.
Compliance: Staying on the Right Side of Chinese Customs
A common misconception among first-time China exporters is that Model 1039’s simplified procedures mean relaxed compliance standards. In practice, nothing could be further from the truth. Model 1039 operates under a well-defined regulatory framework, and compliance is non-negotiable. Customs authorities still require accurate product descriptions, HS codes, quantities, and declared values for all goods under a consolidated shipment. Misclassifying products or undervaluing goods to take advantage of the VAT exemption is a serious violation that can result in fines, seizure of goods, and the revocation of the exporting entity’s Model 1039 authorization.
The compliance advantage of working with an experienced intermediary — one who understands both the letter and the spirit of Model 1039 regulations — cannot be overstated. Rheaura Group’s compliance team has helped clients structure their market procurement exports in full conformity with current General Administration of Customs guidelines, including proper record-keeping, accurate HS code classification, and timely filing of consolidated declarations through authorized market procurement operators.
Which Model Is Right for Your Business?
The choice between Model 0110 and Model 1039 ultimately depends on the nature of your sourcing operation. If you are a large-scale manufacturer importing finished goods under long-term supply contracts with registered Chinese exporters, Model 0110 may be the natural fit — particularly if you have the internal compliance infrastructure to manage formal export declarations. However, if you are sourcing consumer goods, hardware, home decor, fashion accessories, or any category where SKU diversity is high and order volumes are moderate, Model 1039 offers a combination of tax efficiency and procedural convenience that is difficult to match.
For foreign businesses that lack a legal entity in China, Model 1039 also removes the need to establish a WFOE (Wholly Foreign-Owned Enterprise) or partner with a registered exporter solely for the purpose of clearing customs — a significant structural advantage that reduces both cost and complexity.
At Rheaura Group, we have spent over three decades helping foreign companies make the right structural choices for their China sourcing and export operations. If you are evaluating Model 1039 versus Model 0110 for your business, or if you need help setting up a compliant market procurement export structure, our team is ready to discuss your specific situation.
Contact Rheaura Group today to schedule a consultation with one of our trade compliance specialists.