You see price quotes for undercarriage parts from China, but you do not know why they change. This uncertainty makes your budgeting very hard. I'll explain a key factor: the export tax rebate 1.
China's export tax rebate directly lowers my manufacturing costs as a supplier. This policy refunds the Value-Added Tax (VAT) I pay on materials. This allows me to offer you, the buyer, a much more competitive and stable price for undercarriage parts.
This government policy is a big part of our pricing structure 2. But how it works, and how it impacts your specific components, is very important for you to know. It can change your final cost.
Let's look at the key questions you should be asking your supplier.
Can I ask my supplier if their quoted price takes the tax rebate into account?
You worry if you are getting the best possible price. You are not sure if your supplier is being transparent with you. I believe you should always ask questions like this to build trust.
Yes, you absolutely should ask. I recommend asking, "Is this price based on the current export tax rebate?" A professional supplier, like us at Dingtai, will understand this question. We factor this rebate directly into our cost calculation to give you the best possible price.
Asking this question does two important things. First, it signals to the supplier that you are an experienced, professional buyer. You understand the basics of international trade 3 with China. Second, it opens the door to a more transparent conversation about pricing.
How to Filter Suppliers With This Question
This question is a great tool to find out who you are really talking to. When you work in this industry for over 20 years as I have, you learn the difference between a real manufacturer and a simple trading company 4.
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A Professional Manufacturer (like Dingtai): When you ask me this, my team is trained to explain. We will give a clear answer. For example: "Yes, our price for these track rollers includes the current 13% export rebate. This benefit is already calculated into the final FOB price we quoted you." This answer shows we are not hiding profit. We use the policy as intended: to be more competitive for you globally. This builds the long-term strategic relationship that expert buyers value.
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A Trading Company or Unprofessional Supplier: Be careful if a supplier seems confused by the question. If their salesperson does not know what the export tax rebate is, it is a major red flag. This is a common pain point for buyers—dealing with sales reps who do not know the technical or financial details. It means they are just a middle-man. They cannot control quality, and they cannot give you a stable price. They are just adding their own margin on top of someone else's price.
What the Answer Tells You
A supplier's response tells you everything about their transparency. We see this as part of our service. We are an ISO9001 and SGS-certified 5 manufacturer. We want you to know how we build our price. It proves we are a real factory, not just a reseller. This is how we build trust from the first email.
Here is a simple table showing how to judge the answer.
| Supplier's Answer | What It Means for You (The Buyer) | Our Recommendation |
|---|---|---|
| "Yes, it includes the 13% rebate." | High transparency. Professional manufacturer. | Good Partner. They understand their costs. |
| "What is a tax rebate?" | Low professionalism. Almost certainly a trading company. | Avoid. They cannot control price or quality. |
| "That is our internal information." | Low transparency. They are hiding things. | Caution. They are not focused on a long-term partnership. |
Transparency is not just a word for us. It is our business model. When you ask us, we will tell you. It is the first step in proving we are the reliable, long-term partner you are looking for.
Does the rebate percentage vary by product or HS code?
You order many different parts. You might buy track chains, top rollers, idlers, and sprockets 6 all on one purchase order. You might assume the price logic is the same for all. But this assumption can lead to confusion.
Yes, the percentage varies significantly. The rebate is tied to a specific "HS Code," which is a global customs number for products. In my factory, a track chain might have a 13% rebate, but a simple bolt or nut might only have 9% or less.
This is a critical detail that many new buyers miss. The Harmonized System (HS) code 7 is how customs offices all over the world classify goods. China's tax authority uses these exact codes to set the rebate levels.
What is an HS Code?
Think of the HS code as a product's unique ID number for international trade. An excavator track link is not just a "track link" to a customs agent. For customs, it falls under a specific code, like HS Code 8431.49, which covers "Parts for machinery of heading 8426, 8429 or 8430." The government might decide that parts under this code get a full 13% rebate to encourage exports.
However, a high-tensile bolt 8 used to attach that link falls under a different code. It might be HS Code 7318.15 ("Other screws and bolts"). This code might have a different rebate rate, perhaps 9%, or even 0%.
Why This Matters for Your Order
When you send us a purchase order for a complete undercarriage set, we are not just calculating one price. Our finance team must calculate the cost and rebate for each type of part.
- Track Chains (e.g., 8431.49)
- Track Rollers (e.g., 8431.49)
- Sprockets (e.g., 8431.49)
- Bolts & Nuts (e.g., 7318.15)
This is why some suppliers have unstable pricing. A supplier who does not manage their HS codes correctly might miscalculate their total costs. This can lead to them suddenly raising prices on you later, claiming a "mistake." Or worse, they might engage in customs fraud by misclassifying products to get a higher rebate. This puts your entire supply chain at risk 9.
Example of Rebate Variation in One Order
As a manufacturer, I have to manage this complexity every day. Here is a simple example of how this looks from my side. (Note: These percentages are for illustration and can change based on government policy).
| Product Component | Example HS Code | Assumed VAT Paid | Example Rebate % | Rebate Amount (USD) |
|---|---|---|---|---|
| Track Link Assembly (1 set) | 8431.49.90 | $130 (on $1000 cost) | 13% | $130.00 |
| Track Bolt & Nut Set (1 set) | 7318.15.00 | $13 (on $100 cost) | 9% | $9.00 |
| Idler Wheel (2 units) | 8431.49.90 | $65 (on $500 cost) | 13% | $65.00 |
| Total Order | $208 | $204.00 |
This table shows that for a $1600 order, my company (Dingtai) would get back $204 from the government. This $204 is a direct cost saving that I can pass on to you in the form of a lower price.
If a supplier does not understand this, they might overcharge you. Or they might undercharge you, and then be unable to deliver the goods. Our R&D and finance teams work together to ensure every part we manufacture—whether for OEM contracts or our Dingtai brand—is classified correctly. This ensures our pricing is accurate, compliant, and stable for you.
Can changes in this policy cause my supplier to change their prices?
You finally get a stable price quote from a supplier. You trust it. You plan your inventory and budget 10 for the next six months. Then, suddenly, your supplier sends a new, higher price list, blaming "government policy changes."
Yes, this is the single biggest risk. If the government reduces the rebate percentage, my costs instantly increase. I lose that refund. As a manufacturer, I must pass this cost increase on, or I will lose money. This is a primary cause of sudden price hikes.
This is not a theory. It happens often. As the search information you found points out, in late 2024, China adjusted rebates. They removed or reduced them for key raw materials like aluminum and copper. While our undercarriage parts are primarily steel, this action shows that the government will make changes quickly.
How a Rebate Decrease Affects Your Price
Let's use a simple, clear example.
1. Old Policy: I sell you a track roller for $100. My cost is $80. I pay 13% VAT ($10.40) on my materials. I export the roller and get a 13% rebate ($13 back on the $100 sale value). My cost is stable, and my profit is predictable.
2. New Policy: The government announces that the rebate for HS Code 8431.49 is now 9%, down from 13%.
3. The Impact: I still sell the roller for $100. I still pay $10.40 in VAT. But now, I only get a 9% rebate ($9 back). I just permanently lost $4 on that one roller.
4. The Result: My cost just went up by $4. I cannot absorb this 4% loss across thousands of rollers. I must raise my price to you to $104, just to make the same small margin I was making before.
This is what suppliers mean when they talk about "policy changes." They are not lying. This is a real, hard cost that hits their business overnight.
How a Good Partner (Dingtai) Handles This
This is where you see the true value of a strategic partner versus a simple, cheap supplier. A cheap supplier will just raise the price or, even worse, cancel your order because it is no longer profitable for them. This creates a huge "pain point" for you: delivery delays and unstable supply.
We handle it differently.
- We Warn You: Our team in China monitors these policies. If we hear rumors of a policy change, we will warn our long-term partners immediately. We give you time to place an order before the change happens.
- We Honor Contracts: We will always honor any existing contract or purchase order at the price we agreed on. We will take the loss on that order to protect our relationship with you.
- We Explain Clearly: For future orders, we will not just send a new price. We will send an explanation. We will show you: "The old rebate was 13%. The new rebate is 9%. Our price must increase by 4% to reflect this."
This transparency is how we build long-term trust. You will never be surprised. You will have the information you need to manage your own business.
Is this an internal policy for the supplier, or is it something I can negotiate?
You are a tough negotiator. You are a purchasing director. Your job is to get the best deal. You might see this rebate as a hidden profit margin that you can claim. But this can be a mistake in negotiation.
This is a national policy from the Chinese government, not my company's internal policy. You cannot negotiate the percentage itself. That is fixed by law. The rebate is already factored into the competitive price I offer. The negotiation is on my margin, not the rebate.
This is the most common misunderstanding I see from buyers. They think the rebate is a "discount" I can choose to give them. This is not correct.
The rebate is a refund I (the manufacturer) get from my government. I often get this money 3-6 months after I have already shipped the goods to you. It is part of my fundamental cost structure and cash flow.
Think of it This Way
Imagine you buy a product in the USA that comes with a $10 mail-in rebate from the manufacturer. When you sell that product to someone, you do not sell it for $10 less. You sell it at a fair market price. You then take the $10 rebate yourself to lower your own cost.
China's export tax rebate is the same. It is my rebate. It is what allows me to be competitive against suppliers from Korea, Italy, or the US. Without this rebate, my prices would have to be 9-13% higher just to stay in business. The rebate is not an extra profit. It is the reason my price is low to begin with.
How to Negotiate Like a Pro
This knowledge makes you a smarter negotiator. Instead of saying, "Give me your 13% rebate," you should use this knowledge to qualify your supplier and build a better deal.
A bad negotiator says: "I know you get 13% back, so drop your price by 13%." I cannot do this.
A pro negotiator (like you) says: "I understand the rebate is already in your price. Now, let's talk about my 20-container-per-year volume. How can we use your manufacturing efficiency and material costs to lower the base price further?"
This is a professional conversation. This shows me you are a serious, long-term partner.
What You Can Negotiate
This is how we build partnerships with large distributors. The negotiation is not about the rebate. It is about what we can control.
| Aspect | Can You Negotiate This? | How to Approach It (What to Say) |
|---|---|---|
| The Rebate Percentage (e.g., 13%) | No | This is set by the Chinese government. |
| Supplier's Base Price | Yes | "Let's discuss my annual volume and get a volume discount." |
| Price Stability | Yes | "Can you lock in this price for me for six months?" |
| Quality & Warranty | Yes | "Your price is good. Now, confirm your warranty policy." |
| Technical Support | Yes | "We need custom parts. Can your R&D team support us?" |
We use the rebate to set the low baseline price. We use your volume and our efficiency to lower it even more. We use our 20-person R&D team and ISO9001 quality system to guarantee the value. This combination is how we solve your biggest pain points: price, quality, and stability.
Conclusion
Understanding the export tax rebate helps you see why Chinese prices are low, why they change, and how to negotiate better. It is the key to finding a transparent, stable supplier.
Footnotes
1. Learn what China's export tax rebate is. ↩︎
2. Understand the components of a supplier's pricing structure. ↩︎
3. Overview of the basics of international trade and customs. ↩︎
4. See the difference between a trading company and a manufacturer. ↩︎
5. What ISO 9001 and SGS certifications mean for quality. ↩︎
6. A guide to excavator undercarriage part components. ↩︎
7. How HS codes are used to classify goods globally. ↩︎
8. Learn about the specifications for high-tensile bolts. ↩︎
9. Read about the risks of supplier customs non-compliance. ↩︎
10. Tips for managing inventory and budgeting in procurement. ↩︎