Overseas warehouses help Chinese goods reach more foreign customers faster

With a mature operating model based on its overseas warehouses, Ningbo HOOYA Import & Export Group Co., Ltd. based in Ningbo city, east China’s Zhejiang province, doubled its business volume in 2020, compared with the previous year.

It sells more than 15,000 products under over 20 categories in European and U.S. markets and receives an average of over 30,000 orders per day.

Ten years ago, however, HOOYA was a traditional foreign trade enterprise selling daily necessities with low unit prices and low profit margins.

Its overseas warehouses, which have integrated functions for such purposes as storage, transportation and sale of products, hold the key to the transformation of the enterprise.

The company has built overseas warehouses covering 400,000 square meters and 20 storage and marketing centers around the world.

In fact, besides HOOYA, many more Chinese companies have established warehouses overseas.

Ruston Express, an international logistics company based in northeast China’s Heilongjiang province, built its first overseas warehouse in Russia in 2015.

By joining hands with local logistics companies, the warehouse, which covers an area of 11,000 square meters, can reduce the delivery time of parcels to as short as one day.

Fujian Zongteng Network Co., Ltd., a third-party service provider for cross-border e-commerce merchants, owns 36 overseas warehouses covering an area of about 700,000 square meters. These warehouses have served as “transit stations” between Chinese sellers and their overseas consumers.

According to reliable statistics, Chinese companies have so far established more than 1,800 overseas warehouses in countries and regions like Russia, Japan, South Korea, and the U.S.

These overseas warehouses established by Chinese companies are mainly classified into three categories, namely warehouses that provide third-party services for cross-border e-commerce sellers, warehouses that own cross-border e-commerce platforms and mainly provide services for customers on their platforms, and fast-growing warehouses with distinctive characteristics and great potential for development.

Behind the increasing number and density of Chinese-owned overseas warehouses is the country’s thriving cross-border e-commerce.

As an emerging trade form, cross-border e-commerce has bucked the trend of global foreign trade slowdown because of its advantages including online transaction, contactless delivery, and relatively short transaction chain, and played an active role in helping foreign trade companies respond to the COVID-19 epidemic, said Li Kuiwen, head of the statistics and analysis department of China’s General Administration of Customs (GAC).

The pandemic has intensified global consumers’ reliance on online shopping, according to Li, adding that cross-border e-commerce has seen rising import and export volume amid the outbreak, becoming an important force in stabilizing foreign trade.

In the first three quarters of 2020, the value of imports and exports checked and released through China’s customs cross-border e-commerce management platform reached 187.4 billion yuan (about $29 billion), a year-on-year increase of 52.8 percent, official statistics show.

The import and export lists checked and released via the management platform registered 2.45 billion in 2020, up 63.3 percent year on year.

Overseas warehouses have become an essential link and platform for the development of cross-border e-commerce, according to Zhang Jianping, a researcher with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

By building overseas warehouses and then shipping goods in bulk to these warehouses to sort, package, and deliver them to customers according to local markets, Chinese companies can effectively improve logistics efficiency and reduce operational cost, Zhang added.

During the Singles’ Day shopping spree last year, a consumer in Spain received the TV set he ordered via AliExpress, Chinese e-commerce conglomerate Alibaba’s global online retail platform, within only half a day after placing the order, thanks to the warehouse located near his home.

Compared with traditional logistics models, overseas warehouses feature an operating model that allows goods to be delivered to foreign consumers from the nearest warehouses, thus greatly reducing the transportation time.

In Indonesia, Chinese e-commerce giant JD.com has established a logistics chain combining the functions of warehouses and express services, extending its delivery services to 483 cities and seven islands in the country and reducing the delivery time of 85 percent of the orders to one day from five to seven days.

Regarding overseas warehouses as an important measure for stabilizing foreign trade, the Chinese government has provided strong support for the development of these warehouses in recent years.

In July 2020, the GAC piloted a program to boost cross-border e-commerce business to business (B2B) export, adding two export supervision codes “9710” and “9810” for cross-border e-commerce B2B direct export and cross-border e-commerce export overseas warehouses respectively. The move offered a dedicated channel to goods exported via overseas warehouses.

So far, 22 customs under the direct administration of the GAC have carried out the pilot program, which enables companies to enjoy a series of favorable measures in customs clearance, such as priority in inspection, customs transit, and convenient return of goods. Since the launch of the pilot program, these customs have witnessed a steady increase in the number of customs declarations and the value of exports.

More overseas warehouses are expected to be established by Chinese around the world, and these warehouses will see continuous improvement in operating efficiency in the future, Zhang said.

In particular, the construction of new-generation intelligent logistics systems will further give play to overseas warehouses, thus helping cross-border e-commerce make greater contributions to stabilizing foreign trade, Zhang added.