WHAT IS BONDED WAREHOUSE AND HOW BONDED WAREHOUSING HELPS YOUR CROSS-BORDER BUSINESS?

??The international trade and eCommerce business are growing?rapidly in China. SMEs (Small and medium-sized enterprises) and even one-man business are capable to complete in cross-border business. Lacking in resources is big limitation and challenge competed with large enterprises. If you are planning to do international trading in physical products, bonded warehouse (as known as bonded area) is a topic that you should know about.?

WHAT IS BonDED WAREHOUSE

Bonded warehouse, is a warehouse, building and area that dutiable commodities can be stored in with deferred duty payment temporary. Bonded warehouses usually provide fulfillment, repackaging, labeling, 3PL or any additional services. Bonded warehouses usually owned and supervised by government or large enterprises. The goods are kept in assigned warehouse or area and no duties need to be paid until products is shipped out to customers/ consumers. The regulation is various in different countries and economies.??????

BENEFITS AND WHAT BonDED WAREHOUSING CAN DO TO YOUR?CROSS-BORDER BUSINESS?

1)Overcome the?Market uncertainty?and?demand fluctuation

Market uncertainty and?fluctuations of are frequently occurred in the global business environment. They really increase potential risk for cross border market entry. The differences in cultural background, demography, religion?also play a big role. Exporters wait for a stable market situation then process the import. Bonded warehousing decreases the potential risk for market entry. In additional, the demands fluctuations happen throughout the years. The demand of seasonal products like winter clothing, Easter chocolate and Lunar New Years goods are very different within a year. Bonded warehouse provides deferred duties and tax payment as a buffer.

2)?3PL?service and solution platform

Bonded area is basically a platform of third parties logistics service provided for exporters and business owner. The infrastructure and 3PL support are plenty in China in recent years. The?3PL?services include warehousing, order fulfillment, distribution, transportation, deliveries, public warehousing etc. You do not have to worry about the lack of supports for your business operation.

3)?Basic infrastructure, specialized equipment and safety of goods

Bonded warehouse usually owned by government and large enterprises. General speaking, these organizations are well equipped in facilities and resources in order to store different kinds of goods such as foods, hazardous materials and chemicals toxic goods that required controlled atmosphere. The security system is offered in bonded area. However, research is also required if you are willing to find a bonded warehouse for your business.?

4) Improve cash flow and cost

The deferred duty tax payment can improve company cash flow. You pay for tax when goods are shipped out. It improves your company cash flow. In addition, labor and storage cost are big factors in the business operation. Bonded warehousing provides you an alternative in order to reduce labor and storage cost by outsourced your warehousing operation and value-added operation in foreign country with lower wage level and rent charge. Bonded warehousing is an additional choice for your global business.

5) Reduce delivery time after order received

Firstly, items in bonded warehouse are guaranteed to be already imported and stored in target country. The delivery distance and time is far closer to buyer compared to traditional method. Bonded warehouse highly decreases the chances of order delay. Furthermore, it provides good customer experience and relationship in long term.

RESTRICTION OF BonDED WAREHOUSE

1) Time-Limit of bonded warehouse storage

Depending on different counties, there are different regulation about time limitation for bonded warehouse storage period. Exporters are required to apply and registered for period extension if needed. However, the bonded time period is not allowed to prolong for certain countries and goods category. You should make sure this before market entry. In case, according to the law, goods can be confiscated by authority if against the bonded warehouse regulation.??

2)Lower flexibility and flow

Items in bonded area are controlled by custom. The relevant application procedure needs to be held for goods inbound/outbound, released or delivery. Customs supervision is required for most of the warehouse operations like repackaging and labeling. Flexibility and flow are affected by this regulation. Overall efficiency of bonded warehouse is lower compared to private warehouse in free zone. You better keep in mind of this.

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