Just recently, we have been invited to speak at an online panel discussion targeting foreign merchants regarding the setup of cross-border e-commerce business in Asia.
Many questions were raised from the attendees during the webinar surrounding whether merchants shall be operating warehouses and fulfillment centres in Hong Kong or the mainland China, and what each of their advantages and disadvantages are.
This is definitely a very interesting topic. We would love to share our views to you on this.
Fulfilling in Hong Kong: Facing all Asian markets
As opposed to setting up a bonded warehouse in the free trade zones of China, operating a facility in Hong Kong allows merchants to fulfill and deliver orders to markets across Asia more effectively.
Hong Kong possesses both an excellent infrastructure and a set of straightforward policy to cater the vast importing and exporting demands daily. Unlike the highly controlled shipment quotas and rather complicated documentation, regulations and procedures in China, custom clearance tends to be smooth and simplified in Hong Kong.
You may reckon that the costs for warehouse setup and operation in China would be a lot more competitive than that in Hong Kong. But that is not necessarily true, if you are setting up a bonded warehouse in the free trade zones, the difference in terms of operation charges can be minimal.
However, fulfilling orders for the mainland from Hong Kong could be a challenge. Apart from the basic document requirements e.g. commercial invoice and packing list, shippers are always required to provide consignee identification and full product specification.
Fulfilling in the Mainland China: Facing the Greater China market
On the other hand, if brands are targeting merely Greater China, having a local logistics hub within the mainland will be more valuable than one in Hong Kong or any other free trade zones of China.
It will be also a plus if the merchandise is manufactured in the mainland, earning a reduced cost and shortened time for the bulk shipment from the factory to the warehouse and fulfillment centre. All local orders can also be fulfilled and delivered more efficiently, considering that you would not have to go through any customs.
However, fulfilling orders for Hong Kong, Macau and other parts of Asia from the mainland becomes close to impossible. This is due to the harsh import and export restrictions, as well as complicated custom clearance procedures imposed by the Chinese government.
To answer the question in conclusion whether brands shall be running their warehousing and fulfillment operation in Hong Kong or China, we believe the two can be complementary to each other instead of a competition, serving different markets in the very much clustered Asian region.
Noatum eSolutions is expertise in cross-border logistics and supply chain operations. Our professionals are here to resolve any problems or complications you may have along the way. Just reach out to us if you would like to understand more how we may be able to help with your business.