Ecommerce stores warehouse

China on global warehouse frenzy to boost foreign trade – Quartz

China is investing in a global network of warehouses to smooth its supply chains and boost its foreign trade.

Between January 2020 and December 2021, Chinese companies doubled the number of overseas warehouses they operate, from around 1,000 to over 2,000according to figures reported by state media.

A series of recent policy documents clearly indicate that China intends to continue expanding this international network of warehouses.

For example, the 14th Comprehensive Five-Year Plan released last year explicitly calls on the government to “encourage the construction of overseas warehouses”. An industry-specific five-year plan focused on promoting “quality foreign tradepublished in November is even clearer on the strategic role warehouses should play, saying that China should “rely on overseas warehouses to establish a new foreign trade logistics network” and “optimize the provision of international supply chains”.

Meanwhile, three separate guidance documents focusing on foreign trade development, issued by the State Council between last July and last month, have also focus on (link in Chinese) the need to “develop a number of excellent overseas warehousing enterprises”, including with the direct support of Chinese embassies and consulates around the world.

Why are global warehouses important for China?

On a purely logistical level, having overseas warehouses helps Chinese companies get their goods to overseas buyers faster and cheaper.

Instead of shipping products only after a customer has placed an order, businesses can ship their goods directly to overseas warehouses, clearing the customs process even before orders are placed. . When a customer makes an online purchase, the product can then be immediately shipped to them from a nearby warehouse. In the lingo (link in Chinese) of the warehousing activity in China, we then speak of “products ahead of orders”.

According to a 2020 trade report (link in Chinese) on China’s distribution and warehousing industry, overseas warehouses are estimated to reduce cross-border e-commerce logistics costs by 20-50% compared to retail direct mail and reduce the transportation time from 20 days to 3-5 days.

On a broader strategic level, Chinese policymakers and industry experts view domestically owned and operated foreign warehouses as an important part of China’s competitiveness in foreign trade. This is all the more the case as last month the country’s Ministry of Commerce warned of “unprecedented“(link in Chinese) China’s foreign trade challenges, including uneven global economic recoveries from the pandemic, continued supply chain disruptions, and efforts by other countries to relocate supply chains and reduce dependence on China.

For Chinese companies, the pandemic fueled global e-commerce boom-Which one is plan to continue in the coming years – presents an opportunity to further grow their global footprint and market share.

China Business News, a publication under the Chinese Ministry of Commerce, describe (link in Chinese) 2020 covid-related supply chain disruptions as a “baptism” that triggered “widespread and profound changes” in the cross-border e-commerce industry, leading to a “qualitative leap” in the development of warehouses abroad.

But competition in e-commerce is intensifying. The 2020 China warehousing trade report specifically singled out e-commerce giants Amazon, Walmart, and eBay as formidable competitors in the cutthroat cross-border shipping industry. Not to mention companies like shipping giant Maersk, which are also making major investments in e-commerce.

As Chinese companies set up more warehouses around the world, they also operate a network of warehouses operated by global real estate logistics giants like GLP. Chinese brands currently account for around 10% of GLP’s total warehouse rental volume in Europe, according to the company.

But being able to rely on China’s own network of global warehouses offers its own strategic advantages. As Chinese state media People’s Daily put last january (link in Chinese), overseas warehouses “have become a new station for ‘Made in China’ to ‘go out’.” Or, in more direct terms (link in Chinese): “With overseas warehouses, Chinese products will sell even better!”