Expanding your eCommerce business in China is not as easy as it first seems. To succeed, you need to be aware of certain challenges that are common in the Chinese market, and high on our list are the challenges of logistics.
Global logistics in China is a lot different from what you might be used to, so it’s important that companies doing business in the country take some time to understand these unique complexities before they dive in headfirst.
Excessively regulating shipments, imports and exports can cause a number of problems including customs delays, higher tariffs for importing goods into China as well as other risks such as fines.
These excessive regulations make it difficult to get your shipment through in a timely manner because every time they try to import something new they have to revise all their policies and sometimes even add more laws. All of this just slows down the process needlessly.
Shipping costs can be astronomical in China and that’s probably the biggest challenge facing logistics. The best way to get around this is by choosing a shipping method that offers volume discounts when you ship more than one shipment per month, such as air freight or container shipments. However, not all shipping and logistic companies offer these benefits so it’s important to ask before deciding on one.
The language barrier that exists in China can lead to a lack of understanding of customer’s needs, difficulty getting to know foreign customers as well as other risks such as cultural misunderstandings, longer customs clearance times, increased freight costs because they need more people or equipment to get goods through Customs at ports, etc.
The vast majority of Chinese business people are not fluent in English so it becomes an obstacle when trying to do international trade with someone who does not speak your language fluently either (i.e., the seller). It will be difficult for communication between parties involved and there would probably be several miscommunications.
The infrastructure in China is not as good as the rest of the world. This means that there will be a lot more traffic congestion. And if your shipment doesn’t make it on time per transit plans or agreements this could result in delays for customers who have been waiting for their products for a long period of time.
This ultimately has an impact on customer satisfaction and creates work stress with employees who are responsible for overseas projects.
Many of the warehouses in China are overcrowded and poorly equipped. This is typically a result of Chinese companies outsourcing their logistics operations to other countries.
And as a result, it can cause issues with storage space (e.g., overcrowding of goods in rooms), loading docks that are not big enough for the trucks to be able to get through, insufficient room height for easy crane operations in the warehouse, etc.
The problem has gotten so bad that many real estate agents have begun renting out empty lots or spare warehouse space as a way to accommodate these companies who need more space than what they currently have available.
The tight labor market in China also affects its global logistics operations and may cause these problems which may include a shortage of qualified personnel, increasing operating costs to get goods through customs at ports.
It also means other risks such as higher insurance premiums for imported products that need special handling because their employees are underqualified or inexperienced.
The skills gap is due to many factors like aging workers (who have worked long enough), rural-urban migration trends, etc.
This forces companies with international trade to rely heavily on multinationals from countries outside of China who already have an established workforce – so it’s not really benefiting local industry where they would be able to stay competitive while still having access to the same skilled labor pool.
The rise in labor costs means decreased competitiveness, customer dissatisfaction due to higher prices of imported products, etc.
Labor costs will continue to increase as the demand for skilled workers continues to grow because there are not enough people who have the necessary skill sets – do companies need a way to cut their expenses or else they won’t be able to compete on the international level.
It also means businesses can’t afford new technology (which might mean getting more competitive with other countries) if it requires too much capital investment upfront. They would rather take care of business today than worry about what tomorrow has in store when no one knows how top-level management plans will change things.
The need for digitization is another consideration that affects China’s global logistics operations and may cause these problems which may include a lack of transparency, slower growth because they’re still relying on outdated methods instead of using new technology to provide faster service, etc.
Digitizing means being able to capture data in real-time so it can be used efficiently – but this isn’t the case. It also means better decision-making capabilities (e.g., forecasting) as well as reducing time spent processing goods at customs or dealing with frauds when an entire database has been collected from all parts of supply chain management processes
The country has made strides in innovation capacity over the past few years, but it will still take a long time for them to catch up with more developed countries like Britain and Germany who have been investing heavily into R&D efforts on these technologies.
hat said, China’s investments are expected to grow roughly 15% over the next few years and this will help them to compete with other countries in logistics operations.
Lack of market data transparency can be the reason for the inability to determine a company’s performance due to the absence of accurate information. With this lack, companies are unable to improve because they’re not measuring anything – so it can’t get any better if you don’t know what needs improving.
Without being able to measure success or failures in different parts of the supply chain management process (e.g., manufacturing) then how will anyone know where improvements need to be made?
This lack of partnership can be due to an organizational structure that is less familiar with the importance of supply chain management in today’s world, or a cultural preference for autonomous decision-making and execution without much outside input or oversight.
The result? Higher costs, longer lead times, and less competitive products.
That’s why it’s important to partner with 3rd parties global logistics provider that has mastered the art of supply chain management to help you identify inefficiencies in your organization so you can take steps to fix them on your own or with outside assistance from experts.
China’s continued growth in international trade requires a global logistics system that can handle long-distance trade. China needs to take steps in order to improve the efficiency of its systems and reduce the risk involved with international shipping so they can compete on an even playing field internationally.
Yet despite all these challenges, China offers great eCommerce and business opportunities for those who are willing to take the plunge.
The country is always innovating and changing which means that there will be growing opportunities for international businesses in China’s logistics sector as they continue to modernize their systems.
As an eCommerce business owner, you know that expanding your operations to China is not an easy task. The process of finding reliable and trustworthy shipping and logistic companies can be time-consuming and frustrating. You need someone who will help you navigate the legalities of doing business in China while also keeping your company’s interests at heart.
Fulfillment Bridge is an innovative logistics provider that offers solutions to help you expand your businesses into Asia. We are committed to providing our clients with the best service possible by simplifying the entire importing process from start to finish, saving them both time and money along the way.
Let us help take some burden off your shoulders so you can focus on growing your business!