One of Loctek's overseas warehouses in the United States. [Photo by Xu Neng]
By Dong Na
In this early January, Ningbo Jiajing Supply Chain has officially put into operation its overseas warehouse in Ontario, USA, welcoming "Made in China" products from more than 100 cross-border e-commerce enterprises. In addition to this newcomer, Jiajing already has 121,000 square meters of overseas warehouses in the U.S., with locations in Los Angeles, Atlanta, New Jersey, and Houston.
From January to November 2021, 3.49 billion yuan of Ningbo cross-border e-commerce exports were delivered at overseas warehouses, more than 3.2 times the total value in 2020, ranking first in China.
Will overseas warehouse lead to new business model for Ningbo foreign trade?
Driving Force for More
Chinese Goods to the World
In the list of provincial public overseas warehouses, Ningbo occupies 7 out of the total 13.
Experts point out that Ningbo enterprises account for more than half, indicating that the city has a complete new eco system of cross-border e-commerce industry chain. "As the world trade growth is slowing down, the overseas warehouse model can assist the majority of SMEs to go abroad and provide a strong driving force for more "Made in China" goods to go to the world. Ningbo also needs to further increase the support for overseas warehouses to drive the high-quality development of foreign trade."
Statistics show that in the past five years, the scale of cross-border e-commerce in China has increased by nearly 10 times, which has strongly promoted the transformation and upgrading of foreign trade. The new business model has especially played an important stabilizing role in foreign trade under the impact of the pandemic.
For example, Ningbo business responded with great agility in the first days when COVID hit, thanks to overseas warehouses. At that time, the home economy in overseas markets rose rapidly. A group of Ningbo cross-border e-commerce enterprises, represented by HOOYA and Aosom, placed orders through the global overseas warehouses in a timely manner and increased supply according to the capacity of factories, which helped many factories to survive.
All kinds of refrigerators, washing machines, kitchen appliances and fitness equipment made in Ningbo sell well all over the world through HOOYA's overseas warehouses. In 2020 alone, the company's overseas warehouse shipments grew by more than 80%, and it also recorded double-digit growth last year.
Help to Ensure the Growth
of Enterprise Performance
In recent years, both the export and import of China's cross-border e-commerce have been higher than the average growth of foreign trade, and the proportion is constantly increasing, leaving a great space for development in future.
As a leading enterprise of cross-border export e-commerce, Aosom has attached great importance to the transformation with data innovation since its establishment and built an intelligent system for global marketing, warehousing, logistics network, as well as customer service. In 2020, the global operating revenue of the company reached 3.457 billion yuan, with a year-on-year growth of 109%.
Up to now, Aosom has set up subsidiaries in 7 countries including USA, Canada, UK and Germany, and built more than 20 self-operated overseas warehouses, whose total area accounting for about one tenth of the total of Ningbo enterprises.
In 2021, key cross-border e-commerce enterprises in Ningbo achieved performance growth of more than 50%, and overseas warehouses became one of the biggest drivers. Enterprises transport goods to overseas warehouses, and remotely control the storage of goods with the logistics information system to manage the inventory. At the same time, they provide perfect after-sales service to realize the return and exchange of goods and local maintenance, which greatly improves the shopping experience of overseas consumers. Largely counter-balancing the COVID-caused slowdown in exports, the supply is much assured by having storage in overseas warehouses.
Looking Forward to the
Commercial Potential of
the New Model
For cross-border e-commerce sellers, overseas warehouses have some "high thresholds", such as high operating costs, huge pressure of goods circulation, long investment cycle, inconvenient capital turnover, poor certainty of overseas policies, great influence by the operation capacity of third-party overseas warehouse service providers, high requirements for selection, and difficult warehouse monitoring.
Taking the United States as an example, the cost of cross-border logistics mainly consists of different parts: sea freight, the cost of customs clearance trailer in the United States, and the cost of warehouse operation and express delivery. Since last year, with sea freight doubled, even some top enterprises faced a lot of capital pressure, and could only be alleviated through bank financing. Not to mention a lot of enterprises integrating industry and trade, the long capital return cycle might lead to the break of the capital chain.
Although most of the traditional foreign trade enterprises are still exploring, and the overseas warehouse barrier has not been fundamentally broken, the popularity of this new model has intrigued many enterprises into discovering new business potential. To further promote the high-quality development of overseas warehouses, China will implement five policy measures, such as speeding up the formulation of project standards, promoting the draft of a new batch of national, industrial, and association-initiated standards, among others.