How are bonded warehouses run in China?

With the acceleration of globalization, we can easily search for and buy high-quality and well-known products from all over the world. When browsing the Internet, some imported products seem to be stored in bonded warehouses. What is a bonded warehouse? How to use bonded warehouses to simplify the supply chain process and reduce costs? This blog post will discuss the main functional characteristics and benefits of bonded warehouses in China.

What is a bonded warehouse?

A bonded warehouse is an area functioning for import and export processing, international trade, tax declaration, storage, commodity display, etc., and gains the preferential policy of “exemption from certificates, tax exemption, and tax declaration”. It is an economic zone established with the approval of the State Council and subject to special supervision by the customs. It is currently the economic zone with the largest degree of openness and freedom in China. Goods from other parts of China mainland entering the bonded warehouse shall be regarded as leaving the country.

The main use of bonded warehouses in China

• For consolidated shipping and storage of exit goods

There may be more than one supplier for importers who sourcing products in China, Overseas buyers would like to gather these goods together into a full container or store them for a period of time before exporting, so they need to designate a warehouse in China for collecting and storing the goods. Generally, the manufacturers have the requirement of delivery upon completion of production, and leaving the country upon delivery for remittance and tax rebates; Additionally, there are currently a large number of processing factories with incoming materials and imported materials in China. According to China’s present national policy, their final products are prohibited from being stored in ordinary warehouses that are not supervised by customs, then importers can choose to store the goods in warehouses in integrated bonded warehouses to solve the above problems.

• For entry goods custom declaration and distribution

In addition to being the world’s factory, China is also one of the largest consumer markets in the world. The demands of China’s manufacturing industry and Chinese people are extremely enormous. In order to improve delivery timeliness and reduce storage costs outside China, exported traders to China often hope to set up logistics warehouses in China to accommodate this huge market.

• For international transit (intermediary trade)

Facing the highly competitive international market and the complex international situation, trading companies need to flexibly use particular regulatory areas such as bonded warehouses, bonded ports, and free trade areas in different countries to protect their business secrets and interests and breakthrough trade blockades and tariff barriers. A series of simple processing can be carried out in the warehouse: inspecting goods or changing packaging, shipping marks, labels, etc.

• For goods repair and re-export

China is the largest exporter in the world, So it is inevitable to encounter the problem of commodity return due to the quality issues, such as the consignee abandoning the goods and rejecting pay, product packaging/marks/labels/instructions/minor defects, etc., merchandises without meeting the requirements of the consignee or local regulations. It is cumbersome if the returned goods go back to the domestic factory for repair and then re-exported as a result of one more time to go through a formal process the customs and provide relevant supporting documents. The bonded warehouses can deal with the situation cost-saving and time-efficiently.

In conclusion

Bonded warehouses are widely used for inbound and outbound traders, It is efficient to make full use of bonded warehouses in China if traders have the above needs and optimize the supply chain management and cash flow.

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