Thanks to cross-border ecommerce or CBEC, you can now sell your goods directly to Chinese consumers without having a legal Chinese entity. But even though CBEC has made the Chinese market more accessible to foreign merchants, there remains the challenge of choosing the optimal logistics solution for your business.
As a foreign merchant, you can sell your goods in China either through the bonded warehouse model (B2B2C) or through direct mailing (B2C).
The bonded warehouse model (B2B2C), also known as “stock first, order later,” involves importing products in bulk into an approved CBEC bonded warehouse in China (a building or secured area where dutiable goods may be stores without payment of duty). After an order is placed, the product clears Chinese customs directly in the bonded warehouse and is shipped to arrive at the customer’s doorstep within two to three days. However, only products with one of 1,293 HS codes are allowed to be imported using this method.
The direct mailing model (B2C), also known as “order first, deliver later” requires the customer to first place an order on a registered CBEC platform first. In order for the product to be shipped to the customer, it must be kept at an overseas distribution center that is linked to Chinese customs and records of the order, including shipment and payment details, must also be submitted to Chinese customs.
So, what are the differences between the bonded warehouse model and the direct mailing model?
The bonded warehouse model…
1) allows products to arrive at customers’ doorsteps much faster thanks to the simplified and faster product registration process
2) allows companies to postpone import duty and VAT charges
3) allows companies to move revenue to a foreign bank account much more easily
4) expands service to include the Chinese hinterlands thanks to new CBEC zone in Chongqing, Chengdu, etc.
The bonded warehouse model is, therefore, perfect for new businesses with medium turnover products that are interested in testing out the Chinese market using small batches of products.
The direct mailing model…
is generally more trusted by Chinese consumers because of its longer delivery time that infers that the products are coming from overseas
The direct mailing model is, therefore, more suitable for brands looking to introduce new products in the market, as well as smaller products of higher value.
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