In today’s interconnected world, you can’t truly be a multi-national company without incorporating China into your global supply chain. Long considered the world’s factory, the China of the 21st century is so much more. It is home to an emerging and growing middle class with purchasing power that will eclipse most other nations in the near future and its rapid adaption to e-commerce without borders is unparalleled in this decade. The infrastructure for companies shipping in and out of the country needs to be well-managed, yet complex. Speed-to-market is a constant concern, and there are multiple points of friction that can slow down even the most sophisticated supply chain in the past.
Chang Says... |
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| The complexities of doing business in China can seem insurmountable, but having the right technology solution can make all the difference. |
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Road Blocks Ahead
The complicated and constantly-changing compliance requirements from multiple government agencies in China affect almost every aspect of supply chain operations and performance in turn-around time, order fulfillment rate, and costs. To maintain its competitive advantages, China’s government is aggressively and methodically introducing trade facilitation measures to help companies with demonstrable compliance capabilities, such as achieving Advanced Certified status, while realigning its resources to intensify the scrutiny and audit of those companies without.
In addition, China’s multiple and constantly expanding Free Trade Agreements (FTAs) with countries and regions around the world represent an opportunity for cost-savings, but complicate the process of compliance. Added qualifications, documentation, and more can hinder the speed of the supply chain. Companies doing business in China must have a plan to manage the documentation requirements for FTAs, FTZs, and more, alongside in-depth knowledge of all of the layers and facets of Chinese import and export regulations.
The complexities of doing business in China can seem insurmountable, but having the right technology solution can make all the difference. Bumpy roads become smooth and speed limits increase when supply chain operations are automated. However, simply making the switch from manual processes to automated isn’t enough to guarantee the swiftest supply chain in China. Unhindered speed requires an infrastructure that combines automation, local trade regulations experts, and proven practice-based process design.
Stepping on The Gas
The first step in developing a winning China strategy is establishing a China Trade Management (CTM) infrastructure of processes, people, and technology. This requires incorporating the myriad compliance requirements into strategic supply chain planning and daily operations. These steps will help automate import and export procedures to effectively meet compliance requirements, realize total cost savings, and increase operation efficiency before, during, and after goods clearance.
Next, the CTM service should integrate the internal audit process with business intelligence capabilities to proactively identify any potential compliance issues, which facilitates self-compliance resolution. Finally, the CTM should include a local team of experts to monitor and analyze the constant regulatory changes and provide automatic and continual content and system updates for ongoing operations. This step is necessary due to the short lead times companies have between the announcement of new trade compliance regulations and initial enforcement actions, which can happen in one week or less.
An extensive, up-to-date data bank requires well-trained experts with knowledge of trade and customs laws, customs clearance, and language skills. The experts must be able to gather information from China against the backdrop of different requirements in different industries, such as automotive, pharmaceutical, agriculture, engineering etc., and continuously add data. Most companies can’t afford to provide adequately qualified personnel for such research within their own organizations. Thus, they must entrust this task to the solutions provider, who undertakes the research on their behalf, connecting the important company-specific information with their own technology and their own data.
Full-throttle
With the right CTM solution deployed, experts on the ground, and internal systems structured for success, the road in and out of China opens up, becoming a true autobahn built for speed. A fully-automated supply chain, augmented with split-second knowledge, will allow companies to out-pace their competitors for fast turn-around and increased speed-to-market. The growth of digital trade and e-commerce around the world, and particularly throughout China, makes speed an increasingly important factor. Companies that haven’t taken advantage of technology to automate and integrate their supply chains will end up left in the dust.
Check out American Shipper’s report from earlier this year, The Dragon Still Roars: Managing the Complex Trade Opportunities in Modern China, to take a closer look at the four key elements of China’s position on trade: Expanding ties with the EU, the growing consumption market, holding position as the world’s manufacturing hub, and its possible rocky future with the United States.
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