The Pros and Cons of Hosting Your Business Warehousing in China or Hong Kong
If your business manufactures or sells a product made in China or the Far East, there are many decisions you must make when it comes to the shipping and warehousing of those products. While some find it beneficial to use domestic United States fulfillment centers for their warehousing needs, many businesses rely on e-commerce warehousing and fulfillment centers already in China.
But how do you decide where to go? Simply going with the cheapest option isn’t always the best idea, because the lowest cost doesn’t guarantee the best service and the best fulfillment companies. With so many other factors to consider, it can be overwhelming trying to figure out where is the best location for your fulfillment needs. If you’re considering moving your warehousing operations to China, here are some pros and cons you should consider before making your move.
Lower Warehousing Costs
There’s no denying that hosting your fulfillment center needs in China or Hong Kong can be much more affordable than doing so domestically. This is great news for your business, because you’ll get to keep more profit. But as we mentioned before, lower cost doesn’t always mean a better deal. In fact, it may mean a reduction in service or other hiccups that are out of your control. Given the distance it also may not be feasible to drop in and check on things if they go awry. Using a domestic-based warehouse in your community, on the other hand, allows you to better monitor your inventory and ensure quality control.
Close to Manufacturers
If your merchandise is manufactured in China or the Far East, it may make sense to warehouse it there too. The product will have less distance to travel less to get to the warehouse and it can be shipped directly from the warehouse in China to the customer elsewhere on the globe. The downside to this, however, is that you may never see the merchandise and the packaging yourself before it ships out, so you give up a degree of quality control using this method.
Low Shipping Rates
If your merchandise is manufactured in China, shipping an item directly to your customer from China can be more affordable than bulk shipping the item from China to another country and then shipping each order individually to customers. In fact, most merchandise in China can be processed within 2-3 days, ensuring it ships quickly and efficiently, directly to your customer. Better still, many items coming from China will not need to go through a lengthy customs process once they get to the United States, cutting your customers’ wait time.
Unfortunately, it can still take a bit longer to send merchandise from China to elsewhere in the world, so despite the fast processing and customs times, it may still take longer than some customers are willing to patiently wait.
Lower Inventory Requirements
Warehousing in China allows you to keep lower quantities of merchandise on hand at your warehouse location because it is manufactured nearby. Though it can be more expensive to store less merchandise, the cost savings of doing business in China can often make up for this. This can in turn save you even more on your warehousing costs, and it may be a significantly lower investment in product that may or may not sell, saving you money in multiple areas. The downside to this is that should you get a larger order, your manufacturer may need to scramble to ramp up production to fulfill the order in a reasonable amount of time for the customer. Remember, you’ll still need to ship the items once they are manufactured!
Market Testing Capabilities
Using a China-based or Hong Kong based fulfillment center allows for fast product market testing, so you’ll know if your product is worth the investment. This same service can be done domestically; however, it can be a lot more expensive. The downside to hosting market testing in China is that you may not know how the product is being tested, or who it is being tested on.
Very Low-Cost Items with No Delivery Time Sensitivity
Certain dynamics about your product itself may also dictate whether or not using an overseas fulfillment service is prudent. Specifically, the price of your product and the time sensitivity of delivery to customers will have a big impact on your decision. For low priced products, utilizing the lowest cost fulfillment methodology is imperative, and thus lends itself to potentially outsourcing overseas. Furthermore, products that don’t need to be delivered quickly could be a match for Chinese or Hong Kong fulfillment providers. If, however, customers demand quick delivery of your products, the time delays that come without having physical inventory in the distributed market will likely cause tremendous pain in terms of customer complaints and dissuade potential customers from ordering.
The Final Verdict of Warehousing and 3PL Fulfillment Companies in China and Hong Kong
Ultimately, there is no one-size-fits-all answer for every business. Whether or not it makes sense to host your fulfillment in China is a decision each business must make for itself by considering a variety of factors, including cost, location, and more. If you do decide to warehouse in China, make sure you are aware of all costs up front, and do your due diligence using reviews and other means to make sure the warehouse can provide the services you need as compared to domestic warehousing. Warehousing in China can be a lucrative decision for any business and is worth your business’s consideration when deciding where to host your fulfillment.
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