China Logistics Dos and Don’ts
Source: Breakbulk Magazine, May-June 2010 Issue – In China, the Year of the Tiger is traditionally associated with unpredictability and change. But unpredictability is prevalent in China regardless of the year and the stakes can be even higher when handling out-of-gauge project cargo in the country.Companies doing business in China often face numerous hurdles, including late delivery of plant materials and equipment, substandard packaging and handling, inaccurate or incomplete shipping documents and cargo damage.
That’s why it’s important for anyone with a stake in the logistics to be prepared and involved from day one.
You can take specific steps to reduce or eliminate potential problems by planning, taking a proactive approach to events, effectively communicating across the supply chain and most important of all, ensuring you have a reliable logistics resource that can help you navigate throughout the process.
Companies based outside China should look for a logistics provider/freight forwarder with both a global presence and local expertise. Such a company has deep domain knowledge in the local processes, government regulations and Chinese Customs.
Comprehensive logistics controls should be implemented and monitored from the start. Budgets should include independent surveyors, repackaging where necessary, temporary storage facilities prior to shipment and other precautionary measures that normally would not have to be considered if similar plant and equipment were being sourced from other countries. For buyers, this should not be a major hardship since China-made products often provide significant savings in the first place.
Failure to properly control the logistics process can have dire consequences, such as project delays and massive losses from damage.
An experienced logistics provider knows what can go wrong, especially with shipping documentation. Some Chinese suppliers reduce costs by skimping in areas they believe are less important, such as documentation and packaging. Language variances, cultural differences and Chinese engineering specifications often contribute to inaccurate and incomprehensible documentation that can prove disastrous with Customs at the final destination. In many destination countries, such inconsistencies cause delays, extra costs and even affect the tax or duty holidays that should apply to such cargoes.
Do not rely solely on updates from the supplier. Visit the factory or facility personally or have your forwarder do this on your behalf. You should always check on the actual status and readiness of your cargo. Go through the draft packing list and shipping documents with the supplier, and check the packaging.
Packaging is where some Chinese suppliers try to minimize costs by providing material that fails to meet international standards. If goods cannot be packed correctly the first time, add a clause in the contract with your supplier for a surveyor to approve the packaging. If the surveyor declares the packaging unacceptable, the supplier would have to repackage at his own expense.
An inaccurate packing list will cause problems with Customs in the receiving country, and it can affect transport permits, causing further delays. A properly prepared purchase order will prevent this. If all else fails, use clear, concise communications to resolve problems.
Project cargo imports into China can also be a challenge because Customs regulations can be vague or lack specificity. Because regulations in China are more general and are not uniform, they are open to inconsistent interpretation by Customs officers.
Suppliers in China often are large quasi-government or 100 percent government-owned organizations, so they tend to be bureaucratic and often take a long time to make a final decision on an issue, slowing down the process.
A global logistics provider with a strong local presence in or near the sourcing locations can build a bridge between the suppliers and the buyer – so the cargo arrives on time and intact.
Jon Leong is general manager, BDP Project Logistics in Shanghai. He can be reached at jon.leong@bdpprojects.com.