by Sanchi Agarwal
A quick update on the status of the US-China Trade War: it seems like there is no hope for negotiation anytime soon.
Initially, the US claimed to only focus on maintaining its leadership position for technology innovation, in order to justify its additional 25% duty imposition of 1333 products mainly from the tech sector – the “Made in China 2025” goods.
This was supposedly intended to disarm China from pursuing massive economic growth and becoming an even stronger threat to the world’s current superpower, the US.
However, having failed to achieve their motives, the US seems to have become more stubborn, impatient, and nervous towards handling the unstoppable Chinese manufacturing industry.
Going beyond tech, they have placed tariffs on fisheries, cosmetics and other products from China as well. This is bad news for all businesses importing products from China into the US.
So, how can a small business deal with this enormous economical change?
With an increase in costs of imports, supply chain disruptions, and unpredictability of investment flows, it may be time to see what changes can be made in the way you import and fulfill orders.
At the moment, you may be shipping your products in bulk from your manufacturer in China to a warehouse in the US. With the trade war in place, there is now a 25% increase in tariffs for China imports, making this option substantially more expensive now.
Another option would be to fulfill directly from mainland China to the US. However, this presents 2 issues:
- If you're looking to cut costs by using a postal service, the Chinese postal system isn't known for it's quality. They tend to offer a lower standard of tracking than you’d expect from a service like USPS.
- Shipments delivered to the US from mainland China undergo strict inspections from both Chinese and American customs, making delays a norm and customers unhappy with longer delivery times.
So, how can this fulfillment problem be solved?
There IS a city that's perfectly located for international shipping AND close to the manufacturing hubs in China...
...and you guessed it. Hong Kong is the answer: a port city known for the freedom, support, and open horizons it provides to young businesses, allowing them to flourish on a global scale.
Consider the benefits of fulfilling from Hong Kong:
- Shorter delivery times: On the map, Hong Kong is a well-located with close connections to an array of cities around the world. 100 airlines service Hong Kong, with direct flights to 220 destinations (not to mention over 50 cities in Mainland China) making it a great city to consider fulfilling from. With strict yet reasonable laws in place, the city is very conducive for growing your business.
- Pleasant customer service: Hong Kong is systematic. Courier services regularly inform, update, and keep their partners and customers in the loop in order to deliver satisfactory service. Their systematic approach to distribution makes packages swiftly breeze through customs!
- Lower total costs: Being a free port, Hong Kong is advantageous for businesses since there are no applicable import and sales taxes. Moreover, the best thing to happen is The Hong Kong Policy Act! According to this Act, the US cannot impose any tariffs on your products / shipments unless their value is over $800 USD.
- Easy business operations: The world / APAC headquarters for plenty of global companies are in Hong Kong. In fact, it has overtaken London to rank as the world’s second best shipping centre. It is really a city known to facilitate trading and is growing year by year as one of the most influential cities in the world.
Looking at Hong Kong from a US-China trade / tariff point of view is significant, as the city overcomes negatives like low quality Chinese courier services, high risk at customs, delivery delays, and unhappy customers.
Easyship Case Study
How is Hong Kong is an ideal destination for eCommerce businesses who...
- want to go international?
- are in the process of going international?
- aren’t happy in the way their shipping structure looks like at the moment?
To help you understand how Hong Kong may just be the right destination for you to ship from, consider this example.
Linda lives in Sacramento, California and runs a small business selling handmade, scented wax candles online. She's been doing great with selling in bulk to retailers in bigger American cities like New York, and is ready to take her brand global.
She is interested in selling her candles to the southeast Asian market, but high shipping costs are holding her back. She's interested in establishing a base in Asia, but not quite sure where to begin.
With no import or sales taxes, Hong Kong begins to look like a viable option. She also comes across Easyship and is interested in the variety of courier options offered.
Currently, she is using an express courier service that allows her to ship cross-country in 2-3 days, with retail costs varying between $80-130 USD for a box of candles weighing 1 lb.
After testing Easyship’s shipping rate calculator, she checked the shipping rate of the same box of candles from Hong Kong to New York, and discovered an enormous reduction in price. The shipping rate went down from $80-130 USD to only $30 USD, with the same 2-3 day delivery timeframe.
But this was not all! She was even more amazed to realize that there were no additional taxes for shipping her crafted candles from Hong Kong. $30 USD was the final shipping / distribution cost!
Linda finally decided to base herself in Hong Kong for distribution. She loves this city and is looking forward to capture the home decor market with her beautiful, scented candles in Asia.
When there's an opportunity for profits and an easy way to go global, why not?
Choosing Hong Kong as your primary destination to ship from can help ease the pain of the US-China Trade Conflict. Thanks to this city being a free port, your business will be allowed to go global and scale in a flexible and profitable way.
When you take Hong Kong's global connectivity and no taxes, combined with Easyship’s dynamic shipping rate solution, your company can excel in its global distribution strategy.
Ready to ship from Hong Kong? Contact our logistics experts to get a customized solution for your business!