A company has 10 to 30 clients in China. They have different needs because of the different production schedule and ability. Client A needs about 2 tons supply per month, client B, 7 tons per two months, client C, 8 tons per month, while client D, 5 tons every quarter. This kind of situation is often a huge headache for the company. Under the traditional supply mode, he will arrange delivery according to the customer order. Then the company has to deliver frequently in small lot size because of the irregular delivery time. As this delivery way results in a high freight charge, he has to increase the price. As a result, sometimes we almost lose the Chinese clients for the price.

Then, how can the company reduce the high sea freight charges?

Setting up a warehouse in Shenzhen Export Processing Zone to reduce the high shipping cost result from frequent deliveries in small lot size.Shenzhen Export Processing Zone is located in the mainland of China, but its customs policies and supervision conditions are legally equivalent to Hong Kong. Under the supervision of Chinese Customs and the Inspection and Quarantine Department, the commodities stored in this area are regarded as stored in Hong Kong. Then the commodities can be imported from this area and delivered to the inland customers. The whole process can be complete in 1 to 2 days in general.

He chooses the bonded warehouse of Dongtai International Logistics Company Ltd as his overseas warehouse in Shenzhen, China. The advantages are listed following. First reason is the 1/3 rental of the warehouse in Hong Kong. Second, it is in a bonded zone, and equivalent in functions to Hong Kong. Last one is the high efficiency in customs entry-exit. As a supplier, what he should do is to make a prediction about market share and production sales in China in the next one or a half year, then deliver all the production to the warehouse of Dongtai Logistics in Shenzhen Export Processing Zone in China. The cargos can transit to the warehouse from Hong Kong, or from the port like Yantian Port.

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