What is a Bonded Warehouse and How is it Different from a Normal Warehouse in China?
As an importer or exporter in China, choosing the right type of warehouse for your goods is a key decision that can impact your bottom line. Two main options are normal warehouses and bonded warehouses. But what exactly is the difference, and when might you choose one over the other? This article will explain the key distinctions.
What are Bonded Areas in China?
In China, bonded areas refer to secure, enclosed zones within the country that are designated by China’s customs authority that constitutes a bonded area. They treat goods stored within them essentially as if they are still outside mainland China for customs purposes.
Bonded areas include bonded warehouses, bonded logistics parks, and free trade zones. Any company that wants to establish a bonded warehouse must obtain a license from China Customs. This brings certain advantages but also requires following strict supervision and control measures.
Key Advantages of Bonded Warehouses in China
There are several reasons companies opt to use bonded warehouses:
- Duty and tax advantages – No import duties or taxes are paid on goods while they are stored in a bonded warehouse. Taxes and duties only need to be paid when the goods leave the warehouse and officially enter China. This helps importers defer tax payments.
- Flexible processing – Goods can be stored, inspected, assembled, exhibited, manufactured, and re-exported from a bonded warehouse without customs clearance. This provides more flexibility.
- Improved cash flow – Deferred tax payments means companies can better manage cash flow. Bonded storage lets you delay import tax payments by months or longer.
- Meeting special business needs – Bonding allows various activities like manufacturing, processing, and showcasing that normal warehouses don’t permit.
Difference Between Free Trade Zones and Bonded Warehouses
Difference Between Free Trade Zones and Bonded Warehouses
Free trade zones (FTZs) are also designated bonded areas in China, like bonded warehouses. However, there are some key differences:
- Scale – FTZs are much larger bonded areas, usually spanning many square kilometers. Warehouses are one facility.
- Purpose – FTZs aim to promote trade, foreign investment, and development in a region. Warehouses focus on storage and tax benefits.
- Activities – FTZs allow manufacturing and exhibits. Warehouses mainly offer storage, transshipment, and distribution.
- Customs Supervision – FTZs have separate administrative committees, and rules vary by zone. National customs laws govern warehouses.
- Location – FTZs are located in major port and border cities. Warehouses are nationwide.
What is a Bonded Logistics Park in China?
Bonded logistics parks are another type of bonded area in China. As the name suggests, they provide integrated logistics services spanning transportation, storage, distribution, and more. They combine the advantages of FTZs and bonded warehouses.
Key traits of bonded logistics parks include:
- Sizable warehousing areas, like bonded warehouses
- Residential and commercial facilities, like FTZs
- Logistics services like transshipment, stocking, labeling, distribution, and supervision
- Often located near ports, airports, and transportation hubs for convenience
- Managed as a single customs supervised area
Bonded logistics parks aim to be one-stop logistics solutions, from inbound to outbound supply chain processes.
Example of A Major Bonded warehouse in China
One prominent example of a large bonded warehouse in China is the Shanghai Pudong Airport Comprehensive Bonded Zone. Some key facts:
- Over 1.4 million square meters of storage space
- Located in Shanghai’s Pudong Airport Free Trade Zone
- Open 24/7 for maximum efficiency
- Managed by experienced logistics partners
- Temperature controlled and hazardous goods facilities
- Direct air and road links for fast transshipment
- Handles valuable goods like electronics and pharmaceuticals
- Provides customs declaration, inspection, and warehousing
In summary, as one of the largest bonded warehouses in China, the Shanghai Pudong Airport facility demonstrates some key traits like tight security, flexible customs processes, and value-added services beyond just storage.
Deciding Between Bonded vs. Normal Warehouses in China
When assessing normal vs bonded warehouses in China, consider factors like
- Import volume – High volume importers gain more duty and tax advantages from bonding. Lower volumes may do fine in normal warehouses.
- Goods value – High value goods like electronics, pharmaceuticals, and specialty items achieve greater cash flow benefits from deferred duties in bonded warehouses.
- Storage time needed – Goods stored longer term can maximize tax savings in bonded warehouses. Faster turnover may suit normal warehouses.
- Customs processing needs – Companies needing specialized handling like manufacturing and showcasing should choose bonded warehouses or FTZs.
- Location – If situated near vital airports or seaports, bonded warehouses provide an ideal transit point into China.
- Supply chain role – For a key import/export base, bonded facilities make sense. For an end destination warehouse, normal facilities are fine.
Ultimately, bonded warehouses help importers and exporters lower costs and achieve trade advantages. For companies using China as an international supply chain hub, bonded storage and processing is often the best choice
