Supply Chain Solutions in China

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Supply Chain Solutions in China

• Terry Hyde
• Global Development Manager
• Meridian IQ

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What We Will Cover

• Understanding logistics in China
• Making your supply chain more efficient
• Taking the extra cost out of your supply chain
• Taking advantage of modern customs regimes
• Ensuring your supply chain is compliant
• Meridian IQ in China

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Chinas Trade with the World Import Export

• ( billion)

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Chinas Top Imports
( millions)
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Chinas Top Exports
( millions)
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Chinas Top Trade Partners
( millions)
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The China Market
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Logistics Infrastructure Rapidly Expanding-
Expressway Network in 2020 7 radiant 9
horizontal 18 vertical
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Logistics in China Situation Analysis

• 19 of GDP
• Chinese logistics industry was forecast to grow
  33 between 2005 and 2007 (CAGR)
• 57 of manufacturers in China dissatisfied with
  logistic services
• Multinational companies set up domestic supply
  chains - aiming for greater efficiency

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Logistics in China Situation Analysis

• Inefficiencies
• Poor asset quality
• No linehaul concept, no one-stop shop
• Concept of multiple/partial deliveries from Truck
  Load not common
• No seamless integration
• Lack of service reliability
• No visibility of freight flow
• Door-to-door service not common
• Final destination not verifiable
• Different regional trade patterns prevent
  backhaul efficiencies

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The Supply Chain
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DesignSharing our experience
60 Textile 40 Leather upper
Tariff Heading 6404 1100 10 _at_ 16.9 Duty
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DesignSharing our experience
40 Textile 60 Leather upper
Tariff Heading 6403 9996 11 _at_ 8 Duty
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DesignSharing our experience

• 20 FCL Containing x shoes _at_ 2.00
• 4800 pairs of shoes 9,600 total
  value
• Duty at 16.9 1,622.40
• Duty at 8 768.00
• Saving 854.40

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Export Documentation Forwarder Consolidation
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Export Documentation Forwarder
ConsolidationSharing our experience

• The Business
• Worlds largest publisher and distributor of
  children's books
• Shipping from China
• Fragmented global transportation system
• No seamless integration

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Export Documentation Forwarder
ConsolidationSharing our experience

• The Solution
• Streamline a fragmented Chinese transport system
• Coordinate with one preferred shipping provider
• Establish vendor compliance standards
• Provide logistics services at origin and
  destination

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Export Documentation Forwarder
ConsolidationSharing our experience

• The Results
• Significant reduction in transportation providers
  and shipments
• Cost reduction 2 million within 18 months
• Robust reporting system of shipments and business
  metrics

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Export Documentation Forwarder
ConsolidationSharing our experience

• The Business
• UK based cosmetic manufacturer with 500 employees
• Over 90 autumn and Christmas products
  manufactured in China
• 15 Suppliers in China
• 42 less than container load shipments in 6 month
  period

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Export Documentation Forwarder Consolidation
Sharing our experience

• The Solution
• Analyse level of control client has over despatch
  of freight from vendors
• Purchase order management providing visibility of
  orders and freight

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Export Documentation Forwarder Consolidation
Sharing our experience

• The Results
• 79 utilisation of containers
• Visibility of freight from collection through to
  delivery
• Reduced freight cost by 57 (10,638.93)

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Customs Clearance/Compliance
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Customs Compliance First Sale Rule Sharing our
experience
Cost of goods Is there a chain of sales?
Places order with US parent company
Places order with their Hong Kong agent
Places order with a factory in China
Makes the order
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Customs Compliance First Sale Rule Sharing our
experience
Sells 1000 shoes to Hong Kong agent at 6.00 per
pair
Sells 1000 shoes to US company at 11.00 per pair
Sells 1000 shoes to UK company at 15.00 per pair
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Customs Compliance First Sale Rule Sharing our
experience

• The Duty payable on a 6 shoe is 1.06
• The Duty payable on a 15 shoe is 2.55
• Provisions in place to pay duty on the First
  Sale value
• This could have saved the UK company 1,490 on
  one shipment

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Customs ComplianceSharing our experience

• The Business
• High fashion retailer of ski and snowboard
  accessories
• Imported 101 cartons of snowboard accessories

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Customs ComplianceSharing our experience

• The Solution
• Invoiced by their US office 36,374.10
• Factory cost in China was 30,225.11

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Customs ComplianceSharing our experience

• The Results
• Duty saved on one job was 3,199.39
• A net 10 reduction in costs

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Customs Compliance Processing under Customs
ControlSharing our experience

• The Business
• Importer of plastic packaging for Razors
• Currently pay 400,000 a year duty
• Duty of different parts ranging from 2.7 to 6.5

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Customs Compliance Processing under Customs
ControlSharing our experience

• Different Duty Rates

Razorblade 2.5 duty
Shaft 6 duty
Packaging 6.5 duty
Packaging 6.5 duty
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Customs Compliance Processing under Customs
ControlSharing our experience

• Separate items classified as components of a
  razor 2.7 duty

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Customs Compliance Processing under Customs
ControlSharing our experience

• Using PCC re-classified as a razor and pay 2.7
• Duty drops from 400,000 to 166,000
• Saving 234,000 duty
• Saving outlay of 40,950 VAT on this duty

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Meridian IQ in China
Offices 58 in 30 cities Staff
1328 Truck/Tractor 45 units owned Warehouse.
101,295 sqm (3,000 sqm DG whse.) Cold Storage
74,719 tons (-18? to 24?) 54 trucks
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Meridian IQ in China

• Proven logistics infrastructure in China
• China Origin Services
• Availability and uplift
• Control and visibility of your goods
• Ability to reduce transportation costs

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Meridian IQ Our Offer To You

• Free Health Check
• We will review your supply chain, including
• Order management and processing
• Transportation of your product
• Customs compliance

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What We Have Covered

• Understanding logistics in China
• Making your supply chain more efficient
• Taking the extra cost out of your supply chain
• Taking advantage of modern customs regimes
• Ensuring your supply chain is compliant
• Meridian IQ in China

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Thank You