In the last decade, emerging markets have become critical to global retail and consumer goods companies seeking low-cost sources of goods and high-growth sources of revenue. What's more, in the last 18 months the recession has propelled increasing focus on markets like China and India, as the growth of CPG (consumer packaged goods) in some Western markets is anticipated to be sluggish if at all existent for the foreseeable future. Success in emerging markets requires not only a deep understanding of the consumer market, but also the appropriate organisational and supply chain structure to support a changing market-facing strategy.
There is no one-size-fits-all organisational or supply chain structure for Asia, and to some extent each market requires localisation. This is particularly true for how a retail company approaches its management of its customs and trade activities required to support dynamic supply chains. In Asia Pacific, our experience is that the best operating models for retailers, from a customs and trade perspective, successfully balance the following challenges:
WMS has extensive experience of working with retailers (and their 3PLs and service providers) across the region to structure their supply chains, on the one hand to meet local customs compliance requirements but also to maximise value.
Typical projects for our clients in this industry cover:
In addition to sales to third party retailers, a sports apparel company was planning to sell products into Japan to and through its own stores, as well as through E-commerce. The company approached WMS for advice.
We discussed the details of the various product flows with the clients, focusing on fixed and variable components in the supply and invoicing chain. We highlighted the risks of comparable parallel imports at different values, as well as the quota restrictions on some of the products to be imported.
We subsequently designed different import models for the client to reduce duty costs and risks. Some of the pertinent aspects were:
Our client sourced footwear from China, Vietnam and India and used Hong Kong as hub to receive this footwear and redistribute it worldwide, including back to China. The company did not utilise any FTA preferential treatment for its trade flow.
WMS analysed the “as-is” trade model and advised on a new supply chain model to reduce costs and enhance market access.