BEIJING – Chinese companies wishing to enter the global market face delivery problems.

Access to cheap production at home used to give Chinese companies an advantage abroad. But now that is turning into a disadvantage, as pandemic and trade tensions disrupt international shipping channels.

Many goods can’t be shipped, said Fan Xueyu, vice president of international marketing and general manager for Asia-Pacific at Chinese appliance maker Hisense.

The cost of shipping containers has quintupled, from $3,000 to $15,000 each, and shipping to Europe takes about a week longer, she said in an interview in Mandarin last month.

From congestion in the Suez Canal in March to the re-emergence of Covid cases near a major Chinese export hub in Guangzhou in June, logistical failures have plagued global trade one by one.

“What you have in Europe, what you have around the world, I wouldn’t call chaos, but it’s a lot of logistics disruption,” said Alexander Klose, executive vice president of overseas operations at Chinese electric car company Aiways.

“So we had to overbook shifts, we had to delay shifts because there were no ships or containers. It definitely affected us,” he told CNBC in an interview in June.

For the company, which makes its cars in China and sells them to Europe, the outages “delayed some shipments by two to three months just because the cars were sitting in port and not being shipped,” Klose said.

Overseas demand for Chinese-made products remains strong, according to both company reports and official figures. The customs agency said exports to the European Union in the first half of the year rose 35.9 percent from a year earlier to $233 billion, and exports to the United States rose 42.6 percent to $252.86 billion.

Hisense is still looking to expand overseas, and it earned $7.93 billion in international markets last year during the pandemic. By 2025, the company said, it aims to triple the contribution of overseas markets to total revenue to $23.5 billion.

Chinese multinationals are probably rediscovering what they have long known. The best growth opportunities are right in front of them.

But shipment delays mean the latest challenge Chinese companies face when trying to reach international markets.

According to James Roth, a partner at Bain, a management consulting firm, of the roughly 3,400 Chinese companies operating internationally, only about 200 have overseas sales of more than $1 billion.

“If you dig in, the early pioneers — Lenovos, Haier and Huaweis — seem to me to be exceptions rather than vanguards that paved the way for many, many Chinese multinationals that followed them overseas,” Ruth said, referring to three Chinese brands known internationally.

These companies tend to “use a more export model for their international business,” he said. “Chinese multinationals are probably rediscovering what they have long known. Their best growth opportunities are right in front of them.”

China is the world’s second-largest economy, and many economists predict it will surpass the U.S. and become the largest in the next few years.

Amazon bans, taxes and other risks

Other Chinese companies that sell products overseas have recently run into problems with Amazon’s crackdown on fake recalls.

“We understand that the behavior of some sellers has been found to violate Amazon’s ‘Seller Code of Conduct’ and other terms, (which has led to) operational restrictions,” Li Xingang, director of the Department of Foreign Trade at the Commerce Ministry, said at a press briefing earlier this month. This follows CNBC’s translation of his remarks in Mandarin.

He added: “We have always demanded that businesses comply with the laws and regulations of each country, respect local customs and mores, and develop activities in accordance with the law.”

Chinese traders may also face higher costs due to the EU’s new tax policy on goods exported to the region.

“The political, economic, regulatory, logistical and human resource challenges facing Chinese businesses when going overseas have increased significantly,” said an article in the official China Communist Party newspaper People’s Daily, published in late June in connection with the business association’s latest report on the risks for Chinese companies going overseas.

“In recent years, insufficient risk identification and prevention has become an important problem for Chinese businesses, preventing them from ‘going public,'” the article said, according to CNBC’s translation of the Chinese text.

Alibaba’s advantage in air cargo

For Alibaba, a major player in China’s domestic e-commerce market, the overseas entry strategy includes an investment in the logistics division of Cainiao.

Thanks to Cainiao’s partnerships with various companies chartering cargo planes, “we have a steady supply of air freight to European countries,” said William Wang, general manager for Spain, France and Italy for AliExpress, Alibaba’s international e-commerce division.

He claims that as a result, sellers on AliExpress have been able to deliver their products to customers without additional costs or delays.

However, air freight is usually much more expensive than trucking, making it impractical for exporting cars or large appliances.

More overseas warehousing and acquisitions

Logistics challenges mean that Chinese companies will continue to localize in international markets.

E-commerce companies are building or leasing warehouses near customers in Europe so that sellers can pre-ship goods for storage there. Once a customer places an order, the goods need only be shipped from the nearest warehouse, not across the continent.

Chinese companies built about 100 new warehouses overseas in the first half of this year, after an increase of 800 last year, according to China’s Ministry of Commerce.

Chinese companies are looking for other ways to establish a presence in overseas markets.

AliExpress plans to double its staff in France, Spain and Italy next year from just over 200 people currently, Wang said.

Fang said Hisense plans to make more acquisitions and build more factories in different countries as tariffs make it more expensive to sell Chinese products in some markets, such as the U.S.

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