Most often, business in Russia is associated with the purchase of goods, equipment and raw materials abroad. There is a business for which production is created in the countries of Southeast Asia, after which the goods are delivered to other countries. This is done for one simple reason: cheap labor and production capacity. In addition, these countries (most often China) have a ready-made production base, which significantly reduces costs. And so, you buy goods in the same China or have created production in another country, a bright future is just around the corner, workers are working, goods are being manufactured, but something is missing. How will you deliver the goods? Beginning businessmen mistakenly think that the main thing is to find a supplier, and the rest is not important. But that's not true. Without properly structured logistics, any business will lose the trust of partners and clients in a very short time, since in the market the main thing is that whoever sells faster makes a profit. Naturally, delivery around the world differs from delivery within Russia due to many features, such as geography, infrastructure and equipment.
The logistics operator must be reliable and proven in order to know for sure that he will not “screw” at the most crucial moment. We found such an operator - the company. The company takes care of all the logistics issues of a businessman. Understanding all the intricacies of international delivery, especially from China, which Logicom has emphasized, guarantees professional completion of the assigned tasks. The operator reliably builds all elements of the supply chain and, what is important, builds the correct logistics. The company delivers by all available methods: road, air, sea and rail transportation.
Why choose Logicom as your logistics operator
1. The main advantage is the benefit. We are talking not only about low tariffs, but also about the fact that the cost of the company’s services never changes after the conclusion of the contract. In addition, Logicom has established relationships with many partners who are the best in their field, which has allowed them to reduce costs. The company’s employees initially calculate all options and choose the optimal one for the client’s business. He pays only for the final result.
2. Openness, communication skills, accessibility and honesty. The company does not have fixed operating hours, which allows you to find out information about the condition of the cargo at any time of the day. Constant communication is available not only by phone, but also on the website and in instant messengers. The company has staff in different time zones and requests are processed instantly and offers are received within 6 hours. Each customer is assigned an individual manager or specialist.
3. Fast delivery. And it is not just words. At the end of 2017, the average delivery time was 2.5 days ahead of those specified in the contract. It also happened that delivery could be completed 20 days faster than specified in the contract.
4. Help in making the right decision. At the customer's request, Logicom negotiates with the manufacturer regarding production, shipping, and the adequacy of production costs and associated costs. And this is done for free. This saves the client money and time if he decides to order a trial batch of goods. By the way, if the customer decides to independently organize the movement of cargo on a separate part of the route, then the company’s employees will advise free of charge how to do this more efficiently and profitably.
5. Detailed report. The client will know the condition of his cargo, how it is packed and where it is located, and the system will automatically send the information to the customer’s email. Logicom employees also make photo reports on the condition of the cargo at the main stages of transportation.
6. Extensive experience in delivery. Logicom has been shipping products from China since 1998. The company's managers have been working in logistics since 1995 and know their business well. The company's development director is one of the experts from Russia in the EU Commission on Transport and Logistics. That is, these are not yesterday’s students who decided to create a startup, but a time-tested company.
7. They know all the subtleties of the East. Logicom employees have written three books on working with China and know everything about Chinese business. This means no surprises from China for the businessman. The company's development director is not only an expert in the EU Commission on Transport and Logistics, but also a member of the board of the Russian Club in Shanghai and the Coordination Council of Chinese Compatriots.
8. Packages for any business. The company has developed service packages for different businesses, among which you can choose the optimal one in terms of speed, cost, additional services and other parameters.
Who is suitable for Logicom services?
The operator service is suitable for a businessman who does not want to understand the jungle of logistics, customs and other intricacies of delivering goods from other countries.
- For those who want to focus on business development without worrying about cargo delivery.
- A businessman supplying non-standard or specific cargo who needs personal service.
- For those who plan to develop the company’s logistics competence and want to understand how to do it correctly.
Logicom works with all types of businesses: from individual entrepreneurs to large corporations. Even if the client just opened his first startup yesterday and wants to supply goods from another country, he will be treated the same as if he were a representative of a well-known company.
Many people who already have their own stable business, as well as those who are just starting their own business, already know that purchasing goods directly from China is one of the most interesting and very profitable ways to make money today. Mainly because the cost of goods produced in China is quite low, which means that a businessman can safely inflate the trade margin and, accordingly, his profit and earn much more money.
As for the quality of products manufactured in China, it is only growing every year, since today China is the largest industrial country in the world, and it is difficult to argue with that. Industrial production of Chinese goods in terms of quality indicators is in no way inferior to analogues from other countries.
Until recently, few businessmen could boast of organizing direct deliveries of goods from China; it seemed that it was very difficult and accessible only to a few, so there was practically no competition. But today the situation has changed radically, Russian-Chinese economic cooperation has acquired a new status, has significantly strengthened and is constantly developing. In this regard, more and more Russian companies have the opportunity to work with Chinese suppliers directly, bypassing all kinds of intermediaries, and every day there is an inevitable increase in competition.
Businessmen understand that if they do not make any attempts to establish direct cooperation with China now, then they can irrevocably lose time, the opportunity to make quick money, and their market share. But despite this understanding, many still have questions, and establishing contacts with Chinese partners is accompanied by difficulties at almost every stage. The purpose of this article is to help businessmen understand how to properly organize work with China and answer their most pressing questions.
How to find the right manufacturer?
China is the second largest country in the world, but judging by the number of industrial enterprises and factories located on its territory, China can safely be called the leading industrial country in the world. The Chinese economy is unique and today is beyond competition. Everyone knows that almost everything is produced in China, from complex, high-tech production equipment to clothing and souvenirs.
Russian companies have room to roam, because in China you can buy absolutely any product at a profit. But how can you choose a truly reliable supplier among this variety of enterprises, successful cooperation with which will form the basis of your future business?
- Alibaba.com
- Madeinchina.com
- Taobao.com
Here you can find detailed information about Chinese manufacturers, as well as view their current offers with prices and a description of all necessary delivery conditions. In addition, you can communicate with each of the manufacturers online right there on the website by sending messages in English. This will allow us to more quickly discuss further cooperation and come to an agreement.
Of course, you can personally go to China in search of a reliable business partner, and this will be the surest way to establish truly worthwhile and profitable cooperation. But before that, you should carefully study the information about what specialized exhibitions are planned in China in the near future, and also find a good translator. Many Chinese companies are happy to invite foreign partners to their offices, stores and production facilities so that they can personally see the quality of the goods offered.
Those who want to save time, as a rule, involve a specialized intermediary organization in the search for a supplier, which already has the necessary supplier base, and for a certain fee will quickly and gladly help in choosing a Chinese business partner, negotiate with him and draw up all the necessary documents according to the deal. At the first stage of cooperation with China, the assistance of an intermediary in choosing a future supplier is the most optimal solution.
How to become a participant in foreign economic activity?
All goods that are imported into Russia from abroad undergo a very thorough check at customs. If supplies from China are constant, then the businessman will first need to register with the customs service as a participant in foreign economic activity. To do this, you need to prepare a special package of documents (including constituent, banking and other documents, as well as an application in the prescribed form) and receive a foreign economic activity participant card. The card will significantly simplify all customs procedures regarding a businessman and his goods.
All monetary payments will be made in foreign currency, therefore, to make payments with a Chinese company for goods, you should open a special foreign currency account at your bank. It will be used to pay for the purchase of goods in China, and rubles will be converted into foreign currency at the current rate.
However, it should be remembered that the bank will transfer money only if the contract with the foreign company is properly executed and the amount to be paid for the goods is clearly specified in this contract. In addition, for each transaction the bank will issue a special document - a transaction passport, which will then be required at customs.
How to bring goods and speed up the customs inspection process?
Fortunately, today, both in Russia and China, there are quite a lot of transport companies ready to transport a wide variety of cargo. A businessman can only choose the company that offers the best price and delivery time. It is important to find the optimal balance between price and delivery time, since very often a too low price is a guarantee of missed deadlines.
Choosing a transport company for transporting goods from China
The standard package of documents for releasing goods from customs includes:
- Invoice (a document indicating the quantity of imported goods, its characteristics and price, it is made and provided by the Chinese selling company);
- Transaction passport;
- Certificate for imported goods (issued by a specialized Russian organization for most consumer goods imported into Russia from other countries).
Depending on the selected product, this list may be supplemented.
Today, there are professional intermediaries who know all the nuances of customs clearance of certain goods, advise and help businessmen correctly prepare all the documents, significantly speeding up the release of goods from the customs regime. When importing goods from China for the first time, in order to save time and money, it is strongly recommended to use the services of such intermediaries.
It will come as no surprise to anyone that many of the things we use every day are made in China. The price of Chinese goods is affordable even for the poorest people, and this pricing policy is formed thanks to the cheap labor in this country. However, Chinese-made goods are in high demand among our population. Even taking into account their not very high quality, people buy Chinese things - from equipment to clothing and various small things.
For an entrepreneur engaged in trade, it’s time to think about establishing ties with China. Organize a profitable delivery of goods from China, and you will always be able to offer your customers a product that is interesting to them. There are several ways to do this.
How to arrange the supply of goods from China
Direct purchases from manufacturers
The easiest way to establish direct contacts with Chinese manufacturers is by visiting exhibitions where various companies and factories present their products. Such exhibitions are held both in the cities of China and in the cities of the CIS countries (naturally, we are talking about state capitals and other large cities).
Don’t rush to sign a contract with the first manufacturer you like. First, you need to make sure of the reliability and integrity of this manufacturer, and also find out whether its product has the optimal quality for you. Try to collect any information and reviews about this factory or company. It is also necessary to independently study the rules and nuances of drawing up a foreign trade contract before directly concluding it. Monitor every stage of drawing up and signing documentation, otherwise there is a risk of being deceived.
The methodology of business negotiations with the Chinese deserves special attention. The majority of Chinese do not accept business communication via telephone or Internet. For them, business communication is personal communication. Therefore, when aiming for long-term cooperation with a Chinese manufacturer, prepare for the fact that you will have to visit China quite often to negotiate and monitor the fulfillment of all conditions by your partner. If you don't know Chinese, think about how you will communicate with your partner. Most likely, you will need to hire a translator (preferably one who speaks both Chinese and English) for your company. A translator will help you not only in personal communication with the Chinese, but also with documentation, translations of product characteristics, and so on.
Interaction with Chinese resellers
The scheme of working with resellers is clear to everyone: the intermediary interacts with the manufacturer, you (the seller) interact with the intermediary, and as a result, everyone is happy. There are now a lot of intermediary trading companies working with Chinese manufacturers and finding them is not a problem at all. However, before establishing business contacts, weigh all the pros and cons of such cooperation.
The advantages of supplying goods through intermediaries are that: 1) you will have a huge selection of goods from different manufacturers; 2) you will not encounter the problem of a language barrier or lack of business ethics - after all, the employees of such companies most often possess all the necessary skills; 3) you will be able to order small quantities of goods if you want (and you can only purchase large quantities directly from the manufacturer).
And now about the shortcomings. The most obvious one is the price of the product. Naturally, it will be greater than that of the manufacturing company, since the intermediary takes a certain percentage for himself. You are unlikely to be provided with any information about the manufacturer (trade margins, product quality, etc.), since intermediaries most often keep this secret. Problems may also arise with defective goods. If one is discovered, you will not be able to return the product to the intermediary or exchange it for a similar one without defects. Intermediaries most often do not check the quality of the goods, and in every possible way avoid possible returns. This situation may not apply to all trading companies, but be prepared for such developments.
Be careful: Very often, resellers pose as manufacturers. To expose them, ask for the most comprehensive information about production and even ask to visit the plant or factory where the product is made. As a potential partner, you are well within your rights to do this. If the company refuses to provide you with this opportunity, then it is most likely an intermediary.
Cooperation with a domestic company
A domestic company can also be used as an intermediary. For example, if you live in Russia, then you enter into a contract with a Russian company that works directly with Chinese manufacturers. If such a company has been on the market for a long time, then it has experience of cooperation with Chinese partners, all the nuances of negotiations have already been studied, optimal supply schemes have been established, etc.
You won't need to do all this yourself. The intermediary company will organize everything for you - it will find a manufacturer that suits you, and if necessary, go to the production site, control the quality of the goods, and settle all legal issues regarding customs clearance. And you, of course, will need to pay for all these intermediary services. For example, to search for a manufacturer and provide information about him, including product prices, you will have to pay up to one thousand dollars. Product quality control will cost $300-400.
This supply chain also has its pitfalls. For example, a Russian company may have a “special” relationship with one Chinese manufacturer. And without looking for other options, only it will be promoted everywhere. But for you specifically, this option may not be the best. And in this case, various shortcomings of the manufacturer will be strenuously hidden by the intermediary if he receives a kickback for this. Therefore, be vigilant and check all the information within your capabilities!
In today's market, producing the cheapest product is no longer enough. It still needs to be delivered to the buyer. How do companies manage to transport cargo across Russia cheaper than their competitors?
Business expansion requires considerable expenses. Domestic and transnational companies are trying to “fill up” the entire country with their goods. And in order to get ahead of competitors, it is necessary not only to deliver cargo quickly, but also to do it as cheaply as possible. It doesn't always work out. A traditional Russian problem - weak transport infrastructure - makes supplies expensive. The level of costs that entrepreneurs are forced to bear is not comparable with similar costs in Europe or the USA. The share of all logistics costs when organizing deliveries can reach 80–90%. This also includes costs associated with warehousing, customs clearance, personnel, and damaged stocks. Direct transportation may account for about 60% of costs. In Europe they usually do not exceed 35 - 40%. Naturally, this also affects the subsequent cost of production. According to official statistics alone, transport costs in Russia reach 20% versus 7–8% in countries with developed market economies. Independent experts even believe that their share reaches 30%. Each company is trying to find its most effective way to organize its supply chain. No one has yet succeeded in identifying a universal method. There are too many pitfalls in the domestic market for logistics services.
Fancy roads
Developing the optimal route for transporting your goods across Russia is not an easy task. Often, knowledge of general facts about the organization of transportation is not enough. Even a simple delivery from one city to another can be too expensive if you make a mistake with the transshipment point or method of transportation.
Of course, there are standard rules. Thus, the most expensive is traditionally air transport, which is mainly used in cases where the maximum urgency of cargo delivery is important, or when transporting expensive goods. The cheapest transportation is by water, but within Russia it is often preferable to use the services of railway workers. In fact, this is the only way to deliver goods from continental Asian countries. Transporting by rail is cheaper than by truck, but it takes longer. Road transport is more expensive than rail transport over long hauls, but is best suited for transporting goods over a relatively short distance (200 - 500 km), as well as in those regions where the road network is well developed, say, from the EU and CIS countries to the European part of Russia. Everyone chooses a transportation method according to their needs and income. For example, door-to-door auto delivery in the direction Moscow - Krasnoyarsk in 7 days will cost 70% less than urgent air delivery within 2 - 3 days.
Choosing the optimal route based on price-quality ratio is sometimes difficult. You have to make a choice in favor of a seemingly more expensive service. On the most popular routes, the railway's capacity is often no longer sufficient for everyone. Thus, some suppliers have already been forced to switch to delivering goods from Kaliningrad to Moscow by road. In some cases, it makes sense to make creative decisions to save time and money on product reloading and streamline the process. “We can deliver goods to the cities of Siberia by road, which allows us to guarantee delivery times and reduce the total number of transshipments,” agrees Leonid Zondberg, director of sales and marketing for the Armadillo group of companies.
Naturally, when transporting to the regions or organizing transit through Russia, it is rarely possible to limit oneself to only railway or barge. It is necessary to use multimodal transportation (combining two or more modes of transport). However, in Russia quite a lot of time is still lost connecting routes. Reloading and delivering cargo to warehouses are expensive. Containers are often used around the world to save money. In this case, the goods are loaded once - at the supplier - and unloaded at the warehouse. Then you can use your choice of sea, rail or road transport. That is, the container is simply overloaded at the docking points. But so far the share of such cargo in the total volume of transportation on Russian railways is very small - about 30%. One of the reasons is the lack of special terminals.
Almost Euroservice
An additional task when organizing delivery is to establish information interaction between the railway, road transport enterprises, shipping lines, port terminals and customs authorities. We need common information systems, which are lacking. It is still problematic to obtain, for example, information about the approach of ships for loading and unloading, about vehicle accidents during a voyage, about customs violations in the preparation of transportation documents in one point or another of the country. As a result, problems arise with monitoring the implementation of contracts. In this situation, companies involved in organizing transportation, including communication between different modes of transport, cannot provide their customers with reliable service. It is not surprising that with so many problems, even some of the large transnational logistics companies were unable to gain a foothold in the Russian market and, sacrificing potential profits, were forced to leave it. For example, one of them under-shipped up to 10% of client cargo on time.
At the same time, it is necessary to solve the problem of what to transport cargo in. Many offer their own packaging: container, wagon or truck. This often turns out to be cheaper than ordering containers for transportation directly from transport companies. Well, the main related problem is the organization of warehouse storage. The most developed in this regard is the Moscow region; few of the necessary modern warehouse spaces exist in the North-Western region, which can also be called Yekaterinburg, Novosibirsk, Krasnodar and the Volga region. In other Russian regions, modern warehouses are appearing, but the system as a whole is in its infancy. Even in Moscow, taking into account the growth in retail chain turnover, demand is at least 5 million sq. m. m, and the real supply is not much more than one million. Leonid Zondberg adds: “In the most economically developed regions of the country, there is a significant shortage of modern Class A and B warehouses. The demand for high-quality storage is high, but the supply does not yet meet the required volumes. Such areas account for less than 40% of warehouse real estate, of which 60% are concentrated in Moscow, the Moscow region and St. Petersburg. If we talk about cost, then for high-quality warehouses, say in St. Petersburg, the average rental rate per 1 sq. m per year is $120. In the regions this figure is less – $60.” In Moscow, for example, prices are almost twice as high as in Eastern Europe.
Are we better off on our own?
The first choice that a company must make is whether to carry out the transportation itself or outsource this work to a specialized company. The decision is not easy: the temptation to save is great. Firstly, intermediaries are cut off. Secondly, you can make a profit from additional transportation into your own budget. From the outside, this option really seems attractive. Logistics companies unofficially talk about the profitability of their business at 16–18%. The highest incomes are for firms that provide integrated logistics solutions, including, in addition to transportation, services for responsible storage and even distribution of goods. Such profits can only be dreamed of in countries with an efficient transport system. Meanwhile, the service that companies purchase often does not live up to expectations. According to experts, even Western logistics providers providing services in Russia often lower the general level of requirements for employees to the market average. Moreover, there is currently no company capable of fulfilling a customer’s order throughout the country without the involvement of third-party partners.
As a result, large companies that are constantly involved in the transportation of their goods, such as metallurgists or oil workers, create their own transport divisions or companies. The pleasure of transporting your goods yourself, however, is not cheap and has an impact on the entire business model of the company. The total cost of a project to organize a supply chain in one or several regions can cost from $100,000 to several million. Deloitte CIS senior manager Alexey Martkovich says: “There have been situations when a private company calculated that it would be more efficient to transport goods on its own, and created special transport units for this purpose. For example, such decisions were made during distribution across a metropolis. Sometimes such projects ended in failure - the staff simply could not cope with the tasks that were assigned to them. This was especially true for supply planning.”
However, it's not just the quality of the staff. General Director of the YUKOS-Transservice company Igor Asaturov states: “Savings are achieved, for example, by accelerating turnover and reducing downtime during loading. The second way to increase profits is to enlarge the cargo due to the greater load on the transport unit, say, using larger-volume wagons instead of 60-ton tanks.” “The payback of a transport project depends on creating an optimal transportation plan. It is quite difficult for large industrial holdings to connect incoming and outgoing transport flows, minimizing the costs of empty carriages. A logistics company solves the problem by using a large number of customers. In one direction it carries the cargo of some clients, and back – of others. In addition, prices for wagons are rising, and the need for capital investment is increasing,” says Yuri Gaichenya, financial director of the New Transportation Company.
Looking for a logistician
Previously, many large companies tried to minimize their work in the Russian transport system. They simply transported the goods to a general warehouse within the country. Further delivery of cargo to regions or to the final consumer was already a problem for the dealer. But now the situation is changing. “Most companies operating in the country are gradually abandoning self-pickup. This is the market trend, and distributors increasingly prefer a service that includes delivery to the warehouse. At the same time, this practice helps to comply with the uniform pricing system in Russia and avoid cases where goods were purchased in Moscow, supposedly for remote regions at a discount, and then resold immediately outside the Moscow Ring Road. There is no clear answer as to which option is better; it largely depends on the sales strategy and distribution channels used, which may differ for different product categories. For example, with “pickup”, the price list is cheaper, since the price does not include transportation within Russia. So switching to a direct supply system could lead to higher costs, which competitors could theoretically take advantage of. One company recalculated its cost levels after changing its delivery method. As a result, the average increase in cost was 8%. On the other hand, in this case the company can control the price, and the difference in costs incurred by dealers is leveled out. As for additional costs, you can try to divide the costs by region where the company operates, or simply set the average selling price throughout Russia,” says Andrey Martkovich.
As a result, companies are increasingly entering into negotiations with logisticians. There is no single recipe yet for how best to streamline delivery while relying on new partners. Some people prefer to entrust transportation to a large company. But usually no one can do it alone - you have to cooperate with 3 - 4 large or medium-sized operators. This makes it more efficient to transport cargo, thereby insuring the supplier’s risks. After all, bankruptcy of any carrier or its overload during the peak season cannot be ruled out. The logistics market leaders also have limited capacity. Some manufacturers, on the contrary, prefer to work with a large number of small players (with a fleet of up to 10 trucks). In this way, you can get more favorable price conditions, and the logisticians themselves are more interested in a large client. Considering that there are now several thousand independent carriers in the country, they have a choice.
Meanwhile, most logisticians themselves predict the upcoming consolidation of players in their market. It is becoming increasingly difficult for small companies to operate under modern infrastructure. If so, then transport costs may jump for some time. After all, suppliers will have less room for maneuver, and large logisticians may raise prices. But if there are more guarantees of timely delivery of goods, then large companies will be ready to put up with it.
GROWTH CRISIS
IN 2004 – 2006, THE RUSSIAN MARKET FOR LOGISTICS SERVICES INCREASED BY 35.5% – FROM $24.5 BILLION TO $33.2 BILLION. However, the country's transport infrastructure, according to official statistics, meets the requirements of carriers less and less every year. THERE IS NO DEVELOPED ACCESS INFRASTRUCTURE ON THE APPROACHES TO TRADE SEA PORTS (none of the 16 largest Russian ports has a direct connection to the federal highway network). Railway access roads can no longer cope with the sharply increased flow of goods. Eight out of ten hub airports do not have passenger rail service. In addition, now ABOUT 25% OF FEDERAL HIGHWAYS ARE OPERATING IN OVERLOAD MODE, especially on the approaches to large cities. “Bottlenecks” are also considered to be bridge crossings over large natural barriers (rivers and mountain ranges), sections along city streets, city bypasses and approaches to sea trade ports. ONLY 59% OF AERODROMES HAVE A RUNWAY WITH ARTIFICIAL SURFACES; the remaining airfields have unpaved runways. About 70% of runways with artificial surfaces were built MORE than 20 YEARS AGO. Of these, over the past ten years, RECONSTRUCTION HAS BEEN CARRIED OUT ONLY 24%