Corona Update: Businesses Are Looking for Non-Chinese Sources - What Are the Pitfalls?

Corona Update: Businesses Are Looking for Non-Chinese Sources

Kelsey Vierkant

18/02/2020

Kelsey Schenk
Marketing Officer

China is sometimes called the Factory of the World. That factory has been almost shut down. Many companies have shut down their production facilities to prevent Corona outbreaks on the factory floors. And the companies that are still producing, have an issue with getting their goods shipped overseas.

That’s Not Going to Fly

Many airlines have stopped flying to China, and that is a problem for companies relying on air freight. Commercial airliners are responsible for carrying a large portion of the air freight. With flights cancelled, cargo will be waiting for planes that will not come.

Alternative Sources

In many markets, this is causing serious issues:

  • The automotive industry: most car-producing companies have limited stock and rely on regular re-supply, forcing them to look for alternative sources, as a single missing part can stop a full production line. For example, Hyundai has closed several factories in South Korea, due to a shortage of components. Read more about this in this article by The New York Times here.
  • Clothing companies are also scrambling for production capacity outside of China, as they are in fear of empty stores. China is one of the largest producers of clothes. Read more about this in this article by QZ here.
  • Retailers that sell a lot of goods produced in China fear empty shelves. They have larger volumes of stock than automotive companies, but they will face empty shelves around April if the shutdown continues much longer. Read more about this in this article by Marketwatch here.
     

What Are the Pitfalls?

These shortages can impact your company in two ways:

Import: You need to source components or products from a country you have not imported anything before because you have a new supplier.

Export: You need to deliver components to a company you have not yet exported to because you have a new customer that is now sourcing from you.

Whether you are importing or exporting, there are several things you may need to take into account.

  • EORI number: if you need to export goods to countries outside of the EU you need an EORI number. Read more about what an EORI number is here. We have also listed how you can get an EORI number if you don’t have one. Please find that list here.
  • License: make sure you know if you need to have any permits or licenses to import from or export to countries you have not yet done business with. 
  • HS-Codes: make sure your products are correctly classified. Incorrect classification can lead to delays in your shipments, fines, and in some cases even jail time.
  • Dual-use goods: if the products you are importing or exporting are dual-use goods, you need to make sure you are allowed to import or export these goods to or from the country you are about to start trading with.
  • Export documentation: make sure all your documents are in order. Incorrect documents lead to unnecessary delays and fines. Same goes for import documentation.
  • Other documents: for example a Certificate of Origin
     

Ask an Expert

If you are in doubt, or have any questions regarding importing or exporting your goods, then please contact one of our experts.