SAP Introduces New Service For China’s Supply Chains

SAP AG announced the availability of a new application to help centralize processing trade activities, SAP Global Trade Services, processing trade in China.

With almost half of all imports coming into China attributed to processing trade, the customs procedure under which certain goods can be brought into China for export, duty and value-added tax free, it is more important than ever for businesses to be able to efficiently and transparently work with China.

In the last 20 years, processing trade in China has increased dramatically. In 2010, 47 percent of exports and 30 percent of imports were attributed toward processing trade.

Companies face multiple challenges to comply with processing trade regulations, including performing reconciliation, managing customs bills of materials, tracking inventory and managing customs declarations with matching business transactions.

SAP Global Trade Services, processing trade in China, helps companies minimize risk and reduce duties by centralizing processing trade activities. At the same time, it helps improve efficiency by automating imports, exports and e-manual management.

“Processing trade is a typical production model for manufactures in China. Besides the manpower, process and time consumed to deal with certain goods, companies today are seeing compliance risk when they define with customs if the goods are bonded or not,” says Cao Yu Jie, research director, CCW Research.

Company spokesmen add that SAP’s first localized processing trade solution for China will help companies to obtain work orders and goods information directly by processing different codes and processes in the ERP system.

“Trading companies in China therefore are able to save time, lower cost and improve efficiency, which lies at the center of bonded processing,” says Cao Yu Jie.

In 2013, the first localization of SAP Global Trade Services in China was released to help companies to comply with general trade regulations. Companies are already using the solution to manage classifications including supervision codes, declaration elements, letter of credit management; legal control, generating export declaration forms and claiming VAT Refunds. With the new solution, SAP Global Trade Services is completely ready with both General Trade and Processing Trade.

“China has become the largest goods trading country in the world,” says Mark Gibbs, president of SAP Greater China. “Processing trade is important for companies importing into China as well as companies based in China.”

He adds that SAP Global Trade Services, processing in China, helps companies to better manage customs e-manual and handbook, electronic customs clearance and bonded warehouse management; significantly improve the efficiency of customs clearance; and reduce trading compliance risks.”

Rosemary Coates, President of Blue Silk Consulting, says rebalancing global supply chains is “not a step back to your father’s manufacturing of the 1960s.”

“Instead, it is a strategic leap forward with manufacturing consideration given to all of your global growth markets,” she says. “Consider manufacturing the appropriate products in countries where you sell those products, including China, the largest target market in the world.”

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