This story was delivered to BI Intelligence "E-Commerce Briefing" subscribers. To learn more and subscribe, please click here.DHL has opened a fulfillment center in Hong Kong to cater to the growing demand for cross-border e-commerce in the Asia-Pacific market, according to Air Cargo News.The fulfillment center is located next to its Interlink warehouse in Hong Kong and will provide inbound freight, inventory, and last-mile delivery services. DHL already has fulfillment centers that provide similar services in the US, Mexico, India, Europe, and Australia.DHL is capitalizing on a booming e-commerce market in China, driven by preference for foreign goods. China's e-commerce market is the largest in APAC, bringing in $681 billion in sales in 2016, and that's anticipated to climb to $1.1 trillion in 2021. Meanwhile, cross-border e-commerce reportedly accounted for 15% of e-commerce sales in China last year, and is estimated to reach 25% by 2020, according to eMarketer. The boom in e-commerce has been driven by demand for foreign goods, fueled in part by the Chinese government's decision to lower tax rates on goods bought in small quantities from foreign websites in April 2016. Additionally, counterfeit and low-quality products are a concern for Chinese consumers, so buying instead from an established foreign company, or its flagship store on an e-commerce site,is an attractive option.Providing last-mile delivery services, a significant hurdle for retailers in China, will give the company a leg up in the country. China generally lacks high-quality logistics providers, compared with North American and European countries, and relies on a vast network of couriers for last-mile delivery. This has driven e-commerce players to find innovative solutions to logistics challenges, like JD.com drone delivery routes in rural provinces. DHL tested drones for delivery last year and will likely utilize this technology eventually to reach the massive rural population in China. DHL's fulfillment center could also mitigate some of the risks foreign sellers face because of the discordant customs practices in China. Packages are chosen at random for inspection and may be charged a higher customs duty, which causes uncertainty around shipping costs and delivery times for foreign retailers. DHL's new fulfillment center can help minimize these risks by keeping the sellers' goods closer to the consumer.To receive stories like this one directly to your inbox every morning, sign up for the E-Commerce Briefing newsletter.Click here to learn more about how you can gain risk-free access today.Join the conversation about this story
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