Overseas warehouses, which have been repeatedly "edged", have been severely impacted in Southeast Asia. On November 23, Thai police raided the Thai overseas warehouse of a Chinese man named Wu and seized tens of thousands of counterfeit registered trademark products worth 40 million baht. On November 25, Thailand’s Ministry of Industry conducted a surprise inspection of a large Chinese-owned warehouse and found a large number of illegally imported controlled products with a total value of approximately 4.3 million baht...
Not only Thailand, but also Indonesia, Vietnam, and the Philippines have recently conducted strict inspections of overseas warehouses. Not only have a large number of goods been seized, but many Chinese sellers have also been arrested. The seller described that "these warehouse inspections and closures happened overnight without any warning, causing people to panic."
Overseas warehouses are one of the hottest segment facilities for cross-border e-commerce this year. As early as the first half of this year, there were more than 1,800 overseas warehouses serving Chinese cross-border e-commerce companies. Due to Temu and Shein's "semi-trusteeship" and the rising tariffs in Southeast Asia, high-quality overseas warehouses are "hard to find". There has even been a situation in the industry where "high-quality overseas warehouses seldom advertise and can only be introduced through acquaintances, sometimes with secret codes."
As a region with rapid growth in overseas warehouses, why are Southeast Asian countries suddenly "hostile" to the overseas warehouse business? In this wave of warehouse closures, which warehouses are most affected? In the long run, is this "wave of closing positions" purely accidental, or does it represent a major trend in the future? What other breakthrough opportunities are there for e-commerce logistics in Southeast Asia?
Southeast Asia's heavy punch shocked old players
Overseas warehouses encountered both ice and fire.
This kind of warehousing facilities built overseas mainly provide warehousing, contract fulfillment and after-sales services for cross-border sellers overseas. With more than 100,000 cross-border sellers in China, export volume has reached trillions. A considerable amount of goods need to be stored in overseas warehouses and delivered to consumers.
Overseas warehouses can be roughly divided into three categories - platform warehouses (mainly Amazon FBA warehouses), third-party overseas warehouses and sellers' self-built warehouses.
The earliest overseas warehouses were mainly Amazon's official warehouses. With the rise of Shopee and Tiktok, third-party warehouses and sellers' self-built warehouses gradually exploded. Compared with the official warehouse, the paths of the latter two warehouses are obviously more wild.
According to overseas warehouse operator Zeng Qi: "Most (third-party) overseas warehouse companies are not formal. In order to obtain greater profits, they will acquiesce in gray customs tax avoidance and warehousing of sensitive goods. Therefore, seizing warehouses is a common phenomenon in Southeast Asia."
In addition to gray customs tax avoidance, these overseas warehouses operating in gray areas have also had a devastating impact on local enterprises in Southeast Asia.
As long as a certain product emerges in the local area, such as Labubu, a popular trendy product some time ago, Chinese businessmen will directly order containers of goods from China to the local area, and dump them at a price far lower than the local price to seize the market. Compared with traditional cross-border methods, storing goods in overseas warehouses and transporting them can generally save 20% to 30% of costs, or even higher. It has a huge price advantage compared to local companies.
Therefore, despite frequent warehouse inspections in Southeast Asia, it still cannot stop the expansion of overseas warehouses. However, in the second half of this year, the density and intensity of warehouse inspections and closures were obviously more intense than before.
In July, Indonesia, Southeast Asia's largest market, first began a month-long investigation, investigating and punishing many Chinese overseas warehouses involving clothing, textiles, ceramics and other commodities. On October 28, Indonesia upgraded and launched the "100-day work plan", stating that "it will use 100 days to strictly inspect warehouses and terminals, and carry out larger-scale and high-intensity law enforcement operations against illegally imported goods to plug loopholes in national fiscal revenue."
On the day the plan was released, the Indonesian Food and Drug Administration cooperated with the Indonesian police and military intelligence departments to seal two warehouses in Jakarta and seized 152,744 cosmetics with a total value of approximately 2 billion Indonesian rupiah (approximately RMB 920,000).
Most of these seized cosmetics were illegally imported from China. According to reports from the Indonesian police, the shop owner involved has been arrested and may face up to 12 years in prison or a heavy fine of 5 billion Indonesian rupiah.
Not only Indonesia, but also Vietnam followed suit and launched severe crackdowns on overseas warehouses.
On July 29, Vietnam’s Da Nang Market Administration raided a Chinese warehouse and seized more than 3,000 pieces of ready-made clothing smuggled from China. Two days later, Vietnam inspected the warehouse and seized about 70,000 illegally imported cosmetics worth 1 billion VND (approximately RMB 300,000).
On August 5, Vietnam began to seal several large overseas warehouses. The products mainly involved mobile phones, tablets and high-value digital 3C products, as well as toys and other high-priced products. Some illegal products were destroyed on the spot. By October 26, the Ministry of Industry and Trade of Vietnam further issued a document requiring "customs to strengthen monitoring of warehouses and collection points of unregistered cross-border e-commerce platforms." In particular, warehouses such as Temu and Shein were also mentioned as being under strict inspection.
As the second largest market in Southeast Asia, Thailand has also actively participated in this "warehouse checking competition."
On September 13, multiple departments in Thailand jointly searched three Chinese warehouses in Bangkok and seized about 7,300 electric mosquito repellent products and 32,627 pieces of 45 types of illegal cosmetics, with a total value of 2.5 million baht (approximately RMB 530,000).
On November 25, Thailand’s Minister of Industry Aigner personally ordered the investigation team of the Ministry of Industry and the staff of the Industrial Standards Association to inspect the warehouse and seized a large number of illegally imported controlled products with a total value of 4.3 million baht (approximately RMB 920,000).
According to a report from the Thai police, the warehouse under investigation belonged to a Chinese man named Jia. There were a large number of products in the warehouse that did not meet the usage standards and had not been inspected for a series of pollutants, including motorcycle tires, motorcycle inner tubes, car seat belts, motorcycle exhaust pipes, light bulbs and electrical appliances that were not certified by TISI.
The heavy blows dealt by major markets in Southeast Asia have made some old sellers who have been investigated for many years lament that "it is simply inevitable and there is nowhere to escape. Because you don't know which country will check their warehouses again tomorrow."
Category III warehouses suffer the most
As Chinese sellers who are good at "learning war from war", veteran sellers quickly discovered that there were some commonalities behind these seemingly unrelated warehouse inspections.
Many sellers told Qiwhale that there are three types of overseas warehouses that are most affected by this wave of warehouse closures.
The first type is agent-type overseas warehouse.
The so-called agent-type overseas warehouse refers to foreigners indirectly engaging in overseas warehouse operations in the name of local legal persons or residents to avoid restrictions on foreign-invested enterprises. According to Zeng Qi, "Finding a local powerful person as the legal person is almost the foundation of a third-party overseas warehouse. In many cases, whether an overseas warehouse can be established and whether business can be carried out depends on the stability of the 'backer' behind it."
In the past, Thailand was known as the "agent paradise" because the Thai government has always had a tacit attitude towards the "agent" model. But recently, Thailand has begun to focus on cracking down on "agents".
On November 27, Thailand's Deputy Minister of Commerce Napinthong said: "The Ministry of Commerce has received multiple complaints about foreigners using Thai agents to register companies in Thailand. This undermines the principle of fair competition in the market. The government attaches great importance to it and has ordered the Department of Commercial Development and other relevant departments to investigate the companies involved, especially those engaged in e-commerce platform operations, warehouse leasing and logistics businesses in Bangkok."
According to Napintong, strict inspection of overseas warehouse agents is only the first step. In the future, Thailand will also develop a system to specifically monitor companies suspected of using Thai agents to register, but the actual controllers are foreign investors. Once problems are discovered, the relevant departments will strictly enforce the law and completely eradicate agent-based overseas warehouses.
However, there are always new ways to deal with the blockade of technical systems.
The second category involves overseas warehouses suspected of selling illegal products.
According to Zeng Qi's description: "Most products from third-party overseas warehouses have not gone through formal customs clearance, because you can't make money with formal customs clearance, so most of them enter the country through 'grey customs'."
The so-called gray customs means that in order to avoid complicated and expensive customs clearance procedures, exporters outsource various customs clearance matters to customs clearance companies. These customs clearance companies usually have access to the internal customs and can help imported goods enter a certain country's market at a lower than statutory tariff (as low as 30% of the normal tax) through "chartered flights and tax included", "chartered cars and tax included", etc.
However, due to the lack of necessary customs clearance documents and the failure to pay the statutory tax amount, such "gray customs products" must be illegal and violate regulations as long as they are investigated, and there is almost no room for appeal.
On July 26 this year, Indonesia investigated and dealt with a batch of imported goods worth 40 billion Indonesian rupiah at an overseas warehouse in northern Jakarta. The types of goods were very common - including mobile phones, tablets, children's toys, e-cigarettes, etc. But because these goods did not come with the necessary import documents, they did not obtain Indonesian National Standards (SNI) certification. Indonesia determined it to be gray goods and not only destroyed the goods, but also sealed the warehouse.
The third category is overseas warehouses that employ illegal workers.
Taking Thailand as an example, employees working in overseas warehouses in Thailand must go through legal compliance procedures. Zeng Qi told Qiwure.com, "If there is no formalities for hiring workers, the warehouses may even have to be shipped. There can be as many as 30-40 management departments for these warehouses in Thailand. The Ministry of Labor, the Taxation Bureau, etc. will often come for inspections. (If there are problems), they may be fined, or the warehouses may be closed down."
For example, in November, Thailand’s Central Bureau of Investigation (CIB) raided the warehouse of Chinese boss Liao. Thai police discovered that Liao rented a commercial building to secretly produce e-cigarettes (e-cigarettes are banned in Thailand) for sale, and falsely claimed that they were cosmetics.
After capturing Liao on the spot, the Thai police also found 22 Myanmar employees at the scene. During the preliminary interrogation, Liao denied all accusations, but the 22 Myanmar employees admitted that "they came to work at this location and received wages from Liao."
As a result, in addition to being accused of violating the Customs Act and the Order of the Product and Service Safety Committee, Liao was also charged with violating the Alien Employment Management Act. If found guilty, Liao may face jail time.
Trade protection spread from domestic affairs
Under the intensifying wave of warehouse closures, the mentality of sellers has quietly changed.
Optimists believe that the closure of positions is just a thorn in the side of new officials taking office, and they can just "get over it" as usual. This statement is not unreasonable.
The sudden wave of warehouse closures is directly related to changes in domestic affairs in many Southeast Asian countries.
On October 20, Indonesia's new President Prabowo took office, and the new government began to place special emphasis on the supervision of cross-border e-commerce transactions, taxation, logistics and other aspects. The "100-day work plan" mentioned above was proposed by General Sigit, Chief of the Indonesian National Police. General Sigit said, "This plan is to support President Prabowo's 'Golden Indonesia 2045' plan, curb illegal imports, tax evasion and tax evasion, and make up for leaked national finances."
Coincidentally, on the afternoon of October 21, Liang Qiang became the new president of Vietnam and also placed special emphasis on cross-border e-commerce supervision. Vietnam’s Ministry of Industry and Trade officially issued a document on October 26, recommending that the Prime Minister instruct the Ministry of Finance to develop a special plan to monitor imported goods that do not meet regulations. The plan also requires the General Administration of Market Management to cooperate with the General Administration of Customs to strengthen the inspection and processing of platform warehouses and distribution points, which is tantamount to targeting overseas warehouses.
The situation in Thailand appears even more volatile. In August this year, there were two "earthquakes" in Thailand's political arena - one was Thailand's largest party, the Far Progress Party, which was disbanded because of the powerful faction Pita "anti-royalty" (later reorganized into the People's Party); the other was Prime Minister Seta, who had been in power less than a year, was dismissed and was replaced by Pethon Than, the daughter of former President Thaksin Shinawatra.
After the failure of Pita's anti-imperialist campaign, his camp is particularly hoping to rebuild its glorious image and pave the way for the 2027 general election.
One of the ways the Pita camp has adopted is to strictly investigate "grey products" to regain public support. The Pita camp has repeatedly called on the Thai people to become "gray detectives" and report companies that use low-price products and tax-evading products to steal Thai people's jobs, including gray industry fraud, agent investment, online gambling, sideline products, etc. A lot of support was regained as a result.
The changes in Southeast Asia’s overseas warehouse policy do seem to be related to the change of leadership team. However, some sellers believe that the closure of many overseas warehouses is also related to "over-expansion and forgetting to keep a low profile".
Overseas warehouse operator Meili told Qiwhale: "Overseas warehouses rely on 'making a fortune silently'. The most important thing for overseas warehouses is 'stability'." Meili owns multiple warehouses in Chiang Mai, some of which are built on self-purchased land and some of which are leased. But she never publicly announces the location of these warehouses. Even if a customer wants to visit, she will not allow photos or videos to be released externally, especially she will not cooperate with local sellers.
For a long time, there has been a secret game in overseas warehouses - sellers need to use overseas warehouses to store and issue orders, but they must be careful of being "dragged away"; if overseas warehouse operators want to get more orders, they have to acquiesce in the entry of some products in gray areas such as e-cigarettes and imitations, and bear the risk of being implicated in the seller's sensitive goods and the warehouse being seized.
Due to the boom in cross-border e-commerce business in recent years and the increasing tariffs in Southeast Asian countries, the business of overseas warehouses that dare to accept gray products is also getting better and better. As a result, some overseas warehouse owners only focus on collecting commissions for goods, but ignore the risks involved in storing sensitive goods, until they are arrested and imprisoned.
According to Zeng Qi, in order to deal with the risk of warehouse closures, he has made all of his warehouses into independent warehouses - one warehouse corresponds to one customer's products to prevent being implicated. He also negotiated with major customers that the inventory in one warehouse is also limited. When a certain amount is reached, warehousing must be dispersed to reduce risks.
From a longer-term perspective, Zeng Qi also believes that the current trend is compliance. E-commerce platforms have scale effects and the government has a regulatory stick. As a vulnerable group, overseas warehouse operators and sellers can only adapt to the situation. When the policies of platforms and regulatory agencies become stricter at the same time, it also means that the old model of overseas warehouses has come to an end.
New models are also being born in this context.
According to the analysis of Qiwhale Going Overseas Research Institute, which focuses on cross-border e-commerce services in Southeast Asia, with the drastic changes in overseas warehouses, two trends are constantly occurring.
First, it is a fully legal and compliant large warehouse, but the capital threshold that needs to be invested will be greatly increased, and the requirements for customers will also increase accordingly. This will also greatly compress the final profit margin, making this model exclusive to large sellers with sufficient scale and financial strength. It is difficult for small and medium-sized sellers to reach the threshold.
Second, small and medium-sized warehouses with a certain gray space are migrating to their third- and fourth-tier cities and even border cities. In the original model, due to factors such as logistics transportation costs and delivery timeliness, a large number of overseas warehouses would be concentrated in the port areas of central cities in Southeast Asia. Under the blow of continuous turnover, more small and medium-sized overseas warehouses began to move to the edge areas of these countries, especially areas near the borders.
The reason is that, on the one hand, Southeast Asian logistics giants such as Jitu have perfected terminal logistics and distribution, and even marginal areas can still meet the needs of freight and express delivery; on the other hand, such edge cities can be more flexible and efficient in dealing with political and business relations. Although the distribution costs will be relatively higher than in central cities, they are still willing to use certain costs in exchange for greater safety space.
Author｜Riding a Whale to the Sea Li Wei