Guangzhou has given out 12 million yuan, or 1.8 million US dollars, worth of warehouse rental subsidies. It's among support measures to help e-commerce logistics providers reduce costs. Huang Fei finds out why they needed the money and what else can be done to help them out of a jam. 

If you buy something on a Chinese e-commerce site, chances are your parcel will be dispatched from this warehouse.

This is a customs bonded area where imported goods are stored, checked and sorted before being sent to customers across China. But boxes have been piling up and storage space is tight.

LINDA LI CEO, Guangdong Top Ideal Cross-border E-commerce SCM Service "We are under a lot of pressure. Rising demand for imported goods requires a lot of warehouse space. But we have to COVID-proof everything and disinfect repeatedly, which increases our costs and slows our turnaround. E-commerce sites like Taobao and JD.com promise their parcels will exit the warehouse within 24 hours of purchase. We have to keep that promise. But because many cities have put restrictions on non-essential parcels or closed expressways, delays are still inevitable during deliveries."

About three quarters of goods coming in and out of China are carried by ocean freight. To bypass lockdowns in Shanghai, many incoming shipments have re-routed south to Guangzhou or Shenzhen, adding to the pressure on local warehouses.

Exports are stalled as well, partly due to a delay of containers returning to China.

HUANG FEI Guangzhou "Warehouses are caught in what economists describe as a vicious cycle. Fear of delays causes companies to engage in precautionary buying. They are hoarding everything from raw materials to products and parts and booking containers before even securing orders. This of course only adds to the stress on the supply chain, causing even more delays and additional costs."

As part of cost relief measures, 50 warehouses in Guangzhou have been given a subsidy by the Municipal Commerce Bureau.

LINDA LI CEO, Guangdong Top Ideal Cross-border E-commerce SCM Service "The subsidy is like a timely rain for us. It precisely targets cross-border e-commerce warehouses that are in the customs account book. From when they first announced the policies, it only took four months for qualified companies like us to receive the money. It was very efficient."

The local government is also matching firms with rail and air cargo service providers. Huangpu district in Guangzhou's east has promised additional subsidies for those having to switch transportation methods due to COVID disruptions.

CHIU CHUN-HUNG Associate Professor, Sun Yat-Sen Business School "One of the biggest advantages of doing cross-border e-commerce in Guangzhou and the Greater Bay Area, is that we have many ways to send goods in and out. There are several international airports, container ports, and a well-developed rail and road network. We also have entire industrial clusters, which means we can fulfill orders very quickly."

In the longer term, analysts say the government needs to facilitate better information sharing. This involves creating a 5G and big data-driven platform that gives easy access to crucial updates, including shipping schedules and warehouse availability.

Huang Fei, CGTN, Guangzhou.