‘We’ll do our best to help: AliExpress and Yandex.Market support bonded warehouse launch in Tatarstan

How and what for did e-commerce moguls base in Kazan?

On 21 August, Tatarstan welcomed a business mission of the biggest federal trading companies working in the Net and logistic giants — the top management of Yandex.Market, BoxBerry, CDEK and DHL, national offices of AliExpress, iHerb and another ten global players of the e-commerce segment. A discussion of prospects of creation of a cross-border electronic commerce system on the territory of the republic, which has been actively developed by Business Ombudsman and Aide to the Tatarstan president Farid Abdulganiyev in the last months, became a reason for the business giants to meet.

It became known about plans of the Tatarstan government to launch the country’s first experimental free economic zone designed for cross-border e-commerce in the republic as early as in July. Then Rustam Minnikhanov sent a letter to Russia’s Minister of Finance Anton Siluanov and Government Chairman Mikhail Mishustin offering them to discuss the organisation of a В2В2С bonded warehouse. A bonded warehouse is a building with a special customs status thanks to which a salesperson is free from customs duties and taxes while imported goods are stored until the end consumer buys them.

The absence of a legal framework impedes the creation of bonded warehouses in Russia now. In the case legal issues are resolved, such a model will allow Tatarstan entrepreneurs to not only significantly increase commercial turnover and create hundreds of new jobs but also bring the budget about 17 billion rubles a year.

The delegation arrived in the republic and had the time to evaluate the situation after looking over Tatarstan warehouses in Zelenodolsk industrial park: OZON Group of Companies, Wildberries’s logistic centre and X5 Retail Group distribution centre as well as the construction site of Sviyazhsk interregional multimodal logistic centre. After that, Farid Abdulganiyev held a round-table talk in the conference hall of Tatar-inform agency.

“If we don’t manage to launch the bonded warehouse in the next six months or year, it may be late”

In the last five years, Russia’s National E-Commerce Association has actively tried to develop the topic of cross-border commerce in the country, however, the effort hasn’t been crowned with success yet, said Vice President of the association Igor Zubov. Nowadays Russia still falls behind developed countries, it is at the beginning of e-commerce development, the country ranks almost 10^th or 11^th in the world. As the expert explained, the key issue of creating bonded warehouses hadn’t been raised for many years, unless he became familiar with the Tatarstan government.

“We began to actively discuss this project with different agencies in Russia four years ago, and just six months ago when we got acquainted with representatives of the Tatarstan government, this project began to really gain momentum,” the speaker stressed addressing Farid Adbulganiyev. “We were pleasantly surprised at how fast decisions were made in Tatarstan, how fast our colleagues in Tatarstan went into the essence of the project.”

Bonded warehouses in the developed world is a fact of life, the expert stated. Bonded warehouses with different specifics already exist and actively operate in many countries. Bonded warehouses in most European countries, in Baltic States, Scandinavia, Central Europe are focused on transit. If Russians order things on AliExpress, Joom and eBay, parcels often come from these countries’ bonded warehouses. The government of Malaysia was an interesting case three years ago — the small countries with a population of 10 million people launched a bonded warehouse for exports and transit. About 2,000 local companies that began to export commodities operated in the warehouses after the opening, a year later they totalled 5,000.

Bonded warehouses in most countries, as a rule, aimed at imports — China is a classic example. The first bonded warehouses opened in the PRC six years ago, they were six, and in early 2020 it was announced another 30 would open. “Chinese regions are lining up to open a bonded warehouse,” the specialist illustrated. Their total number in the last six years has been 105. Having studied the experience of the “pioneers”, Russia has now a unique opportunity — to unite bonded warehouses with a focus on imports, exports and transit, but the clock is ticking, he is sure.

“We’ve been analysing bonded warehouses around the world for five years. We understand we are falling behind very much. Even Kazakhstan has bonded warehouses with a focus on cross-border e-commerce. And time today is a decisive factor. If we don’t manage to launch the bonded warehouse and get a good turnover in the next six months or year, unfortunately, it may be late because bonded warehouses already exist and they develop actively. But not in Russia,” Zubov concluded.

“We are about to make related decisions, we’re on the threshold of a new turn in e-commerce development. Bonded warehouses are those territories without which we impede further development of online commerce,” Farid Abdulganiyev admitted during the discussion and reminded the audience that Rustam Minnikhanov planned to meet with Director General of the country’s main operator of cross-border commerce — Russian Post — Maksim Akimov on 24 August. The launch of the bonded warehouse in the republic would also be tabled there.

“Bonded warehouses are the world’s best practice. Yandex.Market is ready to join this work”

Top managers of leading Russian e-commerce market players participated in the discussion of prospects of a bonded warehouse in Tatarstan. Participants in the discussion agreed that the future lied with cross-border commerce. At the republican business ombudsman’s behest, the representatives of the biggest Russian and foreign marketplaces and logistic companies of Russia promised to help the project “as much as possible”.

According to Director General of iHerb’s Russian office Ilya Mikin, the company has been developing its own bonded warehouses in Asia for long. With the opening of the first bonded warehouse in South Korea, iHerb literally experienced the creation of regulatory mechanisms and rules with local authorities first-hand. Now the bonded warehouse runs successfully and smoothly, now they plan to launch a warehouse in China, the company is interested in the Russian market as well.

“I am sure that the construction of bonded warehouses in Russia is a step to the future, the development of better consumer experience as well because there will be better control over goods, bonded warehouses can also work for exports. Bonded warehouses are a step to civilised commerce, a transition from open markets to well-organised supermarkets. We can say that we plan to invest in bonded warehouses in Russia and wait for this experiment to begin,” Mikin claimed.

“Bonded warehouses are the world’s best practice, it is, indeed, a legal regime Russian online retailing needs. And I hope it will develop. <…> Yandex.Market is ready to join this work — to search and prepare such a project,” Senior Manager of Government Relations Department at Yandex. Market Tatiana Brazhnik agreed.

“We’ve been in Tatarstan since 2016, we’re one of the first e-commerce companies that entered this territory and develop here very well. As for bonded warehouses, we certainly support the creation of such infrastructure in Russia, we think it will dramatically reduce the speed of delivery of a good to the consumer, and in the modern world, it is one of the key moments when choosing a site and good. <...> We’re ready for experiments, and as soon as the creation of bonded warehouses comes to an end, we will certainly be part of this story,” Director of Government Relations at Ozon Dmitry Rusakov backed his colleagues.

Bonded warehouses are designed not only imports but also exports. And given the economic situation in the world and in Russia when all sides are interested in looking for new models and channels of commerce, e-commerce export is the tool that will help survive the difficult economic situation and create correct logistic infrastructure, head of GR at AliExpress Russia Sergey Lebedev stressed during discussions. According to the speaker, Russian bonded warehouses need to focus precisely on exports.

“It is no surprise that the experiment will begin precisely in Tatarstan because bonded warehouses require very powerful IT integration of all members — between suppliers, bonded warehouse operators, main transport companies, companies providing the first and last mile stages. Thanks for the initiative and courage,” the representative of AliExpress Russia added.