Guangdong’s cross-border e-commerce industry is on the rise

Cross-border e-commerce companies drive substantial absorption in the non-bonded warehouse market of South China.

November 15, 2023
Guangdong: Leader in the cross-border e-commerce industry

In recent years, cross-border e-commerce (CBEC) has become an emerging driving force in China’s foreign trade sector. Nationwide, Guangdong Province leads the development of the CBEC industry. In 2022, Guangdong’s total import and export value of CBEC reached RMB 645.4 billion, ranking first domestically and accounting for 43.4% of the country’s total. Noticeably, the total import and export value of CBEC in Guangdong has scaled up nearly 43 times from 2015 to 2022, achieving an average annual growth of 72%.

The rapid development of CBEC in Guangdong is a result of Guangdong’s advantages in industrial resources, infrastructure, and business model. In the past few years, Guangdong’s CBEC industry has undergone standardisation and platformisation. Along the way, a new ‘Fully Managed’ business model was developed. It is widely adopted by Guangdong CBEC platforms, promoting the rapid growth of the CBEC industry in Guangdong in recent years.

‘Fully Managed’ model: Generating incremental non-bonded warehouse leasing demand in South China

Under the ‘Fully Managed’ business model, CBEC platforms are responsible for products’ storage, transportation and delivery. As sales volume quickly expands, these platforms’ demand for storage space grows naturally. Also, since they rely primarily on airfreight to transport products overseas, they typically prefer warehouses near major airports, such as Guangzhou Baiyun International Airport. Therefore, several leading CBEC platforms have set up storage centres in Guangzhou, a national-level comprehensive logistic hub, and in cities close to the Guangzhou airport, including Foshan, Zhaoqing and Jiangmen.

Figure 1: 2021 to 3Q23 leasing volume of CBEC companies in South China cities (by year)

Source: JLL Research, 3Q23

Based on transactions tracked by JLL from January to September 2023, major CBEC platforms, including SHEIN, Temu, Tiktok Shop and AliExpress, together leased over 1.8 million sqm (GFA) of non-bonded space (pre-leasing included) in South China cities, such as Guangzhou, Dongguan, Foshan, Jiangmen and Zhaoqing. The strong leasing demand during this time period was mostly due to their rapid business growth and expansion.

So far in 2023, many newly completed warehouses of relatively large size in Guangzhou, Dongguan and Foshan have been taken up by the above-mentioned CBEC platforms. Such strong leasing demand, to some extent, has kept non-bonded rents relatively stable in these cities. Also, within 3Q23, the non-bonded vacancy rates either dropped or stayed largely unchanged compared to those of 4Q22.

Figure 2: 1Q23-3Q23 non-bonded market indicators and leased area by CBEC companies of three South China cities

Source: JLL Research, 3Q23
Note: *new supply, net absorption and vacancy rate of Foshan are based on 2Q23 data, such indicators of other cities are based on 3Q23 data;
**based on leasing transactions (including pre-leasing) by GFA obtained as of September 2023.

Outlook: CBEC is expected to continue promoting the healthy development of South China’s non-bonded market

Driven by consistent business growth, leading CBEC platforms are likely to maintain their rhythm of expansion in the short term. Therefore, the ongoing competition over high-quality supply chain resources in Guangdong may further facilitate leasing demand in the local warehouse market.

However, these CBEC platforms are also taking steps towards the development of self-built warehouses and overseas supply chains. In the medium to long term, such strategies could lead to fluctuations in CBEC firms’ warehouse leasing demand in South China.