A bonded factory is a kind of factory that falls under the special case of customs supervision. Here, the goods produced and stored will not be subject to regular customs procedures, such as payment of customs duties and other fees, upon entering or leaving the factory. With the exemption from the usual custom taxation, many countries have enacted laws to regulate the operation of bonded factories.
One of the main advantages of a bonded factory is that it allows the efficient and safe storage of goods prior to the sale and reduction of the total cost of production. This makes it an attractive option for companies that manufacture, import and export goods. Instead of paying the usual taxes, a manufacturer can save money by transfer the responsibility of payment of tariffs, transportation and distribution cost to a third party.
The Bonded factory also usually provides conduct storage and transportation services, thus cutting down cost that would be associated with the traditional way of doing business. The bonded warehouse creates a bonded circuit, where goods can be moved freely, without paying any kind of tariff. In addition, bonded warehouses also allow the storage of goods for a long period of time. This implies that it is possible to store goods that are not immediately suitable for sale and then gradually launch them in the market at the appropriate moment.
The bonded warehouse also benefits the manufacturer inasmuch as it permits easy clearance of goods from customs. Additionally, companies located in bonded factories get the use of the latest technological tools, personnel and resources to effectively manage the production and distribution of products.
Apart from the efficiency of operation, another advantage of a bonded factory is that entities that use it do not need to be physically present during the entire production process. This means that you can manage the whole production process from a different country or region. This enables companies to save money, because personnel and other associated costs with travel, accommodation and transportation expenses can be avoided.
Additionally, operating a bonded factory allows flexible payment terms to customers, as payment can be deferred until the product reaches its final sale point. This eliminates the delay associated with waiting for payment but it also implies that the manufacturer takes a risk.
Finally, one of the greatest advantages of having a bonded factory is that it eliminates the need to pay duties in countries that levy high import and export taxes. As long as the goods remain in the bonded factory, taxes can be avoided in countries. This obviously translates into a considerable financial saving.
Overall, operating a bonded factory represents a feasible option for those companies involved in manufacturing, importing, exporting and storing goods. It provides an efficient means for the protection and saving of goods, as well as a more flexible method of payment. This makes it an attractive option for companies looking to expand their global presence.
