For years, the model was simple: products remained in China until they were purchased, and only then would an individual parcel be shipped directly to the European consumer. That model is not disappearing, but there are growing signs that it is no longer the obvious choice for every product category or at every stage of a Chinese seller’s development.
This time, the most interesting signal is coming not from Europe, but from China. According to China’s General Administration of Customs, exports handled through overseas warehouses increased 3.3-fold in the first half of 2026. A year earlier, the total value of China’s cross-border e-commerce trade – imports and exports combined -reached RMB 2.84 trillion.
It is becoming difficult to treat this as a niche logistics optimisation. What we are seeing increasingly looks like a broader shift in how some Chinese companies organise their international sales.
At the same time, Europe is changing the conditions that for years favoured the direct shipment of small parcels from China. In 2025, around 5.88 billion items entered the EU in low-value consignments, 26% more than a year earlier. According to European Commission data, 93% of that volume originated in China.
From 1 July 2026, customs treatment also changed for consignments valued below €150. The EU introduced a temporary €3 customs duty, calculated according to the separate tariff categories contained in a parcel.
For Chinese e-commerce companies, the economics are therefore beginning to look different.
It Is Not Just the Route of the Parcel That Is Changing
Overseas warehousing is nothing new. Chinese sellers have been using logistics and fulfilment centres in the United States, the United Kingdom, Germany, Poland, Spain and other European markets for years. What is new is primarily the scale and pace at which this model is expanding.
Chinese trade policy is also actively supporting the shift. Government plans for 2026 include further development of the “cross-border e-commerce + overseas warehouses” model, while the Ministry of Commerce has announced the digitalisation and modernisation of overseas warehousing infrastructure.
The difference between the two sales models is fundamental.
In the traditional direct-shipping model:
factory or warehouse in China → customer order → individual parcel → customs clearance → European consumer
With locally held inventory:
China → bulk shipment to an EU warehouse → local inventory → customer order → delivery from within Europe
For the customer, the difference may simply mean receiving a parcel the next day instead of a week later. For the seller, however, much more changes than delivery speed alone.
Why Direct Shipping Is Losing Some of Its Advantage
Direct shipping has one major advantage: the seller does not have to predict in advance where demand will emerge.
Goods remain in China until an actual order triggers shipment. There is no need to rent warehouse space in advance, finance inventory held in Europe or decide how many units should be sent to Germany, Poland or Spain. This model is particularly attractive when the seller has a very large number of SKUs, low-value products and unpredictable demand.
Some of those advantages, however, are gradually being offset by new costs and risks.
Since July, the EU’s approach to low-value imports has begun to change. Successive elements of customs reform are moving towards greater product traceability and greater responsibility for formalities being placed on platforms and sellers engaged in distance sales.
And customs duties are only part of the equation. Other factors do not appear directly in a tariff schedule: delivery time, return costs, last-mile predictability, the ability to replace products quickly and marketplace expectations around fulfilment times.
Direct shipping will remain an important model, but in some categories its economic advantage over placing inventory in Europe in advance may gradually decline. Once sufficient scale is reached, local inventory simply becomes more competitive.
Europe Is Also Looking More Closely at What Is Inside the Parcel
The shift is not only about taxes and logistics. EU authorities are paying increasing attention to the compliance of products sold directly from third countries.
In coordinated inspections carried out across the EU in 2025, a large share of products sold online from outside the EU failed to meet all applicable requirements. In toys and small electronics, 55% of inspected items were found to be non-compliant, while among the products subsequently sent for laboratory testing, 84% were assessed as non-compliant or unsafe. Further inspections also identified high levels of non-compliance in categories including cosmetics and personal protective equipment.
These figures do not, of course, justify treating Chinese products as inherently problematic. They do, however, help explain why the EU is placing increasing emphasis on product traceability, documentation, labelling, the responsibilities of individual actors in the supply chain, and the ability to remove a product from the market quickly.
For a professional Chinese seller, holding inventory locally can therefore become part of a broader process of maturing its European operations. A European warehouse solves the problem of speed and product availability, but at the same time opens up an entirely new set of operational questions.
1. VAT: The Goods Now Have a European Address
As long as an individual product is shipped from China only after the customer places an order, the seller operates within a distance-sale import model. Once a larger batch of goods is imported in advance and stored in an EU warehouse, the tax position becomes more complex.
Inventory has to be imported, import VAT arises, and storing goods in a particular Member State may trigger a requirement for local VAT registration. Sales from that warehouse to consumers in other EU countries may subsequently be handled through mechanisms such as OSS, but the exact structure depends on the sales model, the location of inventory and the role of the marketplace.
The decision to “place inventory in Europe” quickly becomes a tax decision as well.
2. Customs: One Large Shipment Does Not Eliminate the Import Problem
Moving from thousands of small parcels to bulk imports into a warehouse may simplify logistics, but it requires a more traditional approach to customs clearance.
Tariff classification, customs value, origin, documentation and the party responsible for the import all need to be determined. In practice, Chinese companies often frame this as an importer of record question: who formally brings the goods into the EU, who submits or arranges the customs declaration, and who carries the associated obligations?
Choosing a warehouse does not answer these questions. A logistics operator, the seller, a European subsidiary and a customs representative all perform different roles, and a poorly designed structure may reveal its weaknesses only when the first container is already on the way.
3. Product Compliance: The Goods Are Now Physically on the European Market
Holding inventory locally also makes product compliance more important.
Depending on the product category, requirements may apply to CE marking, technical documentation, instructions and warnings, labels, manufacturer and importer details, an EU responsible person, or sector-specific product regulations.
The General Product Safety Regulation (GPSR) adds another layer, strengthening safety and traceability requirements for consumer products sold online and placing specific obligations on marketplaces.
For a company that previously focused primarily on shipping products to European customers, the nature of the question therefore changes. It is no longer simply whether the product can be delivered to Europe, but whether the company is prepared to keep it legally and sustainably on the European market.
4. Returns Stop Being the Customer’s Problem and Become the Company’s Process
Direct shipping works much better in one direction than the other. Sending a product from Shenzhen to a customer in Europe is relatively straightforward; asking the customer to return it to China is much less attractive both economically and operationally.
A local warehouse makes it possible to offer a European returns address, inspect returned goods, put some of them back into stock, process exchanges and resolve complaints more quickly. At the same time, it requires a proper reverse-logistics process.
The company needs to decide who receives the return, who assesses its condition, whether the product can be resold, what happens to damaged goods and how returns from several countries will be handled.
For a large European online retailer, these are everyday operational processes. For a Chinese company moving deeper into the European market, they may represent an entirely new capability.
5. Fulfilment Becomes the Management of a European Operation
Choosing a warehouse quickly turns out to involve much more than comparing the price per pallet.
The company has to decide where to hold stock, how quickly to fulfil orders, how to integrate systems with marketplaces, how to manage inventory levels, how products should be packed, which carriers to use, how inventory movements should be accounted for, and when to open another warehouse.
This creates a risk that is almost the reverse of the one associated with direct shipping. Previously, the problem was slow delivery. Under a local-inventory model, the problem may instead be €100,000 worth of stock sitting in the wrong warehouse in the wrong country.
The location of inventory is therefore not merely a logistics decision. It affects taxes, cash flow, sales, customer service and the structure of the company’s entire European operation.
The Most Likely Outcome Is a Hybrid Model
Chinese e-commerce is unlikely to stop sending small parcels directly to Europe. A more likely outcome is the use of different models depending on the product category, margin and predictability of demand.
New SKUs and products with uncertain demand may continue to be tested through direct shipping. Bestsellers, frequently purchased goods and categories in which delivery speed and ease of return have a strong impact on conversion may increasingly be moved into European warehouses.
A Chinese company may therefore test demand first by shipping directly from China, and only later move its best-selling products closer to the customer.
This is why the growth of exports handled through overseas warehouses is so significant. It does not simply point to the development of logistics. It suggests that some Chinese sellers are moving from testing the European market to building permanent operational infrastructure within it.
For European Service Providers, the Most Important Moment Is the First Local Inventory Decision
This may be one of the most underestimated sales signals in B2B relations with China.
A Chinese company may sell into Europe for years without needing a local law firm, VAT adviser, accountant or European warehouse operator. Then it makes one decision:
“We are going to place inventory in Europe.”
Almost immediately, a series of questions follows: who imports the goods, where VAT registration is required, whether a local company is needed, whether labels and documentation meet EU requirements, who will handle returns, how sales across several countries should be organised, which warehouse to choose and how inventory movements should be accounted for.
This is precisely the point at which local European expertise starts to become highly valuable. Not because the Chinese company has decided to “enter Europe” in some abstract sense, but because the goods are now physically in Europe and need to be managed here legally and efficiently.
The End of Direct Shipping? No. But Its Position Is Changing
The model of shipping parcels directly from China will remain an important part of Chinese cross-border e-commerce. It will continue to make strong commercial sense for certain products, business models and stages of market testing.
What is changing is the environment around it. The EU is reducing some of the advantages historically associated with low-value imports, strengthening product controls and increasing the responsibilities of the parties organising the sale. China, meanwhile, is actively promoting a model based on overseas warehouses, and businesses are adopting it on a broader scale.
The 3.3-fold increase in exports handled through overseas warehouses in the first half of 2026 may be one of the clearest early signs that the next phase of Chinese cross-border e-commerce will increasingly take place not only from China into Europe, but within Europe itself.
For European service providers, this is an important shift. The more Chinese inventory is physically located in Europe, the more tax, customs, legal, logistics and product-compliance issues need to be resolved locally.
And that is precisely where a new market is emerging for European specialists.