CBU stands for Completely Built Unit.
A Completely Built Unit (CBU) refers to a product that is manufactured and assembled entirely in one country and then imported into another country in its final, ready-to-use form. This designation is particularly significant in industries like automotive, electronics, and heavy machinery, where products can also be imported in various states of disassembly.
Understanding Completely Built Units
When a product is classified as a CBU, it means it leaves the manufacturing facility and arrives at its destination fully assembled and functional, requiring no further assembly processes in the importing country before it can be sold or used. This approach contrasts sharply with other import strategies that involve local assembly.
Key Aspects and Implications of CBUs
Importing products as CBUs has several important considerations for manufacturers, distributors, and governments:
- Higher Import Tariffs: Many countries impose higher import duties and taxes on CBUs compared to parts or disassembled kits (like CKD or SKD units). This policy often aims to encourage local manufacturing, create jobs, and stimulate domestic economic activity.
- Logistical Considerations: Transporting fully assembled units requires specialized logistics to prevent damage and accommodate their size and weight. While it simplifies the process at the destination end (no assembly required), the journey itself can be more complex and costly for shipping and handling, requiring robust global supply chain management as offered by logistics providers.
- Market Entry Strategy: Companies might opt for CBU imports to quickly introduce new models or products into a market, test market demand, or when the sales volume does not justify the significant investment required for local assembly facilities. It offers speed to market and reduced initial capital outlay in the importing country.
- Quality Control: Since the product is assembled at the original manufacturing plant, the manufacturer has full control over the assembly process, potentially ensuring consistent quality across all markets.
CBU vs. CKD vs. SKD
To fully understand CBUs, it's helpful to compare them with other common terms in international trade and manufacturing:
- CBU (Completely Built Unit): The product is fully assembled in the manufacturing country and imported as a whole unit.
- CKD (Completely Knocked Down): The product's components are imported in a completely disassembled state, requiring full assembly in the importing country. This strategy often attracts lower import duties and promotes local industrial development.
- SKD (Semi Knocked Down): The product's components are imported partially assembled, requiring less extensive local assembly than CKD but more than a CBU.
| Feature | CBU (Completely Built Unit) | CKD (Completely Knocked Down) | SKD (Semi Knocked Down) |
|---|---|---|---|
| Assembly Location | Entirely in the manufacturing country | Fully in the importing country | Partially in the importing country |
| Import Duties & Tariffs | Generally Higher (as it's a finished product) | Generally Lower (to incentivize local assembly) | Moderate to Lower |
| Local Manufacturing | Minimal (primarily sales, service, distribution) | Significant (full assembly line, workforce) | Moderate (some assembly operations) |
| Speed to Market | Faster (no local assembly required) | Slower (requires setting up and executing assembly) | Moderate |
| Logistics Complexity | High (handling finished, often bulky goods) | High (managing numerous small, diverse parts) | Moderate (fewer, larger sub-assemblies) |
| Local Job Creation | Limited to sales, distribution, and after-sales | Significant in manufacturing and assembly | Moderate in assembly and related services |
| Target Market | Niche markets, low volume sales, luxury goods | High-volume markets, countries promoting local industry | Mid-volume markets, balancing cost and efficiency |
Practical Examples
- Automotive Industry: A high-end luxury car model produced in Germany and shipped directly to a showroom in the United States without any local assembly is a CBU. Conversely, many mainstream car brands have local plants that assemble vehicles from CKD kits to serve regional markets and comply with local content regulations.
- Consumer Electronics: A specialized server rack or a unique smart device manufactured entirely in Asia and then imported to Europe for direct sale is often a CBU, especially if the volume doesn't warrant a local assembly plant.
Choosing to import CBUs versus CKD or SKD units is a strategic decision for businesses, heavily influenced by market demand, import regulations, logistics costs, and long-term business objectives.
