China will encourage the development as soon as possible of several giant package distribution and delivery system firms and further open up the logistics industry to foreign investors. Domestic logistics enterprises are also encouraged to strengthen cooperation with both domestic and foreign investors and grasp global market stakes to meet the demands of growing international trade and globalization after the country joins WTO at the end of this year.
Under the rules of the World Trade Organization (WTO), the country hopes to open its service and logistics market in three years.
Logistics is a term used to describe the process of delivery of a product from the manufacturer to the consumer that includes transportation, storage and distribution. Today the industry has grown to integrate logistics services with information and financing.
Despite an overall slowdown in the world's economic growth, China's sustained momentum of development and high market demand have provided a good opportunity for overseas investors to access its logistic market. The logistic industry will benefit more from foreign investment, including financing, technology and management, and with this, the industry will play a more important role in China's economy.
The industry is expected to be of great help to the country's national economic growth, since a large number of businesses, especially state-owned enterprises, are bogged down by poor management and inefficient logistics, resulting in high production costs.
Among China's 450 large and medium-sized industrial enterprises, 45 percent plan to select new agents to handle logistics within the next two years, and 75 percent want to establish business relations with modern logistics companies, according to recent statistics issued by the Storage Industry Association.
Companies that have improved their logistic delivery and storage systems usually see profits rise. They include such companies as Tsingdao Beer Group and Haier Group in East China's Shandong Province.
After reforming its logistic system, Tsingdao Beer has been able to save about US$3.9 million (32 million yuan a year).
More and more enterprises have come to realize that with economic globalization, competition lies not only in the performance or quality of their products, but also in their logistics capacity.
China's logistics market is estimated at around US$215 billion (1.78 trillion yuan). The industry is expected to become a new source of profits for Chinese firms.
Logistics companies in the country must move fast to utilize the final three-year protection period after China’s entry into the World Trade Organization if they are to be able to survive when foreign logistic giants arrive.
The State Postal Bureau (China Post) aims to become the country's biggest logistics provider, supported by its far-reaching network and decades of delivery experience, but it needs to restructure management systems and business operations in order to become a modern logistics provider.
At present, few domestic logistics giants exist in China capable of competing with foreign companies, though the industry has had a rapid development in recent years. Many foreign logistics companies have dominated the market because of a better reputation compared with their Chinese competitors. Foreign logistics companies are already eyeing the enormous potential of China's market, and are investing heavily in China.
Siemens’ operations in logistics and production in China began in the early 1980s. The company now enjoys a strong professional presence in China's electronics assembly and postal automation industries.
Danish shipping giant A.P. Moller Maersk Group has set up a national distribution center in the western suburbs of Shanghai to provide logistic services ranging from procurement and warehousing to transportation.
Singapore-based APL Logistics, one of the world's leading companies in logistic sector, has joined hands with two Chinese companies to tap the logistic market in China. APL Logistics has set up branches in seven Chinese coastal cities including Shanghai, Dalian, Tianjin, Qingdao, Xiamen, Shenzhen and Nanjing. Another five branches are expected to open in the coming two years.
Coastal cities including Shanghai, Tianjin and Shenzhen have listed logistics as a rising industry in the 21st century. Meanwhile, experts say China should enhance cooperation with international companies to improve its logistic management.
China’s government encourages Chinese companies to increase profits by improving management and efficiency in the purchase, transportation, storage and delivery of materials and products.
(china.org.cn edited by Shan Xingmei from Xinhua News Agency reports )
