Huge potential demand for logistics
China is now the seventh largest economy in the world and this means a huge demand for logistics. In 2001, China's GDP was RMB9.59 trillion (about US$1.16 trillion). According to World Bank estimates, logistics costs account for 16.7 per cent of China's GDP. Industry experts in China believed that the costs of logistics could be 20 per cent or even higher, twice as much as in developed countries . Based on this, total spending on logistics could amount to RMB1.92 trillion.
To understand the potential demand for logistics, it is worth taking a look at the levels of growth in some of the key industries where logistical opportunities lie.
Secondary industry
The value-added of secondary industry (see Table 4.10.2) hit a record high of RMB4.91 trillion in 2001, having grown at an average annual rate of 9.8 per cent within the ninth five year plan period. Total sales of industrial materials amounted to RMB5.5 trillion.
| Year | Amount (RMB billion) |
|---|---|
| 1996 | 3,361.29 |
| 1997 | 3,722.27 |
| 1998 | 3,861.93 |
| 1999 | 4,055.78 |
| 2000 | 4,548.78 |
| 2001 [*] | 4,906.90 |
| Source: China Statistical Yearbook 2001 | |
| [*] 2001 figure is a preliminary estimate by the China Statistical Bureau | |
Retail
The retail sector has experienced sustained growth over recent years. Total retail sales of consumer products grew at an average annual rate of 10.6 per cent in the ninth five year plan period and 2001 saw a new high of RMB3,759.5 billion. The retail infrastructure has also undergone significant changes in the past few years and will require higher standards in logistics services.
| Year | Amount (RMB billion) |
|---|---|
| 1995 | 2,477.4 |
| 1996 | 2,062.0 |
| 1997 | 2,684.3 |
| 1998 | 2,915.3 |
| 1999 | 3,113.5 |
| 2000 | 3,415.3 |
| 2001 [*] | 3,759.5 |
| Source: China Statistical Yearbook 2001 | |
| [*] 2001 figure is a preliminary estimate by the China Statistical Bureau | |
Agriculture
The efficient flow of agricultural products depends very much on the quality of the logistics. Products need to be moved from farming areas to the market for industrial and consumer consumption. They also need to be processed on their way to the markets for added value. In value terms, China's agricultural sector has been increasing at an average rate of 3.5 per cent in the period of the ninth five year plan (see Table 4.10.4).
| Item | 2000 | 2001 [*] |
|---|---|---|
| Grains | 462.18 | 452.62 |
| Cotton | 4.417 | 5.32 |
| Oil bearing crops | 29.548 | 28.72 |
| Sugar cane and beet | 76.353 | 87.90 |
| Fruits | 62.251 | 65.36 |
| Aquatic products | 42.784 | 43.75 |
| Forestry products | 2.623 | |
| Meat | 61.246 | 63.40 |
| Poultry and eggs | 22.433 | |
| Source: China Statistical Yearbook 2001 | ||
| [*] 2001 figures are preliminary estimates by the State Statistical Bureau | ||
Import and export trade
Imports and exports are economic power engines of China (see Table 4.10.5). In the period from 1996 to 2000, China's import and export trade increased at an annual rate of 11 per cent. Exports come from all over the country, are consolidated at the ports and go from there to other parts of the world. Likewise, imports arrive at Chinese ports for onward distribution into all parts of China. Both imports and exports need efficient logistics to deliver the right products to the right place in the right quantity and at the right time.
| Year | Total import and export value (US$ billion) |
|---|---|
| 1995 | 280.9 |
| 1996 | 289.9 |
| 1997 | 325.1 |
| 1998 | 324.1 |
| 1999 | 360.6 |
| 2000 | 474.3 |
| 2001 [*] | 509.8 |
| Source: China Statistical Yearbook 2001 | |
| [*] 2001 figures are preliminary estimates by the State Statistical Bureau | |
E-commerce
China's fledgling e-commerce industry has been developing rapidly over recent years. In 2000, B2B and B2C online transactions exceeded RMB700 million. Transactions from Internet 'matchmaking' reached RMB70 billion and it is reported that a proportion of the RMB60 billion government purchases in 2001 were also made via the Internet. According to an UNCTAD report, the total transaction value of e-commerce in China in 2001 was US$9.33 billion, 80 per cent of which was B2B. The Internet is emerging as an important mode of commerce and many Chinese enterprises use it as an alternative marketing channel. The statistics of the China Article Numbering Centre reveal that among those who have set up Internet sales capabilities, 13.5 per cent are in the manufacturing industry, 12.5 per cent in the wholesale sector and 17.9 per cent in retail. One bottleneck among others in the development of China's e-commerce is the lack of an efficient delivery system, a problem to which modern logistics can provide a solution.
Other sources of demand
Other sources of demand for logistics could include bonded zones, wholesale markets and the recuperation of recyclable resources.
According to a survey of China's 15 bonded zones in 2000, total imports and exports in those zones reached US$18.7 billion. The average import and export capacity of the bonded zones is US$1.25 billion. These zones are mostly located along the coastal areas and close to seaports. After China's WTO entry, the role of bonded zones may be challenged as a result of tariff concessions , but new opportunities lie in the existing warehousing and processing capabilities that can be developed into logistics and distribution capabilities. Bonded zones will allow third-party logistics providers to establish warehouse and distribution centres . Goods can be stored in bond until needed, delaying payment of customs duties and VAT, and keeping stocks of products closer to Chinese customers and consumers.
There are currently over 3,000 wholesale markets with a total transaction value of over RMB100 million. These markets play a very important role in the distribution of goods in China. The total value of transactions for these wholesale markets reached RMB1.64 trillion in 2000, equivalent to 20 per cent of the country's GDP and 47.8 per cent of total retail sales of consumer products. The flow of goods in and out of those wholesale markets will require efficient logistical support.
Recuperation of recyclable resources also offers logistics opportunities. There are large quantities of scrap materials sent for recycling each year: 3 million tons of scrap steel , 200,000 tons of scrap non-ferrous metals, 2 million tons of scrap paper, over 200,000 scrap cars , 800,000 tons of scrap plastics and 1 million tons of scrap glass.
EAN: 2147483647
Pages: 648