Logistics industry rapidly grows in China
The four-day CeMAT ASIA 2008 exhibition these days in Shanghai is witnessed by famous global brands for logistics technology and equipment that how China has developed the industry at the exhibition.
This exhibition provides Chinese logistics equipment and manufacturers with a big opportunity to showcase their new technology and products while looking for potential business cooperation among foreign counterparts. Some 380 exhibitors from 25 countries and regions are expected to attend the event at Shanghai New International Expo Centre.
Although the concept of logistics industry was almost unknown to the Chinese 30 years ago, it is now an area of business that China has been developing on an impressive scale. Because this is the leading event in the logistics field, CeMAT ASIA will showcase the industry’s latest products and technologies.
According to the statistics from China Federation of logistics and Purchasing (CFLP), the nation’s output value for logistics equipment increased almost seven times, reaching 200 billion yuan last year, up from 30 billion yuan in 2002.
With an annual speed of 30 percent growth rate, China’s logistics equipment sector is now able to cover a wide range of logistics services, from transportation to port and air port facilities.
The industry’s tremendous development over the years has been noticed by He Liming, CFLP Executive Vice-Chairman who used to lament the gap between China and the West regarding logistics hardware. But nowadays, things changed. The country’s rapid economic growth has stimulated a greater need for logistics services-creating demand for related equipment.
Zhou Yun, secretary-general of the logistics branch under the Chinese Mechanical Engineering Society, agrees China has come a long way in the industry. He notes the country today boasts logistics equipment giant Zhenghua Port Machinery Co Ltd, which holds a market share of up to 70 percent in the world’s port machinery sector.
The industry has also become more competitive for China-made products as major international manufacturers within the sector have set up joint ventures or wholly owned plants in the country. Industry experts welcome the move because during the process of bringing in increased foreign capital and advanced production facilities, China can share knowledge between Wests.
There are both confidence and worries in experts’ opinions. Although it has been given the strong momentum of the logistics industry, experts still worry about their too fast development which may bring bad effect if they don’t have adequate capacities. As a result, the profit margin of the traditional logistics sector like transportation has been squeezed to less than 5 percent.
Chinese companies need to improve their technology and develop a niche market to compete.
Zhou said the one-stop logistics service in Chinese companies is still very few, but it’s unnecessary for all of them to have such kind of service.
The support of government through investments in technological developments will also be very helpful, Zhou added.
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China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.
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