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5 White Paper on the Business Environment in China
2.4 Transportation and Logistics
TRANSPORTATION AND LOGISTICS have been ing issues with the sector, including ine cient operations and
intimately related to the export-oriented manufacturing inadequate transportation capacity.8 Other concerns about the
that has served as a major driver of China’s economic growth industry have included a lack of broad competencies by do-
since 1978. Since the o cial opening of the sector to mestic rms, a shortage of professional talent and generally
foreign investment in 2005 as a part of China’s WTO-entry disorganized macro-level planning.9
obligations, foreign, in addition to domestic, companies have
also held a stake in the sector’s growth and have bene ted A 2010 report by consulting rm A.T. Kearney had
from the gradual improvement of related infrastructure. previously singled out fragmentation and competition for
homogenous and non-diversi ed services as indicators of
In February 2007 it was estimated by the China the sector’s need for development, in addition to the issues
International Freight Forwarders Association that there were above,10and even China Daily joined in the criticism, calling
20,000 freight forwarding companies operating in China.1 for the PRC government to decrease administrative burdens
on companies serving both the domestic and international
According to government gures, the total output and added markets.11
value of the logistics industry in 2008 reached 89.9 and 2 trillion
yuan—an annual increase of 23 and 1.9 percent, contributed Nevertheless, a 2010 report by PriceWaterhouse Coo-
16.5 percent of the aggregate added value throughout the pers is more optimistic, stating that the transportation and
service sector and 6.6 percent of the nation’s GDP.2 logistics “market will continue to increasein the future and
consider on-going growth rates of more than 20% as realis-
It was reported in December of 2009 that the logistics tic. e rapid development of electronic commerce has laid
sector’s “combined output value rose 4 percent year-on-year a solid foundation for the industry. Approximately 10% of
to 1.47 trillion yuan” in the three quarters of 2009,3 with China’s 420 million internet users have already purchased
Ma Zeng Rong, Vice-Chief of the exhibition division of the products through the internet and thus created demand for
China Federation of Logistics and Purchasing having told CEP services.” 42
reporters that “China’s logistics industry has weathered the
Foreign players such as DHL, FedEx, TNT or UPS all
nancial crisis” approximately two months earlier.4 have signi cant presence in the Chinese logistics market, ex-
In 2010, Xinhua reported that the industry’s value-add periencing 20 to 40% growth annually. Despite such growth
rates, it is still the small private domestic courier companies
component had seen a net increase of 700 billion yuan from that dominate the majority of the Chinese CEP market. 42 is
2008 levels.5 may change in future. e same report adds that according to
the China International Freight Forwarders Association, as
In slightly di erent terms, a 2012 statement from the Chi- the Chinese middle class continue to gain in a uence, “la-
na Federation of Logistics and Purchasing indicated that the bour cost advantages of small courier companies will decline
total value of goods carried by the industry in China “grew by over the next ve to ten years. Future customers will place a
9.6 percent year-on-year to reach 146.4 trillion yuan ($23.27 much stronger emphasis on reliable delivery rather than price,
trillion) in the rst 10 months [of that year].” At the same an area where multinational logistics services have a strong
time, however, the Federation warned that “Logistics expenses advantage over small domestic courier companies.”42
in the rst 10 months surged 11.5 percent year-on-year to 7.2
trillion yuan, up 0.2 percentage point from September and In March 2009, State Council released the “logistics
1.9 percentage points from a year earlier”— underscoring the reconstruction and revitalization plan”, of which e orts were
lingering ine ciencies which have been targeted by the gov- designed to encourage reconstruction and acceleration of M&A
ernment’s modernization e orts for several years already.6 activity in order to (roughly) “cultivate a number of agglomerative
and modernized logistics enterprises able to provide a high level
ese modernization e orts, in fact, were explicitly singled of service and compete in the international market.”12
out in the 11th Five-year Plan (viz. the “vigorous development
of [a] modern logistics industry”).2 Since that time, the gov- is plan, however, was said to lag behind the industry’s
ernment invested an estimated 4.7 trillion yuan in the sector.7 actual needs and as a result hindered long-term development
rather than helping it, according to China Federation of Lo-
In addition to this government investment, in recent years gistics and Purchasing Chairman He Liming.13
local logistics rms are said to have also bene tted from mea-
sures such as the adoption of modern management methods, Additional regulatory guidelines were released in August
“process reengineering”, service outsourcing and diversi ca- 2011 (Guobanfa [2011] No.38). In addition to adjusting tax
tion in the market.2
Nonetheless, a 2011 KPMG report identi es several ongo-
148
2.4 Transportation and Logistics
TRANSPORTATION AND LOGISTICS have been ing issues with the sector, including ine cient operations and
intimately related to the export-oriented manufacturing inadequate transportation capacity.8 Other concerns about the
that has served as a major driver of China’s economic growth industry have included a lack of broad competencies by do-
since 1978. Since the o cial opening of the sector to mestic rms, a shortage of professional talent and generally
foreign investment in 2005 as a part of China’s WTO-entry disorganized macro-level planning.9
obligations, foreign, in addition to domestic, companies have
also held a stake in the sector’s growth and have bene ted A 2010 report by consulting rm A.T. Kearney had
from the gradual improvement of related infrastructure. previously singled out fragmentation and competition for
homogenous and non-diversi ed services as indicators of
In February 2007 it was estimated by the China the sector’s need for development, in addition to the issues
International Freight Forwarders Association that there were above,10and even China Daily joined in the criticism, calling
20,000 freight forwarding companies operating in China.1 for the PRC government to decrease administrative burdens
on companies serving both the domestic and international
According to government gures, the total output and added markets.11
value of the logistics industry in 2008 reached 89.9 and 2 trillion
yuan—an annual increase of 23 and 1.9 percent, contributed Nevertheless, a 2010 report by PriceWaterhouse Coo-
16.5 percent of the aggregate added value throughout the pers is more optimistic, stating that the transportation and
service sector and 6.6 percent of the nation’s GDP.2 logistics “market will continue to increasein the future and
consider on-going growth rates of more than 20% as realis-
It was reported in December of 2009 that the logistics tic. e rapid development of electronic commerce has laid
sector’s “combined output value rose 4 percent year-on-year a solid foundation for the industry. Approximately 10% of
to 1.47 trillion yuan” in the three quarters of 2009,3 with China’s 420 million internet users have already purchased
Ma Zeng Rong, Vice-Chief of the exhibition division of the products through the internet and thus created demand for
China Federation of Logistics and Purchasing having told CEP services.” 42
reporters that “China’s logistics industry has weathered the
Foreign players such as DHL, FedEx, TNT or UPS all
nancial crisis” approximately two months earlier.4 have signi cant presence in the Chinese logistics market, ex-
In 2010, Xinhua reported that the industry’s value-add periencing 20 to 40% growth annually. Despite such growth
rates, it is still the small private domestic courier companies
component had seen a net increase of 700 billion yuan from that dominate the majority of the Chinese CEP market. 42 is
2008 levels.5 may change in future. e same report adds that according to
the China International Freight Forwarders Association, as
In slightly di erent terms, a 2012 statement from the Chi- the Chinese middle class continue to gain in a uence, “la-
na Federation of Logistics and Purchasing indicated that the bour cost advantages of small courier companies will decline
total value of goods carried by the industry in China “grew by over the next ve to ten years. Future customers will place a
9.6 percent year-on-year to reach 146.4 trillion yuan ($23.27 much stronger emphasis on reliable delivery rather than price,
trillion) in the rst 10 months [of that year].” At the same an area where multinational logistics services have a strong
time, however, the Federation warned that “Logistics expenses advantage over small domestic courier companies.”42
in the rst 10 months surged 11.5 percent year-on-year to 7.2
trillion yuan, up 0.2 percentage point from September and In March 2009, State Council released the “logistics
1.9 percentage points from a year earlier”— underscoring the reconstruction and revitalization plan”, of which e orts were
lingering ine ciencies which have been targeted by the gov- designed to encourage reconstruction and acceleration of M&A
ernment’s modernization e orts for several years already.6 activity in order to (roughly) “cultivate a number of agglomerative
and modernized logistics enterprises able to provide a high level
ese modernization e orts, in fact, were explicitly singled of service and compete in the international market.”12
out in the 11th Five-year Plan (viz. the “vigorous development
of [a] modern logistics industry”).2 Since that time, the gov- is plan, however, was said to lag behind the industry’s
ernment invested an estimated 4.7 trillion yuan in the sector.7 actual needs and as a result hindered long-term development
rather than helping it, according to China Federation of Lo-
In addition to this government investment, in recent years gistics and Purchasing Chairman He Liming.13
local logistics rms are said to have also bene tted from mea-
sures such as the adoption of modern management methods, Additional regulatory guidelines were released in August
“process reengineering”, service outsourcing and diversi ca- 2011 (Guobanfa [2011] No.38). In addition to adjusting tax
tion in the market.2
Nonetheless, a 2011 KPMG report identi es several ongo-
148
