Page 256 - 2017 White Paper
P. 256
7 White Paper on the Business Environment in China
China Federation of Logistics and Purchasing Chairman Although government officials seem keen to expand
He Liming (China Briefing 2011). the nation’s network of airports—currently fewer than
300, including general aviation airports (Zheng 2012)—
Additional regulatory guidelines were released in others are more cautious about expansion for expansion’s
August 2011 (Guobanfa [2011] No.38). In addition to sake. Civil Aviation Management Institute of China
adjusting tax burdens, the guidelines also allow for more professor Zou Jianjun warns, “airport design projects do
favorable land-use policies, the integration of resources need certain forward-looking characteristics. But local
and the strengthening of coordination between governments should also be realistic about the airports’
government departments (China Briefing 2011). prospects […] unfortunately, most local officials prefer
large-scale projects, it’s like they are ashamed to build a
“China’s State Council has given first priority to small airport” (Ibid.).
more than 20 cities in nine regions for an infrastructure
upgrade in the next two years... [which upgrades] have By 2013 it was reported that profits remain elusive.
already improved operational efficiencies in China’s “Of China’s 183 airports, 143 are loss making, [a fact
transportation and logistics”, observed the above- which suggests] that more than 60 of the 80 new airports
cited A. T. Kearney report, which continued that “Other envisioned in China’s economic master plan for 2011-
recent infrastructure improvements that have helped 2015 will end up in the red” (Reuters 2013).
the industry include a wave of new regional logistics
distribution centers, logistics parks, modern warehouses “Developing an aviation hub is more than simply
and improved distribution facilities”(A. T. Kearney 2010b). building an airport”, says one consultant. “It first of all
requires minimum annual passenger flows of 10 million
Following up on investment funding earmarked and cargo volume of 200,000 tons, she said. Only Beijing,
for aviation, China Daily reported in November 2012 Shanghai, Guangzhou, Chengdu, Shenzhen and Kunming
that several months prior the State Council “issued a met those criteria at the end of 2012” (Reuters 2013).
document to encourage the development of China’s civil
aviation industry” and that “In the same month, the Civil More broadly, KPMG observed in 2011 that
Aviation Administration of China said that the country improvements in the domestic industry’s IT infrastructure,
plans to build 82 new airports and expand 101 existing in better management practices and more sophisticated,
ones across the country from 2011 to 2015” (Zheng integrated solutions would help to eliminate some of the
2012)—the same period covered by the 12th Five-year existing inefficiencies in addition to—or perhaps instead
Plan. of—direct government action (Wong 2011).
Central authorities are furthermore putting their A trend toward consolidation of discrete services
money where their mouth is, with the NDRC having within the transport and logistics industry has also been
“approved 24 projects to build new airports and expand observed, but as a result of more segments of the supply
existing airports, with an estimated investment of around chain, including transportation, warehousing, logistics
100 billion yuan ($15.9 billion)”, over the course of 2012 and management of the supply chain itself, being
(Zheng 2012). outsourced to specialized service providers rather than
as part of consolidation efforts by the PRC’s Government
Provincial authorities, the article continues, have (UNCTAD 2008) (which, it was reported, had required Air
wasted no time in jumping aboard the initiative: [In China, China Eastern and China Southern to strengthen
October], Hunan province said it planned to build 21 their cooperation in the cargo industry in order to “gain
general aviation airports1 in the next 18 years. Earlier, the upper hand in the domestic cargo market from
neighboring Hubei province also said it would build foreign carriers”) (Wang 2010).
seven commercial airports and two general aviation
airports in the next 18 years (Zheng 2012). Another interesting development among local players
is domestic giant SF Express reportedly negotiating with
1 General aviation airports, as China Daily helpfully explains, “are Siemens over green mobility products (Yao 2011).
designed to handle four to 10-seat aircraft, as well as planes used for
agricultural, industrial and rescue purposes”. In the United States, trade with China—and the
logistical requirements that accompany it—have been
256
China Federation of Logistics and Purchasing Chairman Although government officials seem keen to expand
He Liming (China Briefing 2011). the nation’s network of airports—currently fewer than
300, including general aviation airports (Zheng 2012)—
Additional regulatory guidelines were released in others are more cautious about expansion for expansion’s
August 2011 (Guobanfa [2011] No.38). In addition to sake. Civil Aviation Management Institute of China
adjusting tax burdens, the guidelines also allow for more professor Zou Jianjun warns, “airport design projects do
favorable land-use policies, the integration of resources need certain forward-looking characteristics. But local
and the strengthening of coordination between governments should also be realistic about the airports’
government departments (China Briefing 2011). prospects […] unfortunately, most local officials prefer
large-scale projects, it’s like they are ashamed to build a
“China’s State Council has given first priority to small airport” (Ibid.).
more than 20 cities in nine regions for an infrastructure
upgrade in the next two years... [which upgrades] have By 2013 it was reported that profits remain elusive.
already improved operational efficiencies in China’s “Of China’s 183 airports, 143 are loss making, [a fact
transportation and logistics”, observed the above- which suggests] that more than 60 of the 80 new airports
cited A. T. Kearney report, which continued that “Other envisioned in China’s economic master plan for 2011-
recent infrastructure improvements that have helped 2015 will end up in the red” (Reuters 2013).
the industry include a wave of new regional logistics
distribution centers, logistics parks, modern warehouses “Developing an aviation hub is more than simply
and improved distribution facilities”(A. T. Kearney 2010b). building an airport”, says one consultant. “It first of all
requires minimum annual passenger flows of 10 million
Following up on investment funding earmarked and cargo volume of 200,000 tons, she said. Only Beijing,
for aviation, China Daily reported in November 2012 Shanghai, Guangzhou, Chengdu, Shenzhen and Kunming
that several months prior the State Council “issued a met those criteria at the end of 2012” (Reuters 2013).
document to encourage the development of China’s civil
aviation industry” and that “In the same month, the Civil More broadly, KPMG observed in 2011 that
Aviation Administration of China said that the country improvements in the domestic industry’s IT infrastructure,
plans to build 82 new airports and expand 101 existing in better management practices and more sophisticated,
ones across the country from 2011 to 2015” (Zheng integrated solutions would help to eliminate some of the
2012)—the same period covered by the 12th Five-year existing inefficiencies in addition to—or perhaps instead
Plan. of—direct government action (Wong 2011).
Central authorities are furthermore putting their A trend toward consolidation of discrete services
money where their mouth is, with the NDRC having within the transport and logistics industry has also been
“approved 24 projects to build new airports and expand observed, but as a result of more segments of the supply
existing airports, with an estimated investment of around chain, including transportation, warehousing, logistics
100 billion yuan ($15.9 billion)”, over the course of 2012 and management of the supply chain itself, being
(Zheng 2012). outsourced to specialized service providers rather than
as part of consolidation efforts by the PRC’s Government
Provincial authorities, the article continues, have (UNCTAD 2008) (which, it was reported, had required Air
wasted no time in jumping aboard the initiative: [In China, China Eastern and China Southern to strengthen
October], Hunan province said it planned to build 21 their cooperation in the cargo industry in order to “gain
general aviation airports1 in the next 18 years. Earlier, the upper hand in the domestic cargo market from
neighboring Hubei province also said it would build foreign carriers”) (Wang 2010).
seven commercial airports and two general aviation
airports in the next 18 years (Zheng 2012). Another interesting development among local players
is domestic giant SF Express reportedly negotiating with
1 General aviation airports, as China Daily helpfully explains, “are Siemens over green mobility products (Yao 2011).
designed to handle four to 10-seat aircraft, as well as planes used for
agricultural, industrial and rescue purposes”. In the United States, trade with China—and the
logistical requirements that accompany it—have been
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