Page 260 - 2017 White Paper
P. 260
7 White Paper on the Business Environment in China
Separately, the company also invested “billions of In August [2013] Cathay Capital Private Equity and
dollars to build a network of warehouses across China” the Sino-French fund it manages invested $19.6 million
and by September 2012 had already purchased parcels in Shanghai Zhengming Modern Logistics Co., which
of “land in Tianjin, Shanghai and Guangzhou”upon which operates refrigerated trucks in China that transport
to build huge warehouse complexes (Osawa 2012). food for businesses including McDonald’s Corp., China
Mengniu Dairy Co. and Haagen-Dazs” (Deng 2013).
Foreign participation in the sector—where permitted
by law—is robust. In February 2009, FedEx opened its “Successful Chinese logistics firms have strong supply-
$150 million Asia Pacific hub in Guangzhou (Chen 2010), chain management… so it makes sense for private-
which is expected to contribute a value upwards of $63 equity firms to back the local players”, said one private
billion to China’s economy by 2020 (Sinocast 2008). equity managing director (Deng 2013).
Competitor UPS similarly opened an Asia Pacific hub in In August 2015, a newsworthy development in
Shenzhen, reportedly costing $180 million (Chen 2010). China’s logistics industry occurred when the National
Development and Reform Commission pledged to
In 2008, UPS officials reported that China, Hong Kong, “guide private capital” to the logistics industry, which it
Japan, South Korea and Taiwan accounted for more than says is “holding back economic growth”. In a statement
half of the company’s total intra-Asia volume that year, to Xinhua, the NDRC said that “China’s overall logistics
and are anticipated to grow in terms of overall volume in sector remains underdeveloped and the government
the future (DPA 2008). will speed up construction on major projects as part of
wider efforts to stabilize economic growth and push
Roughly four years later, the company also announced industrial restructuring”. By 2020, President Xi Jinping’s
“the opening of three new healthcare distribution administration aims to build a “modern logistics service
facilities in the Asia-Pacific region, two of which are to be system with annual growth of value added output of
located in China, in Hangzhou and Shanghai, [bringing around 8 percent, accounting for around 7.5 percent of
its] healthcare distribution facilities around the globe to the country’s GDP”, states the NDRC document (Xinhua
36” (China Daily 2012). 2015).
DHL’s $175 million North Asia hub in Shanghai is due Data from China Federation of Logistics and
for completion in 2012 (Lan 2010), and the company now Purchasing showed goods worth 104.7 trillion yuan (16.3
owns a total investment in the nation worth $30 million, trillion U.S. dollars) were transported in the first half of the
spanning 39 branches and 26 sales offices across the year. Between January and June, the gross revenue of the
country. It targets 90 branches and sales offices by 2015 logistics industry hit 3.6 trillion yuan, up 5.4 percent over
(Wang 2011a). the same period last year (Xinhua 2015).
Marie-Christine Lombard, CEO of TNT, predicted that Postal Law Reform: Background2
by 2020 the PRC’s delivery market would be equivalent
to the current market size in the United States—valued at Reform of the Postal Law began in 1998, and finally
approximately $85.7 billion (Wang 2011b). concluded 11 years later, in 2009.
Although foreign delivery services may face substantial In 2005, China Daily noted that, “although in its sixth
operating challenges and fierce local competition, foreign draft, the postal law amendment is still moving slowly,
investors are increasingly optimistic about the sector. with many non-postal service providers accusing the
authority of favoritism towards the postal system” (He
In September 2013, “Carlyle Group said it was 2005), referring to the fact that the body tasked with
collaborating with real-estate investment manager developing the revisions was, essentially, China Post itself.
Townsend Group, as well as warehouse developer and
operator Shanghai Yupei Group, to invest a total of $400 2 Footnote: Although it is no longer current, this section has been left
million in 17 warehouses in China that will be leased to intact to provide historical context to the discussion above.
firms including retailers and e-commerce companies”
(Deng 2013).
260
Separately, the company also invested “billions of In August [2013] Cathay Capital Private Equity and
dollars to build a network of warehouses across China” the Sino-French fund it manages invested $19.6 million
and by September 2012 had already purchased parcels in Shanghai Zhengming Modern Logistics Co., which
of “land in Tianjin, Shanghai and Guangzhou”upon which operates refrigerated trucks in China that transport
to build huge warehouse complexes (Osawa 2012). food for businesses including McDonald’s Corp., China
Mengniu Dairy Co. and Haagen-Dazs” (Deng 2013).
Foreign participation in the sector—where permitted
by law—is robust. In February 2009, FedEx opened its “Successful Chinese logistics firms have strong supply-
$150 million Asia Pacific hub in Guangzhou (Chen 2010), chain management… so it makes sense for private-
which is expected to contribute a value upwards of $63 equity firms to back the local players”, said one private
billion to China’s economy by 2020 (Sinocast 2008). equity managing director (Deng 2013).
Competitor UPS similarly opened an Asia Pacific hub in In August 2015, a newsworthy development in
Shenzhen, reportedly costing $180 million (Chen 2010). China’s logistics industry occurred when the National
Development and Reform Commission pledged to
In 2008, UPS officials reported that China, Hong Kong, “guide private capital” to the logistics industry, which it
Japan, South Korea and Taiwan accounted for more than says is “holding back economic growth”. In a statement
half of the company’s total intra-Asia volume that year, to Xinhua, the NDRC said that “China’s overall logistics
and are anticipated to grow in terms of overall volume in sector remains underdeveloped and the government
the future (DPA 2008). will speed up construction on major projects as part of
wider efforts to stabilize economic growth and push
Roughly four years later, the company also announced industrial restructuring”. By 2020, President Xi Jinping’s
“the opening of three new healthcare distribution administration aims to build a “modern logistics service
facilities in the Asia-Pacific region, two of which are to be system with annual growth of value added output of
located in China, in Hangzhou and Shanghai, [bringing around 8 percent, accounting for around 7.5 percent of
its] healthcare distribution facilities around the globe to the country’s GDP”, states the NDRC document (Xinhua
36” (China Daily 2012). 2015).
DHL’s $175 million North Asia hub in Shanghai is due Data from China Federation of Logistics and
for completion in 2012 (Lan 2010), and the company now Purchasing showed goods worth 104.7 trillion yuan (16.3
owns a total investment in the nation worth $30 million, trillion U.S. dollars) were transported in the first half of the
spanning 39 branches and 26 sales offices across the year. Between January and June, the gross revenue of the
country. It targets 90 branches and sales offices by 2015 logistics industry hit 3.6 trillion yuan, up 5.4 percent over
(Wang 2011a). the same period last year (Xinhua 2015).
Marie-Christine Lombard, CEO of TNT, predicted that Postal Law Reform: Background2
by 2020 the PRC’s delivery market would be equivalent
to the current market size in the United States—valued at Reform of the Postal Law began in 1998, and finally
approximately $85.7 billion (Wang 2011b). concluded 11 years later, in 2009.
Although foreign delivery services may face substantial In 2005, China Daily noted that, “although in its sixth
operating challenges and fierce local competition, foreign draft, the postal law amendment is still moving slowly,
investors are increasingly optimistic about the sector. with many non-postal service providers accusing the
authority of favoritism towards the postal system” (He
In September 2013, “Carlyle Group said it was 2005), referring to the fact that the body tasked with
collaborating with real-estate investment manager developing the revisions was, essentially, China Post itself.
Townsend Group, as well as warehouse developer and
operator Shanghai Yupei Group, to invest a total of $400 2 Footnote: Although it is no longer current, this section has been left
million in 17 warehouses in China that will be leased to intact to provide historical context to the discussion above.
firms including retailers and e-commerce companies”
(Deng 2013).
260
