Strategic Role for Big Local Distributors & New Port Clusters

Related entries: Business Issues, General, Services, Trading

Distribution and logistics have often been seen as a constraint for companies operating in China Business Services (see our previous post on logistics services here). Now, with increasing competition – and volume of goods – there are official plans to further develop the sector with the creation of large, strategic enterprises, and new port clusters that will support international trade growth.

According to the China Daily:

    “Our target is to help establish, in five to eight years, 15 to 20 large-scale distribution companies with well-known brands and self-owned intellectual property rights,” said Di Jiankai, director of the commercial reform department under the Ministry of Commerce.

    The distribution industry encompasses retail, distribution, logistics, catering and community services and involves the process of delivering goods and services.

    Di expected the sales network and profitability of these companies would far exceed that of their domestic rivals, with some even matching international counterparts.

    “Such large distribution companies will play a leading role in a number of aspects such as helping restructure the distribution industry, encouraging the growth of small- and medium-sized firms, promoting the manufacturing industry and creating jobs,” he said.

    To achieve this goal, the ministry will encourage large distribution companies to boost their business through mergers and acquisitions.

The paper goes on to note that “Twenty major distribution companies achieved sales revenue of 531.7 billion yuan (US$66.5 billion) in 2005, up by over 31 per cent year-on-year, while profit jumped 30 per cent year-on-year to 6.8 billion yuan (US$850 million).”

In addition, as part of the 2010 plan, two major port clusters are planned for south China – in Fujian and Guangdong – to add to the current clusters around Tianjin, Shenzhen and Shanghai, according to a report in Business Times (quoting China Daily):

    ”The Fujian port group would centre around Xiamen, with Zhangzhou receiving crude oil and gas imports while others, including Quanzhou and Putian, mainly handling containers.

    Further south, Guangdong’s Zhanjiang and Guangxi’s Fangcheng ports would be among those designated to handle mineral imports and, together with Hainan’s Haikou, would deal with containers.
    Zhanjiang and Haikou would also download and store oil and gas, the newspaper said.
    The plan to build up ports in and near Xiamen is part of a “Western Shore Economic Zone” planned for the Taiwan Strait, the report said.

    Li said the Xiamen port was in preparation for “mainland-Taiwan free trade relations”, the newspaper reported.”

It is estimated that China’s ocean cargo handling capacity may rise from 3.8 billion tonnes in 2005 to five billion tonnes in 2010, while throughput of twenty-foot equivalent (TEU) units would rise to 130 million, up from 74.41 million in 2005.

See news source

    Gov’t to help boost distribution industry
    China Daily, China – 8 hours ago
    By Jiang Wei (China Daily). The Chinese Government will assist large companies and groups in the distribution industry to further …

    China plans major port clustersBusiness Times – Malaysia – Malaysia
    BEIJING: China plans to build up two major port clusters in the south of the country to help fuel the country’s booming economy and feed its huge energy needs …

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