This report covers distribution, logistics and transportation in China. The report begins with an overview of these industries and an analysis of expected changes following China’s entry into the World Trade Organisation (WTO).
As consumer markets across East Asia falter in the face of an impending world recession, foreign companies – especially consumer goods manufacturers - are increasingly turning to China, whose comparatively robust growth is bucking the global trend. While this is likely to make the competitive environment in China even fiercer, it does at least bode well for positive change in the country’s distribution and logistics markets. China’s distribution and logistics sectors are highly fragmented and hampered by red tape. The traditional state-owned import-export corporations which added another layer of bureaucracy to the distribution process will be bypassed and, unless they can radically transform their operations to provide true value-added service, will be left behind. The government has embarked on a major infrastructure programme to improve intermodal transport; it is seeking to remove some of the bureaucratic layers - remnants of China’s centrally planned economy - which currently hamper distribution of goods; and under protocols agreed as part of China’s accession to the World Trade Organisation in 2002, it is opening up its distribution and logistics markets to foreign competition over the course of the next three years. These measures are essential if China is to make the most of the added benefit that WTO membership will bring to its economy, and if foreign companies are to succeed in an operating environment where a poor distribution model can spell disaster.