Ready for the big time in logistics industry

Updated: 2011-12-09 08:10

By Wang Ying (China Daily)

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During the last 10 years, China has developed from a fragmented market into a broadly internationalized market, said executives from DHL Global Forwarding, the freight unit of Deutsche Post AG.

"We have experienced a true opening-up of the market, especially in the logistics industry. It is one of the most entirely open industries. We hardly experience any trade barriers whatsoever," said Kelvin Leung, chief executive officer for North Asia-Pacific at DHL Global Forwarding.

Ten years ago, the Chinese market was still fragmented, and it was very difficult to get an operating license. For operations like freight and logistics different types of licenses were needed, said Steve Huang, chief executive officer of DHL Global Forwarding China.

"A decade ago, you can't do this, cannot do that, and you have to perform a service through a local agent. Now it's different, and you can do everything by yourself", as the government is committed to developing industry and the overall economy, said Huang.

DHL Global Forwarding has obtained all the logistics licenses in China. "This tells us a lot. When I came to China for the first time in 1995, we had only 11 employees and three offices. But now we have 3,000 permanent employees, 39 branches and another 26 sales offices," Huang said.

The company has already set up 39 branches and 26 sales offices nationwide and plans to have 90 branches and sales offices in China by 2015, according to Huang. It has also invested $30 million in China, he said.

Currently 25 percent of DHL Global Forwarding's global revenue comes from the Asia-Pacific region, said Roger Crook, chief executive officer of DHL Global Forwarding Freight.

"I think China has realized that by opening up the logistics industries, they can actually boost trade and manufacturing," said Leung.

There have also been changes in terms of trade practices. "The contracts are now more in line with international norms," he said.

"Of course both sides have made many compromises. But the differences are becoming smaller and smaller. Most of the gains can be directly attributed to China's entry to the World Trade Organization."

Over the next 10 years, DHL Global Forwarding will still continue to pursue other growth opportunities in China, especially diversified options, said Huang.

In the 12th Five-Year Plan (2011-2015) China has indicated that it will rely more on economic growth in central and western China, while domestic consumption will shore up the overall economy when exports fall, said Huang.

Domestic consumption is going to account for the majority of the manufacturing capacity in China and the country will no longer be just a factory for the rest of the world. The big swing, or China's transformation as a super consumer, is going to happen in the next decade, said Crook.

With local demand getting stronger, growth will also come from imports. Data from the China Federation of Logistics and Purchasing indicated that in the first half year of 2011, the logistics sector in China grew steadily, rising 13.7 percent year-on-year.