SHANGHAI: US Penske Logistics announced the official establishment of its first wholly-owned subsidiary in China on Thursday, as part of its strategy to expand into the Asian market.

"We have had success in North America and Europe but our business is still blank in Asia at present," said Vincent Hartnett, president of Penske Logistics.

With an annual revenue exceeding US$1 billion, Penske is a global leader in logistics services, covering logistics network design and management of supply-chain, transportation and warehousing.

"As more industrial multinationals come to China, they require our business to follow suit," he said.

Before Penske, multinational logistics companies such as TNT, FedEx, UPS and DHL have already gained a foothold in China's competitive market.

Local logistics insiders said Penske (Shanghai) Logistics Consulting Co Ltd, set up in the city's downtown area with a small investment of US$1.2 million, is Penske's initial attempt in the Chinese market.

"But the subsidiary in Shanghai could develop into a headquarters for China as well as for Asia if business is successful," Hartnett said.

He said Penske chose Shanghai, a focus of the world at the moment, as a platform to go into the Asian market.

The Shanghai company will focus its primary business in logistics planning, system control and information management.

"As China has become an important global market for logistics, we are excited with the opportunities it presents," Hartnett said.

"The establishment of this subsidiary will be a focal point of the strategic development of Penske Corp, which will allow us to better serve our customers globally."

Penske insiders said it is negotiating with about 10 multinational customers on co-operation in the Chinese market.

In the past few years, China's logistics industry has experienced tremendous growth. Statistics show that the current logistics market size has exceeded 200 billion yuan (US$24.2 billion), with continuous growth of 20 per cent annually.

(China Daily 03/19/2005 page5)