Although the 3PL market is still at an embryonic stage in China, it has huge potential, driven by World Trade Organisation related policy changes, buoyant merchandise trade, a strong domestic manufacturing sector and intensifying rivalry among suppliers of manufactured goods. This competition is leading to more efficient and professional supply chain management so as to improve the cost-competitiveness of their products in the marketplace.
China’s logistics market has grown significantly over the past decades, particularly in recent years. All four major forms of transportation (Railway, Highway, Waterway and Civil Aviation) have witnessed strong growth.
In response to the rapidly expanding freight market, cities and provinces across the country are drawing up development plans in order to create a more efficient logistics system. From a humble start in the 1990s, modern logistics park development is still relatively immature in China. Previously, only large markets like Shanghai and Shenzhen had logistics development listed in their Five-Year plan. Currently, almost all provincial capitals and prefecture cities have included logistics development in their latest Five-Year plan.
Being the “nodes” of a modern logistics network, logistics parks are an important part of a government’s development plans. Over the past several years, the supply of logistics space has grown significantly.
Shanghai
Shanghai is the largest city in China in terms of population and one of the largest metropolitan areas in the world, with over 20 million people living in its extended metropolitan area. Shanghai is also one of China’s four provincial-level, self-governed municipalities. The other three municipalities are Beijing, Tianjin, and Chongqing.
The Shanghai municipal government has been actively developing the logistics industry and has attracted significant foreign investment interests. The demand for logistics properties in the city has been especially high, fuelled by the entry of foreign logistics service providers and multinational companies, with the liberalization of China’s logistics industry.
Shanghai has the country’s largest seaport and the second-largest airport in terms of air-freight throughput. It also boasts the largest retail sales and industrial output in China. The demand for all types of logistics space is stronger in Shanghai than anywhere else in China.
With the advantages of deep-water ports, airports, land transport and having full port facilities, Shanghai is developing 4 major logistics parks located at WaiGaoQiao, Pudong Airport, Northwest and the Yangshan deep-water port.
WaiGaoQiao Logistics Park, enjoying the advantages of the harbor area and free trade area, has developed into a well known distribution center for bonded commodities used by many multi-national corporations.
With the positioning of Shanghai as the aviation hub in Asian-Pacific region, Pudong Airport Logistics Park is an aviation logistics hub with comprehensive services.
Northwest Logistics Park has developed into a well known inter-provincial distribution center for the logistics industry, servicing the Yangtze River Delta and inner provinces through land transportation.
The Yangshan deep-water port Logistics Park is developing into one of the most important port logistics zones which link local logistics networks with the international logistics networks and shipping centers in Northeast Asia.
Looking forward, Shanghai’s industrial market is likely to stay robust on the back of sustained demand from end-users. Shanghai’s good infrastructure will continue to attract major industrial players to set up headquarters, research and development (R&D) centers and logistics facilities.
Shanghai WaiGaoQiao Bonded Logistics Zone
The Shanghai WaiGaoQiao Bonded Logistics Zone in Pudong, is perhaps the most well known amongst the 15 bonded zones in China. Bonded zones were first established in China in the 1990s at a period when the country was heavily geared towards the export market. As a result, the main functions of bonded zones have traditionally been international trade, warehousing and export processing trade. Foreign investors are attracted to bonded zones such as the WaiGaoQiao Bonded Logistics Zone due to preferential tax policies and various exemptions from customs duty and VAT. Bonded zones are technically considered to be outside the PRC for customs purposes, allowing for the deferment of payment of customs duty and import VAT until the goods are shipped into the country.
WaiGaoQiao Bonded Logistics Zone, leveraging on its location beside the seaport, has been developing bonded facilities and value-added industries for more than 15 years. Over 1,000 freight-forwarding companies operate from the park.
The policies in WaiGaoQiao Bonded Logistics Zone are more liberal than that of the other bonded areas. It has become a leading platform for export-oriented economic development for the Yangtze River Delta and accounts for more than 80% of the goods from Jiangsu, Zhejiang and export processing enterprises of Shanghai.
Currently, WaiGaoQiao Bonded Logistics Zone has 100,000 square meters of warehouses, and 140 square meters of container yards. Eighteen enterprises registered with the Customs are in the zone, mainly internationally well-known logistics and shipping companies, with a total investment of over US$ 19 million. They are engaged in international purchase and delivering, providing all round logistics chain services for domestic and international enterprises.
Shanghai Northwest Logistics Park
The Northwest Logistics Park is located in the Taopu area of Putuo district, Shanghai. The park is located between the Shanghai-Ningbo and Shanghai-Jiaxing highways and near the 204 and 312 national highways. Northwest Logistics Park has become one of the most important distribution centres linking manufacturers in the Yangtze River Delta and the retail market in Shanghai. The Northwest Logistics Park serves mainly international distribution, freight storage, trade, information service, storage, channels, processing, dispatching and exhibition trades.
Shanghai Lingang Logistics Park
The Yangshan Free Trade Port Area is one of three sub-zones under the Lingang Logistics Park. The free port is the first bonded port zone in China that offers the most liberal and favorable investment policies in the country. It enjoys tax and foreign currency benefits of both a bonded logistics park and an export processing zone. It is an integral part of Lingang New City, a satellite city planned by the Shanghai Municipal Government to support the newly opened Yangshan deep-water Port and to promote Shanghai as the logistics hub of the region.
The Yangshan deep-water Port is designed to accommodate the world's largest container ships and to cater for the large increase in container volume to and from Shanghai. Current plans call for a total of 52 berths by 2015 which would place Yangshan in contention for top spot as the world's busiest port with annual throughput at 22 million TEUs (twenty foot equivalent units). We expect land values in the Lingang to rise gradually as port activity expands, thus necessitating a need for high-quality, modern facilities.
Guangzhou
The Pearl River Delta has been the most economically dynamic region of the China since the launch of the nation’s reform program in 1979. In recent years, the municipal government in Guangzhou has been aggressively promoting the region as a logistics hub, leveraging on its status as an epicenter for manufacturing, its well established transportation network and rapidly developing logistics infrastructure. With the opening of the logistics industry to foreign players in 2006, the continual support from the municipal government to develop the industry and expanding production hubs there, demand for warehouses in Guangzhou is expected to grow from strength to strength.
Affirming to the popularity of Guangzhou as a manufacturing location, investments continued to flow in, especially from Hong Kong and Macau. Demand for industrial properties is expected to strengthen on the back of continued inflows of manufacturing investments.
Beijing
In Beijing, demand for logistics services is underpinned by the fact that the city is China’s largest trading market for information technology and computer accessory products and that it boasts one of the country’s largest retail markets. There is strong demand for quality, bonded logistics facilities in Beijing. With the government’s directions to make the land market more transparent and to prevent under-pricing, capital values are expected to rise moderately.
The Government’s shift in industry orientation to high-tech industries (e.g. technology research, bio-pharmaceuticals and light manufacturing sectors) triggered a strong demand for standardized factory space. Rising office rents in the Downtown have also resulted in an increase in demand for office properties in industrial parks. With the combined effects of tight industrial land market, sustained demand for logistics properties as well as strong outlook for industrial park developments, the industrial land price is expected to continue to grow moderately.
Beijing Tianzhu Airport Economic Development Zone
Beijing Airport Industrial Zone was founded in 1994, with a planned area of 6.6 square kilometers and 1 kilometer west to the Beijing Capital International Airport. After nearly 10 years’ of sustained development and construction, a modern high-tech zone has been formed, serving the needs of international and high-tech corporations. Currently, there are 284 foreign and domestic enterprises from 18 countries and regions which have invested in the zone with a total investment amount of USD 2.4 billion. There are more than 60 international companies operating in the Zone, such as Sony, JVC, Panasonics, SMC, Printing Company; Ericsson, Electrolux, United Technology, FedEx, Airbus, Alston, Rosenberg, Philips, LG, etc.
Tianjin
Another promising logistics market is located in Tianjin, a coastal city situated in North Eastern China. Logistics activities in the city are currently centered around Tianjin Airport and in the Binhai New Area, which consists of the Tianjin Port and the Tianjin Economic Technological Development Area (TEDA). The central government has identified logistics as a key growth area for the city, and strongly supported municipal plans to develop the Binhai New Area and enhance the city’s logistics infrastructure. With the Tianjin Port – the largest in North China – poised to grow its cargo throughput over the next few years, the city’s logistics market is set to thrive, which in turn boosts the demand for logistics properties.
Tianjin Economic Technological Development Area
The Tianjin Economic Technological Development Area (TEDA) is one of China's most successful special economic zones. Located in the northern part of the country, its role as a logistics center and local economic engine is comparable to that of Shenzhen in the south or Pudong in the east. After an initial period in which the focus was on attracting industrial investors, TEDA is now developing into an important economic zone with modern facilities and infrastructure.
Tianjin Port Free Trade Zone
The Tianjin Port Free Trade Zone was established in May 1991 with a development area of approximately 5 square kilometers. Integrated with the four major sectors of international trade such as logistics, near-harbor processing, manufacturing and exhibition, the bonded zone is an important economic zone and the biggest of its kind in North China that enjoys preferential customs, taxation and foreign exchange policies.
Source: http://en.wikipedia.org