Chinese domestic logistics companies should prepare for
increasing competition and challenges from foreign rivals, experts
said at the 2nd Logistics Industry Development Annual Conference
held in Hong Kong.
As China is completely opening its logistics market to foreign
firms this year in line with its commitments to the World Trade
Organization (WTO), some foreign investors are expected to conduct
more acquisitions in the sector, said Wu Jiahuang, a researcher
with China Institute of the WTO.
He said foreign-invested companies would purchase some local
companies to take advantage of their local network or
infrastructures.
"That would be a crucial time for domestic companies, in
particular the small and medium sized private ones."
Compared with their foreign rivals, many Chinese logistics
companies are of high cost and low efficiency.
"It (foreign companies' acquisition) will not happen overnight
but it is the trend in the logistics industry," he said.
China Logistics Association, the independent industrial
association, is striving to help develop domestic logistics
companies.
For example, it organized the recommendation of 100 outstanding
logistics enterprises, expecting to introduce those with good
performance to customers, both at home and abroad.
"We expect it will help build domestic logistics brands," said
Xu Shouzhen, the secretary general with the association.
He said domestic companies enjoyed certain advantages in
competition with multinational giants.
For example, some small and medium sized companies, which focus
in a particular region, are likely to have steady customer
relationships and high flexibility.
"Facing the competition from overseas rivals, they are forced to
learn, to improve the efficiency and become adapted to
globalization," Xu said.
He said domestic companies could survive the challenges from
foreign companies as long as they can further sharpen their
competitive edge, given the promising market in China.
As a strong manufacturing center in the world, China also
demands a profound logistics network. The output of the Chinese
logistics market is expected to reach 1,197 billion yuan (US$147.8
billion) in 2010.
"We hope that in five to 10 years, several Chinese logistics
companies will develop into large-scale multinationals," Xu
said.
In fact, some Chinese logistics companies have started to go
abroad. Upon the need of their customers, some companies have
established overseas branches and representative offices.
(China Daily January 8, 2006)