Current Asian marketplace logics are being stirred, but are yet to be shaken by the recent headways made between China and ASEAN. The plans are to build a Free Trade Area (FTA) by 2015 which will be the third largest in the world. Trade between China and the Association of Southeast Asian Nations (ASEAN) is already growing at an annual rate of over 20%, consisting of roughly 9% of China’s foreign trade. The momentum is building. The time is ripening for companies to place ASEAN on the radar screen of their China sourcing and distribution strategy boards. If things go according China’s plan, the nation will remain the center of gravity for global supply and demand patterns, with Nanning serving as the launching point for logistics flows in and out of ASEAN.
Logistics parks and zones are popping up all over China and competition among local governments is intense. In general there appears to be a lack of coordinated planning and duplication of efforts between zones. Many argue that Nanning has little potential due to the relatively weak economic status of the region. Will the ‘build it and they will come’ approach work for Nanning? What are the key factors in support of locating a distribution hub in Nanning?
Strengths
- Location advantages: ASEAN, western China, distribution for south and west including rail, water, roads.
- Excellent transportation infrastructure.
- Significant land resources.
- Industrial development zones: Including sectors such as building materials, machinery, pharmaceuticals, etc.
- Basic logistics synergies have already been formed: Steel processing logistics center, pharmaceuticals distribution center, and other processing and distribution areas currently exist.
- Favorable government policies for logistics and manufacturing activities.
Weaknesses
- Positioned with less developed countries: Long distance from the economic power centers of China.
- Logistics market not developed.
- Far distance from rail: 8 km to the Yongdong Station and 20 km to the Western Rail Station.
- Protected farm land limits logistics infrastructure development.
- Lack of complete infrastructure: Construction has only just begun and transportation planning is yet to be clearly defined.
Opportunities
- China entering WTO: Is advantageous for the logistics industry as a whole.
- National Development of Western China: Nanning is one of the three cities placed as priority, the others being Guiyang and Kunming.
- Favorable development policies, including the logistics industry development.
- Establishment of China-ASEAN Free Trade Zone: Nanning is strategically positioned as an axis for ASEAN.
- Pearl River Delta Regional Cooperative Development: Nanning is at the axis of the economically developed Hong Kong, Macao and Pearl River Delta.
- Economic growth in Nanning: Service sector is particularly strong, including transportation and warehousing.
- Development planning in Nanning city progressing.
Threats
- Duplication and redundancy in functions with other logistics zones in China.
- Lack of logistics talent.
- Competition from other logistics zones and local governments.
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