Excerpt from: China Supply Chain and Logistics Strategy
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| January 17, 2007 | | Link to Vietnam and Other ASEAN Markets | I recently presented at a consultation seminar in Nanning, Guangxi China Jan 15-16 2007. The seminar focused on the planning and construction of the Nanning logistics base in the Beibu (Guangxi) Economic Zone. Participants included leaders from the Guangxi and Nanning local governments, Chinese professors, investors, logistics experts, and third-party logistics service providers.
The event helped to unveil some of the hype surrounding the broad statements made by the press and official government reports. It became apparent that the approach towards growth held by the government is that by building the infrastructure business will come. On the other hand, local professors and industry experts freely discussed their views on the prospects for developing Nanning into an international logistics base. The general sentiment was that more effort is needed to fully understand the actual characteristics of the true demand for logistics services, both in Nanning as well as in the region as a whole. A common thread of concern among the intellectuals was that the government plans were too high-level and that there was little focus on the real needs of the current marketplace. Logistics providers and investors on the other hand, were generally optimistic. Yet, they also agreed that more focus needs to be placed on understanding and segmenting the market.
On the macro-level the Chinese government has expressed the plan to build a large Free Trade Area (FTA) by 2010 between China and ASEAN countries. This FTA will incorporate 1.7 billion people (one third of the world’s population). The China-ASEAN trade volume has been increasing at a rate of 22% per year and the free trade zone is expected to be the second largest in the world.
Foreign Firms Believe in Nanning’s Potential
- Walmart has opened a Super Center in Nanning, with a second center planned for completion in the near future.
- TNT logistics plans to establish a China-Southeast Asia land transport network, using Nanning as a hub
Why Choose Nanning as a Distribution Hub?
Advantages
| Disadvantages
| Geographical positioning:
- Link between China and Southeast Asia.
- Potential export area for goods
sourced from Western China
- Link to Guangdong,
Hongkong, Macau.
Infrastructure:- Good road infrastructure
- Hanoi-Pingxiang-Nanning
Connecting China and Vietnam
Supportive Logistics Policies Rail connecting Fangchenggang Port (freight volume at this port increased by 30% last year) Applying for bonded logistics center (B) status (Currently, Suzhou is the only approved bonded logistics center type B in China)
| Lack of comprehensive rail network (no rail going East to Southeast Asia) Weak human resources in logistics Economy not well developed Logistics costs and service levels poor compared with neighboring Guangdong Province (no economies of scale)
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