An Eye on Long-term Arrangements

    He Dengcai, secretary general of the China Society of Logistics and director of the research office of the China Federation of Logistics and Purchasing, said that the revitalization plan includes solutions to current problems, with an eye on long-term, overall and macro arrangements.

    Medium and long-term arrangements were included in the revitalization plan, which was examined and adopted by the State Council on February 25. It stipulates, "Actively expand the demand of the logistics market, promote interactive development between logistics enterprises and production and commercial enterprises, and enhance the professionalization and specialization of logistics services. Accelerate the merger and reorganization of enterprises to nurture a number of large modern logistics enterprises with high service levels and international competitive capability."

    "Logistics enterprises must enlarge their operation scale, otherwise they will have problems in operation and services and face surviving risks. When the market environment is good, they can survive; once they meet difficulties and fierce transnational logistics competition, they can do nothing but surrender," said Cheng Guoqiang.

    In fact, following the sharp reduction of orders for foreign-funded logistics enterprises as a result of the spreading global financial crisis, overseas companies have accelerated their exploration of the Chinese market, targeting medium-sized and small enterprises, which they used to ignore. Last year US company FedEx began to launch services targeted at medium-sized and small enterprises, and its Kinko's China provides services such as document printing and express deliveries. UPS has also launched similar businesses. In 2009, the focus of competition between domestic enterprises and foreign-funded operations will move from first-line to second-line cities.

    It is worth noting that basically all large private logistics enterprises have become merger targets for foreign-funded logistics enterprises, and some have in fact been merged or are in the process of merging. Cheng Guoqiang holds that the promulgation of the readjustment and revitalization plan of the logistics industry will create a relatively stable environment for domestic logistics enterprises. Meanwhile, it will effectively prevent large-scale acquisition of Chinese logistical assets by international capital.