Apr-07
Distribution and transportation
major challenges for industrial players in China
As the American economy cools, and as China’s domestic consumption
increases, more of China’s rapidly growing output will be consumed
at home. Already the forecasted GDP growth of 8% between 2006-2010
is expected to translate into a robust growth rate of 18% in the logistics
sector, or 95 triilion RMB by 2010.
All forms of transportation technology are growing rapidly, with heavy
and light commercial vehicles and cars seeing particularly high growth.
The expansion in transportation fleets will need to be matched with
significant improvement in transport infrastructure, including roads,
ports and aircraft, to efficiently connect this vast country. 3,960
billion RMB has already been budgeted by the Chinese government for
infrastructure development between 2006 and 2010.
The fact that every 1% of economic growth produces 2.8% growth in
logistics expenditure, indicates the relative current inefficiencies
of the industry. The plethora of smaller logistics companies will
probably begin to face consolidation in the coming year. To challenge
the arrival of foreign companies such as FedEx, local companies will
have to embrace common technological solutions to improve production
and distribution efficiencies already adopted by their foreign counterparts.
75% of Chinese enterprises do not deploy barcode technology and only
10% deploy ERP/SCM systems.
While the Chinese economy continues to boom, opportunities to improve
efficiency of the logistics and distribution arenas offer enterprises
the change to become more flexible, increase profitability, and thus
allow greater rewards for companies in the areas of distribution technology,
automation and knowledge.
Visit our Industrial
& logistics practice
About Fusion Consulting
Fusion Consulting is a business intelligence consultancy providing
strategic advice on Asia-Pacific markets. With offices in Shanghai,
Singapore and Hong Kong, and a network of 400 freelance industry consultants in 16 countries, the company conducts custom research and consulting
to help clients understand their markets, compete more effectively
and grow into new areas of opportunity. www.fusionc.com
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