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David Hannon, News and Transportation Editor -- Purchasing, 12/9/2004 2:00:00 AM
The logistics industry in China is set for a round of explosive growth, with a compound annual growth rate of 33% projected out to 2007, supported by the increased outsourcing of logistics functions.
However, the report projecting that growth from Transport Intelligence adds that China's economic growth has papered over major structural problems which need to be addressed if the development is to continue. Those problems include: weak transport; inadequate information and communications infrastructure outside economic zones; a culture of regulation and bureaucracy; fundamental energy-supply problems; high transportation and logistics costs; a poorly educated and badly trained work force as well as high regional imbalances of trade (both domestically and internationally).
"If China's economy does have a hard landing, as many economists predict, there will be a major impact on air, sea, express and logistics companies which have over-invested in capacity in the region," says John Manners-Bell, the report's author. "For the time being though, the fragmented, low value-add nature of the Chinese transport market will provide huge opportunities for foreign, and the more developed domestic players, to grab market share. However, its transformation will not be as straightforward as many logistics companies would like to hope."
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