Logistics companies urged to expand abroad

BEIJING - China will further encourage domestic logistics companies to acquire overseas distribution centers to "facilitate the nation's trade growth", said Wang Xuanqing, deputy director of the Department of Circulation Industry Development at the Ministry of Commerce.

Container trucks wait to clear customs at an international shipping center in Yiwu city, Zhejiang province. Analysts say a better overseas shipping and storage network will help make domestic exporters and importers more efficient and stimulate trade growth. [Photo/Xinhua News Agency]?

He did not provide any details.

Wang made the comments at an industry conference on Tuesday in Beijing, just days after the ministry prioritized "stable export growth" in its 2012 agenda.

"We will take more steps to stimulate exports, to consolidate and expand our market share" internationally in 2012, Commerce Minister Chen Deming said on Tuesday.

Analysts said a better overseas logistics network would improve the efficiency of domestic exporters and importers and therefore stimulate trade growth.

But they warned that Chinese companies should thoroughly study the regulatory landscape before entering any foreign market.

Chinese logistics companies have steadily expanded abroad in recent years. The latest such move was by aviation and tourism conglomerate HNA Group Co, which announced on Dec 21 that it had accomplished the $1.05 billion takeover of GE SeaCo, the world's fifth-largest container-leasing enterprise, previously owned by General Electric Co.

Europe's debt crisis, which has crimped developed economies' trade, might offer an opportunity for Chinese logistics companies, said He Liming, chairman of the China Federation of Logistics and Purchasing, an industry association.

"Chinese companies may be able to make overseas acquisitions at a lower cost," he said

He also warned that companies pursuing overseas expansion should understand that the situation in Europe would curtail growth in the international market.

Most overseas acquisitions have been made by large logistics companies, according to He.

"Small companies should not rush to follow the trend of overseas investment. At present, they should focus on developing their management capabilities and concentrate on the domestic market," he added.

Domestically, logistics plays an important role in the development of the service industry, said Wang Huimin, deputy director of the Bureau of Economic Operations Adjustment at the National Development and Reform Committee.

Wang said logistics accounts for 17 percent of the nation's service industry. China's service industry accounts for 43 percent of the economy, 7 percentage points less than the global average for developing countries.

"The logistics industry will not only promote the development of the entire service sector but will also help transform the growth mode of the manufacturing sector, improving China's competitiveness as a world manufacturer," she said.

China has emphasized development of the logistics industry in recent years. On Aug 19, the central government issued guidance on the industry's sound development.