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China’s logistics industry faces a downturn

Smaller industry players on the mainland are being hindered by a shortage of funds and land and may have to merge in order to survive

The false prosperity of the logistics industry created excessive capacity and threatened the national strategy to move up value chains by boosting the share of the services industry in GDP to more than half by 2020.

Less than 30 per cent of the more than 230 stands had been leased out at the park in Huairen county, Shanxi province, project manager Meng Qingchun told the South China Morning Post.

Although the local government gave the park operator the clearance to begin constructing in a good location, Meng said the two sides had yet to reach an agreement on the land price after the authority quadrupled its original charge. Golden Sands Beach may be a relatively vulnerable and small player in the national wave of logistics investment but many share its headaches on securing funding and getting reasonably priced land from local governments amid severe competition from companies in industries such as infrastructure and manufacturing, which can bring significant investment and tax revenues.

“Compared with developed nations, our industry faces very high costs and very low efficiency,” said Geng Shuhai, a deputy director of the economic and trade department of the National Development and Reform Commission. Geng said the government was in the final stage of amending a plan governing the logistics industry’s development, which will be made public soon. However, he ruled out any major overhaul on existing policies.

“It’s urgent for China to develop major, globally competitive logistics enterprises, especially considering serious resource bottlenecks, growing urban transport pressures, and rising environmental challenges.” he said.

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