Several sources have indicated that the Chinese government will extend support to industries hit by the economic downturn to help ports, warehouse operators and shipping firms.
A report in Reuters said that China will add logistics to its industry support plan, citing sources close to the matter. The government had previously announced a support programme for just ten industries, excluding logistics.
“The plan [for logistics] is still being discussed by government officials,” said Chris Zuo, Assistant General Secretary at the China Automotive Logistics Association. “According to some rumours, the goal of an 11th 5-year plan for the logistics industry would be accelerated, and be accomplished by 2011 instead of 2013. That would mean more investment and encouraging policies.”
The mix of tax breaks and funding, which has already been directed at the automotive sector, is aimed at prompting firms to consolidate and restructure. The government wants to reduce the number of major carmakers from 14 to 10 as part of the consolidation plans.
China’s State Council has already introduced measures to boost the market including regulating the development of car loans and the second-hand car market, speeding up infrastructure construction and increasing government procurement of domestically developed models.
“Personally, I think the development of automotive logistics depends on car consumption and the regrouping of the carmakers,” Zuo told Automotive Logistics. “Investment is also very important, but it is only to the carmakers, not to the car buyer directly.”
While Chinese growth is expected to slow, it is the only market predicted to grow for light vehicles this year by the PWC Automotive Institute, albeit at just 1.5%. In an example of the investment still underway in the country with or without government support, Great Wall Motors, China’s largest privately-owned carmaker, has begun work on a RMB3 billion ($444m) auto parts and logistics project that will cover an area of 1,300,000m2 in the Tianjin Beinhei New Area.
The project will take three years to complete and will include a knock-down (KD) assembly facility with annual production capacity of 150,000 units, and a parts and components facility for 150,000 units per year including chassis systems, transmissions and seats. The third area will be dedicated to export logistics and aims at meet the export demand in KD.