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Logistics processes in China are lagging behind the impressive development of the country's infrastructure, with the integration between networks and modes needing drastic improvement.
At last week's Automotive Logistics China conference in Beijing, carmakers, logistics providers and ministry representatives discussed the benefits of China's growing demand for cars and OEMs' huge investment in production capacity.
"We have the opportunity to double the current output of cars," said Cai Jin, vice president of the China Federation of Logistics & Purchasing (CFLP) (pictured). However, he said that without a huge improvement in efficiency, China is going to find it hard to deliver on its promise and the general consensus in China's auto industry is that a lot more has to be done to bring it up to a globally competitive standard.
Investment in infrastructure in China has been impressive. Over the past five years the government has spent more than RMB 10 trillion (about $1.5 trillion) on 639,000km of new roads, 33,000km of new freeways and 15,500km of new railway lines. It has created 1,700 deep water ports and 170 airports, according to Wei Yong, chief of the transport and logistics division of the National Development and Reform Commission.
But according to Andreas Ginkel, director of logistics for General Motors International Operations, there is a lack of integration between these modes. "For example, even if there has been investment in rail, we're missing rail links to plants, ports and VDCs."
The point was reiterated by Richard Li, vehicle distribution manager at Ford, who acknowledged that while plants were being built and output increasing, the expressway network was the main mode. "We know that trucking takes 90% of total volume in China, but in the US it is 75% by rail," he said. "We need mass delivery with low cost and rail should play an important role here."
 "There has been no integrated mechanism to reduce the cost of transport between terminals," added Zhang Xiaodong, professor at the Transport College of Beijing Jiaotong University. "There is also a problem with the proficiency between regions."
Thomas Blank, regional director of sales and marketing for Geodis Wilson, said that the infrastructure in China is better than in some parts of Germany, but the processes haven't changed.
"You might have a brand new port in China, but the loading and customs processes are the same as 15 years ago, and still take a long time," said Blank.
Part of the problem is that domestic OEMs tend to own their own logistics providers, which some speakers said was holding back efficiency and the potential for shared networks. However, there are signs that the market is moving away from that model and some companies are opening up their services or spinning them off into separate companies.
There was also an indication that the NDRC, which helps to set transport policy and investment, was making moves to alleviate the discrepancy. "The convergence of traffic facilities and for multimodal transport is not enough, and the advantages of having logistics parks have yet to be realised," Wei confirmed. "We have formulated specialised plans and programmes in terms of logistics parks and planning, and we are paying more attention to the unity of planning and facilities."
There are also opportunities for improvement to the logistics processes in China through the influence of established global providers.
Liu De Chen, deputy general manager for Beijing Foton Logistics, owned by the commercial vehicle OEM, described how the company had developed an advanced distribution centre and warehouse to feed its production plant. "We are learning a lot from our foreign partners," said Liu.
Partnerships with established global providers are also increasing and there was a reiterated appeal to closer collaboration during the event, including for export activity. Chinese carmakers, including Chery, FAW, Brilliance and Lifan, stressed the importance of working with international logistics providers to improve quality throughout the distribution process.
Duo Jang, from Brilliance Auto, said that the support of international logistics providers, including information sharing, was crucial to its export business, and it welcomed the engagement of other international providers.
Meanwhile, Lifan Group's vice president, Li Wu, indicated that the company would be looking to global providers to help improve operations, and revealed opportunities to such companies in an upcoming tender.
"Some of you here are the world leaders in the industry and next month we will enter our international logistics bidding and I hope you will give it your attention," he said.