Untitled - China Europe International Business School

Organization of the logistic chain in the Chinese international trade 

I. INTRODUCTION 

INDEX 

II. LOGISTIC FRAME IN THE HINTERLAND OF SHANGHAI 

II.1. China’s Logistic Industry overview 

II.I.1. Introduction 

II.I.2. The demand of logistics and transportation services 

II.I.3. The supply side of Logistic Industry 

II.I.4 Challenges and opportunities in China Logistic Industry 

II.I.5. Logistics and transportation service providers 

II.I.6. Use of logistics providers 

II.I.7. Logistic Market Regulation 

II.2. China’s Ports overview 

II.2.I. Port Logistics context 

II.2.2. China Ports 

II.3. Yangtze River Delta Logistic Context 

II.3.1. The hinterland 

II.3.2. Shanghai Port 

II.3.3. Shanghai Container Terminals 

II.3.4. Main Container Terminal Operators in Shanghai 

II.3.5. Logistic infrastructures in Shanghai 

II.3.6. Ningbo Port 

II.3.7. Ningbo Container Terminals 

II.3.8. Main Container Terminal Operators in Ningbo 

II.3.9. Logistic infrastructures in Ningbo 

II.4. Container flows to Europe 

II.4.1. Main European ports involved in container traffic with China 

II.4.2. Container traffic from Shanghai Port 

II.4.3. Container traffic from Ningbo Port 

III. EXPORT FLOWS FROM CHINA TO EUROPE 

IV. MAJOR INDUSTRY SNAPSHOTS 

IV.1. Automotive and components/parts Industry 

IV.2. Textile and garments 

IV.3. Electronics 

IV.4. Machinery 

V. ORGANIZATION OF THE LOGISTIC CHAIN 

V.1. The logistic chain overview 

V.2. Decision-making in the logistic chain 

V.3. The main players in the logistic chain 

VI. CONCLUSIONS 

VII. ANNEXES 

Annex I: Logistic Companies profiles 

Annex II: Companies interviews 

CEIBS Port of Barcelona Chair of Logistics 1


I. INTRODUCTION 

The continuous growth of international trade between China and Europe has boosted the volume of 

containerized cargo directed to Europe and thereby the need of logistic services and transportation 

infrastructures both in China and Europe. 

In addition, shippers in China have to deal with increasing requirements and expectations coming from 

more demanding European markets as well as with the need to achieve more cost-efficient logistic 

chains to maintain the profitability of product manufacturing or sourcing in China. On the other hand, 

logistic and transport operators are becoming global not only in their geographical scope but also in the 

range of services they provide. 

This rapidly evolving scenario where inter-dependencies between players are growing as fast as 

competition between them, is however constraint to go towards a scenario of collaboration to achieve 

together a more reliable, fast, cost-efficient and integrated logistic chain that supports the flow of goods 

between China and Europe. 

The Port of Barcelona Chair of Logistics in CEIBS has been engaged to conduct a research to explore 

the organization of the logistic chain in the Chinese international trade with Europe. The results are 

aimed to: 

� Provide a general overview of the logistic industry in China and specifically of the hinterland of 

Shanghai. 

� Identify the major export flows from China to Europe and the main industries and companies 

involved. 

� Portray the decision-making stages along the logistic chain and the criteria involved. Identify the 

major players and how their own evolving scenario are impacting the structure and operating of 

the logistic chain. 

To achieve this knowledge, both a qualitative and a quantitative research have been accomplished 

through: 

� Secondary research and related conferences attendance 

� 17 personal in-depth interviews with key players, shippers and logistic and transport 

operators, 

� A survey plus a phone interview has been conducted to 14 companies manufacturing in or 

sourcing from China and with important European markets. Many more companies have 

been approached but discarded because they didn’t meet the requirements. 



II. LOGISTIC FRAME IN THE HINTERLAND OF SHANGHAI 

II.I. China’s Logistic Industry overview 

II.I.I. Introduction 

China’s endless economic growth and exponential international trade has boosted the need of logistic 

services and transportation infrastructures. The development of the Logistic sector however hasn’t 

followed the pace of economic growth, making savings in product manufacturing or sourcing in China 

be threatened by high logistic costs. Inefficiencies, unreliability, lack of transparency, regional 

disparities, shortage of professionals and cultural barriers are some of the challenges faced in the 

logistic sector. 

Generally, China’s logistics and transportation industry still lag behind the requirements of the demand 

side thought fast improvements have taken place. China’s entry into The World Trade Organization has 

altered the scenery, creating a new competitive landscape, where international players spread and 

Chinese companies are catching up quickly. Chinese Government, aware of the critical role of logistics 

in China’s future growth is strongly promoting the modernization of the global logistic industry through 

huge investment on infrastructures and encouraging companies to outsource logistics, and providers 

to improve their logistic capabilities. 

The shift from State-own-enterprises to private companies, the increasing number of multinational 

corporations and major retailers within China, have also boosted the competition and increased the 

requirements and expectations coming from the demand side. 

Some logistic and transportation industry indicators 

� The gross value of China’s transportation and logistics industry stood at 38.4 

trillion RMB (US$ 4.64 trillion) in 2004, a year-on-year increase of 30%. 

� Total logistics costs in China account for 2,9 trillion RMB (US$ 350.24 billion) in 

2004, about 21,3% of the GDP, which is way higher than the 10% of developed 

countries. (China’s Ministry of Commerce) 

� There are around 700.000 logistic companies in China though 16.000 officially 

registered. 

� Logistics in China’s industrial production takes almost 90% of the whole 

production cycle time and 40% of general production costs. (United Nation 

Development Program) 

� Road transport account for 73% of all freight movements. China has now 

the second road network after the United States, with 1.8 million km of road 

network (World Bank indicator 2006) with 4.600 new kilometers of expressways 

every year. High quality roads only account 14% of the total road network (Asian 

Development Bank). 

� Cargo containerization is more than 70% in ports, less than 30% in rail 

transport and less than 5% in road transportation (Volvo Trucks Asia). 



II.I.2. The demand of logistics and transportation services 

The transportation and logistics demand is still concentrated in coastal areas. The three coastal 

regions, Bohay Bay region, the Yangtze River Delta region and Pearl River Delta region concentrate 

most of the foreign investment and the international trade, while only 30% of the population. 

Three main regions, with 30% of the population, account for: 

86% International trade, 78% of foreign direct investment and almost 50% of the GDP. 

Source: China Statistics Yearbook 2005. Data from 2004, except FDI from 2003. 

Beijing-Tianjin- Liaoning-Shandong 

Population: 12% GDP: 18% 

Int’l trade: 17% FDI: 24% 

Shanghai-Jiangsu- Zhejiang 



Guangdong 



The east coast and central regions with 60% of population account for: 

94% International trade, 94% of foreign direct investment and almost 75% of the GDP. 

Hebei- Shanxi- Henan- Hubei- 

Jiangxi- Fujian 



Main economic data: 

China Population: 1.300 million persons 

Total GDP (2004): 1.5 billion Euros 

Foreign Direct Investment (2003): 41.133 million 

Euros 

International Trade (2004): 897.000 million Euros 



II.I.3. The supply side of Logistic Industry 

Transportation and logistics supply is also concentrated in the same areas where demand is more 

important. Logistic infrastructures and logistic companies operations are located in the three main 

areas of development, where cargo movement and industry output are mainly concentrated. 

The main ports of China and the main cargo airports are also located in the same areas as well as 

better road and rail infrastructures are more and better developed. 

Chinese Leading Seaports (in cargo throughput) 

Qinghuandao 

� Via 8 main seaports move 65,8% of 

total cargo throughput, 4,91 billion 

tons in 2004. 

� China Total container throughput 

Dalian 

in 2005 reached 75.8 million TEU’s 

Tianjin 

� Three coastal regions account for 

Qingdao 

75.5 % of China mainland container 

throughput: 

Shanghai Main container ports: 

Ningbo � Dalian, Tianjin, Qingdao 

� Shanghai, Ningbo 

� Guangzhou, Shenzhen 

Shenzhen 

Guangzhou 

Source: Chinainfobank, China Statistical Yearbook 2005, China’s Shipping Development Report 2004 

II.I.4 Challenges and opportunities in China Logistic Industry 

China Logistic industry faces several and different kinds of challenges. Regardless the difficulties and 

troubles, no other country has seen so fast development in its infrastructures or so fast improvement 

within its industry players to satisfy the huge demand of logistic services. 

a. China’s geographic and cultural features 

The vast size of the country, with less than a quarter of its territory under one thousand meters, the 

Himalayas (Sichuan, Gansu, Yunnan, Tibet, ), the deserts (Gansu, Ningxia, Inner Mongolia, 

Xinjiang), the seasonal flooding (Yangtze River valley, Guangdong, Guangxi) and the cultural 

diversity existing between provinces are hindering the development of a national integrated 

logistics network. 

b. China’s regulatory frame 

The licenses which allow operating in the logistic industry in China are fragmented by service and 

by region. Several government bodies from central to local administrations are regulating the 

logistic activity. The central government authorities involved in Transportation and Logistic areas 

include: 



The Ministry of Communications (MOC) responsible for road and water transportation; the Ministry 

of Railways, responsible for rail services; the Ministry of Commerce (MOFCOM) the former 

Ministry of foreign Trade and Economic Cooperation (MOFTEC) handling licenses for freight 

forwarding and other services; the Civil Aviation Administration of China (CAAC) attending to 

aviation matters, Customs for goods coming in and out of the country and The State of Postal 

Bureau, 

c. Provincial and local protectionism 

Local governments aiming to protect local economies have set up complicated regulatory 

requirements on transport services and severe border controls. Non local companies are regularly 

shaken down for official and non official tolls, causing overcosts and delays. Local companies can 

often have the monopoly on rights to deliver within a city. Local protectionism results on large gaps 

between the application of central government policy and the local practices. 

d. Uneven infrastructures 

Although the improvement of logistic infrastructures in the last decade has been huge, transport 

infrastructures still lack of integration. Infrastructures are sometimes low quality, causing unreliable 

delivery times, high damage rates, etc. The east coast infrastructures though, are considered to 

meet higher standards though capacity is still constrained particularly in peak months and in 

certain areas. 

e. Logistics capabilities are still limited 

Deficient or outdated equipment, shortage of qualified logisticians and supply chain professionals, 

low technical and operation capabilities, deficient management, are some of the characteristics 

spread over small and medium logistic companies. Generally the performance levels are still very 

insufficient compared with international standards although major logistic companies in China are 

already providing high quality services especially to big customers. 

f. Still slight demand on outsourcing 

By far, the demand for logistics services still comes mainly from multinational companies settled in 

China. In the side of Chinese companies, some of them still operate on the basis of self-sufficiency 

in all processes, owning and operating all supply chain functions. 

However some opportunities may facilitate the further development of the whole industry. 

a. Government commitment towards logistics industry modernization 

To avoid transportation and logistics to become the bottleneck to future economic growth, the 

Government has given high priority to the logistics industry in the last Five Years Plan (11th Plan). 

A heavy commitment has been made toward the improvement of the transportation infrastructure 

and the efficiency of logistic services. Government also encourages the outsourcing of the logistics 

operations. 



b. Logistic industry consolidation 

Industry consolidation is taking place within China through international and local mergers and 

acquisition. The injection of knowledge through the increasing presence of foreign players is 

helping to improve the standards of the sector. The formation of bigger and more capable 

companies is also leading to an improvement in service offerings and in performance levels. 

c. Increasing Logistics outsourcing 

Increased international and domestic trade will drive demand for logistic services. The shift 

towards high-value manufacturing and exports will grow segments with higher propensity to 

outsource logistics. The increasing competition to low costs will also drive the logistic outsourcing. 

II.I.5. Logistics and transportation service providers 

In China, the logistic and transportation market is still very fragmented, mainly composed by small 

transportation companies and regional or local operators. There are 700.000 so-called logistic and 

transportation companies in the market although only 16.000 are officially registered. Because of the 

strong government control and the limited competition, the logistic market has been characterized by 

low efficiency and low standards of service. Currently most logistics service providers are too small to 

be competitive; they lack management rules and customer service and can only provide nationwide 

services through different partnership in the various provinces of China. 

However, companies are slowly moving towards international standards, mainly because of the 

increasingly foreign participation (most of the multinational logistic companies have entered the 

Chinese market in the last 5 years); the consolidation of the industry which creates more efficient 

companies, and to higher competition between increasing players. 

A. Logistic market by Business types 

Transportation companies (trucking companies) 

Estimations count over 2,5 million trucking providers. Not a single provider has more than 2% of 

the market share. The average number of vehicles owned per trucking companies is less than 

two. 

Freight forwarders 

According to Hong Kong Trade Development Council, in January 2004, 4.000 freight forwarders 

in China were engaged in international freight forwarding (including headquarters and branches 

of the same companies). More than 500 were Sino-foreign joint ventures and more than 100 

foreign- invested forwarders were from Hong Kong. 

Until January 2006, Chinese freight forwarders were the only to be allowed to operate the inland 

transportation within China while foreign invested freight forwarders could only handle 

international freight forwarding business. Therefore, Chinese freight forwarders in China usually 

operated on a small scale, and their scope was limited to a particular seaport or airport and the 

nearby area. The owners were usually the operators and they didn’t have their own bills of lading. 

They were generally not able to provide one-stop services to customers. 



The World Trade Organization agreement which allows international freight forwarders to 

operate within China, is forcing domestic players to work out their weakness to stand competitive 

in the market. Forming strategic alliances with other domestic freight forwarders in other 

locations, expanding their scope of services to become an integrated service provider and 

mergers and acquisitions are the alternatives outlined. 

Third party logistics (3PL) 

China’s 3PL logistic market is still small in China compared to developed countries. Chinese 

companies are still reluctant to outsource functions other than transportation. However forecasts 

are optimistic and foresee big growths. 

Until now, according to China Federation of Warehousing, the 3PL companies operate mainly in 

the three main areas Yangtze River Delta region; Pearl River Delta region and Bohai Bay 

Region. 

Logistic companies operations 

Region 3PL operations 

Bohai Bay Region 23% 

Yangtze River Delta Region 28% 

Pearl River Delta Region 24% 

Share 75% 

Source: China Federation of Warehousing 

According to a survey of China Storage Association, 89% of 3PL’s in China have less than 500 

employees and have limited facilities and equipment. 

B. Logistic Market by company category 

In China’s Logistic Industry there are four categories of Logistic companies with different 

characteristics, origin, services and performance levels. 

Large State-owned-enterprises. 

This category includes most of the important players in the Chinese logistic industry. They are 

large government owned or recently privatized logistic service providers. (There are about 50 

companies of this kind.) This kind of company own extensive transport and warehousing assets 

and enjoy a strong relationship with central and provincial governments. In the domestic market 

they enjoy strong brand awareness, and have built broad national networks. They therefore have 

been very attractive for foreign companies, and have participated in joint ventures with foreign 

leader companies. Through these relations, SOE’s have sought to improve their lack of 

sophistication in information technologies, management and customer service, acquiring value 

added logistics capabilities. 



Small and medium-sized domestic logistics providers 

Generally private owned, with a regional or local scope, they usually focus on one or two vertical 

key industries. They have own assets and limited financial resources but are well know for their 

flexibility to serve their customers. They have little name recognition. Some have evolved from 

transportation, storage or wholesale companies into Logistics providers by expanding the scope 

of the services they offer. They have become the acquisition targets of multinational companies 

that want to grow quickly in China. 

Foreign Logistics providers 

European, North American and Asian multinational firms or new Wholly-foreign-owned-Entities 

(WFOE’s) and smaller firms working in niche markets. Most of the international logistic 

companies enter the Chinese market to provide extended services to their clients entering the 

Chinese market. They enjoy broad networks in their market of origin and high levels of 

sophistication in the services provided. They used to need local partners to provide services in 

China and have difficulties to attract domestic customers because of their higher costs. 

There are about 25-30 leading international companies. They sometimes lack of local know-how 

and need to build relationships with governmental authorities. These companies are following 

two ways to expand into domestic market, partnering or acquiring with local companies, to gain 

access to assets and clients while providing logistics capabilities. 

Logistics divisions of manufacturers and processors 

They are shippers’ in-house logistics providing services to internal customers. In some cases 

shippers use their own freight as a platform to get into logistics business directly or through joint 

ventures with foreign companies. Some difficulties to sell services to its own sector (lack of trust 

of their competitors). 

II.I.6. Use of logistics providers 

The potential demand for outsourcing logistics is very high in China. According to the latest survey 

“2005 China Logistics User Survey” from China Supply China Council: 

� 56% companies are currently using 3PL, (low percentage if compared to 70-80% in Western 

Europe and North America). 

� The top three services currently outsourced are Transportation (30%), warehousing (15%) and 

custom clearance (12%). 

� Only 20% of the respondents consider 3PL as a “Solution provider”. 3PL are still not perceived 

differently from transportation companies and warehouse operators. 

� The main criteria when selecting a 3PL provider in China are price, followed by local market 

experience, services range and good reputation. 

� 65% of manufacturers and retailers have their China logistics decisions taking place within 

China, 16% in Asia Pacific Headquarter, and 18% outside Asia. 

� The main problems impacting China logistics are: High logistics costs (47%); Quality of 

transport (13%); Reliability of Logistics providers (11%); Quality of service level (8%); Local 

regulations (8%); Quality of data and tracking (4%); Quality of infrastructure (2%). 



According to Mercer survey in 2002, 70% of multinational companies outsource logistics while only 

20% of domestic companies do. In general, Chinese companies still maintain a large number of 

logistics facilities which constitute a considerable proportion of their total assets. Chinese Government 

is strongly encouraging the outsourcing of logistics. The pressure to low cost is also a driver for 

companies to focus on core-business and outsource logistics. 

However there are still several constraints for domestic companies on the demand side: 

o Difficulty in coordinate if logistics activities come from different companies 

o Low methods to reduce operating costs and improve logistics efficiency 

o Difficulty to divest their low efficiency facilities and extra-personnel 

According to the last surveys about outsourcing logistics, the main reasons for not outsourcing are: 

o In-house capabilities still available 

o No confidence in service level of current logistic providers 

o Good providers not available 

II.I.7. Logistic Market Regulation 

China’s regulatory frame 

Numerous licenses and permits are required for Logistic companies to operate in China. Operating 

licenses and permits are provided by different ministries, provincial authorities and municipalities. 

Obtaining them can be time and resource consuming. 

The central government authorities involved are: 

• The Ministry of Communications (MOC) responsible for road and water transportation; 

• The Ministry of Railways, responsible for rail services; 

• The Ministry of Commerce (MOFCOM) (the former Ministry of foreign Trade and Economic 

Cooperation (MOFTEC) ) handling licenses for freight forwarding and other services; 

• The Civil Aviation Administration of China (CAAC) attending to aviation matters, 

• Customs for goods coming in and out of the country and 

• The State of Postal Bureau. 

The basic permits for foreign-invested international transportation joint venture enterprises to establish 

legal Entity (Joint venture) are: 

• Foreign Investment Enterprise Approval Certificate 

• International Freight forwarder Certificate (or “Class A License”) 

• Business License issued by State Administration for Industry and Commerce 

Companies also need to apply for key licenses depending on the activity. The operating licenses in 

China per service are: 

• Air cargo Agent permit 

• NVOOC registration certificate 

• Custom broker License 

• Custom Bonded/Supervised Warehouse license issued by Customs 

• Entrustment certificate for express services 



At the same time, to establish branches or to operate in certain areas, there is a vertical system of 

management with various levels extending from the central government down to the local authorities. 

The overlapping of administrations is characterized by low efficient cooperation and coordination 

among all departments. 

Until the China’s accession to the World Trade Organization, Logistic sector was not opened to foreign 

participation. The CEPA agreement (Mainland, Hong Kong and Macao Closer Economic Partnership 

Arrangement) was the first free trade agreement to start the opening of the logistic sector. It gave 

preferential access to China (above World Trade Organization commitments) for goods and suppliers 

from Hong Kong (Hong Kong companies, and Hong Kong subsidiaries of non Hong Kong 

multinationals). Since 2001, Chinese Government has been opening up the logistic Industry driven by 

the World Trade Organization commitment. 

In the past years the government also started the separation of companies and sector administration, 

although is not completely implemented. China Post is still a player and a regulator. 



II.2. China’s Ports overview 

II.2.I. Port Logistics context 

Among all Asian countries, China Mainland enjoys the largest increase in container exports. The 

Asia-Europe line experienced in 2004 a growth in both ways of transport of 10% to 12 million TEU. 

The global container transport volume in 2004 grew faster than carrying capacity causing lack of 

shipping space in most of the shipping lines during the peak seasons, and the increase in freight rates 

for liner services. 

China is the largest handler of container worldwide. The containers carried to and from China 

accounted for almost ¼ of the world total. The throughput of containers reached by Shanghai and 

Shenzhen in 2005 has made them third and fourth biggest ports in the world ranking. 

World’s major container ports, 2002-2005 (1.000 TEU) 

Port 2005 2004 2003 2002 

Singapore 23.200 21.329 18.410 16.941 

Hong Kong 22.602 21.984 20.449 19.144 

Shanghai 18.080 14.554 11.280 8.620 

Shenzhen 16.197 13.660 10.600 7.614 

Busan 11.840 11.430 10.370 9.436 

Kaohsiung 9.471 9.714 8.843 8.493 

Rotterdam 9.287 8.292 7.144 6.506 

Hamburg 8.088 7.003 6.138 5.374 

Dubai Ports 7.620 6.429 5.152 4.194 

Los Angeles 7.485 7.321 7.200 6.106 

Antwerp 6.488 6.063 5.445 4.777 

Source: Port Authorities (Port of Rotterdam) 

II.2.2. China Ports 

As foreign-trade shipping market increased, foreign-trade cargo transport volume experienced a 

strong growth, mainly coming from the growth in import volumes of crude oil, iron, coal and grain and 

the growth of container exports. 

o In 2004 China became the largest oil consumer in the world. More than 92% of imported oil was 

carried by sea. Waterway crude oil imports reached 110 million tons, up 25% over 2003. 

o To feed to growing metallurgical industry, China’s import ore increased strongly. The major coastal 

ports handled 202 million tons, 38% up from 2003. 

o Coal imports increased by 81% reaching 14.34 million tons while coal exports were down by 7.6%, 

totaling 86.8 million tons. 

o China experienced an increase of grain imports of 40% over 2003, reaching 30.74 million tons, 

while grain exports decreased by 78.2% to 4.54 million tons. 

o The container throughput of Chinese main ports reached 61.60 million TEU, up 26.6 % from 2003. 

The main container ports, Shanghai and Shenzhen experienced huge growths of nearly 30%. 

Ningbo container throughput grew up 44.5%, reaching 4 million TEU. Other mainland ports also 

followed this pace, Yingkou, Weihai and Liangyungang growth rate was above 40%. 



By 2020, container terminals will have a total capacity of over 200 M TEU. The aggregate traffic 

capacity of coastal ports shall reach about 6.4 billion tons. 

A. Seaports and Infrastructure 

By the end of 2003, there were more than 130 ports in China opened to foreign vessels. Over 80.000 

foreign-flag vessels are calling every year to Chinese ports. 

There are over 3.300 productive berths in coastal ports with a total handling capacity of 1,7 billion tons. 

Among them, 745 are deep water berths, with a handling capacity of 10.000 tons each. 

The tonnage of China’s international maritime transport fleet is over 44 million DWT, ranking No.5 in 

the world. 

China’s Top 10 Container Ports (Million TEU) 

Main Ports 

Container 

throughput 

Jan-set 2006 

Container 

throughput 

2005 

Container 

throughput 

2004 

Growth 

2004-2005 

Growth 

2003-2004 

Shanghai 15,96 18,08 14,6 23.8% 29% 

Shenzhen 13,41 16,19 13,7 18.2% 28.2% 

Qingdao 5,64 6,30 5,1 23.5% 21.3% 

Ningbo 5,17 5,20 4,0 30.0% 44.5% 

Tianjin 4.34 4,80 3,8 26.3% 26.5% 

Guangzhou 4.80 4,68 3,3 39.4% 19.5% 

Xiamen 2.90 3,34 2,9 13.8% 23.2% 

Dalian 2.33 2,65 2,2 18.2% 32.4% 

Zhongshan 0.80 1,07 0.9 11.1% 22.1% 

Fuzhou - -- 0.7 - 18.6% 

Lianyungang 0.90 1.00 -- 100% -- 

Source: China Ministry of Communications 

Top 10 Chinese Coastal Ports in Cargo Throughput (2004) 

Main Ports Freight handled Number of Length of 

(Million tons) berths (units) Quay line (m) 

Shanghai 379,0 197 24.046 

Ningbo 225,9 79 10.042 

Guangzhou 215,2 133 14.645 

Tianjin 206,2 114 20.324 

Qingdao 162,7 55 12.788 

Qinghuangdao 150.3 57 10.077 

Dalian 145,2 223 30.715 

Shenzhen 135.3 -- -- 

Zhoushan 73.5 -- -- 

Fuzhou 59.3 -- -- 

Source: China Statistical Yearbook 2005, The report on China’s shipping development 2004 



B. Leading shipping Lines 

By the end of 2004, 153 shipping companies were authorized to engage international liner services in 

Chinese mainland ports, of which 113 were overseas companies. 

Shipping Companies and Operators in China 

Company Type Total number Joint Ventures 

Shipping companies 245 30 

NVOCC 1600 240 

International Shipping agencies >1000 17 

Source: Report on China’s Shipping development 2004 

Driven by the strong demand for container transport from China, the world’s main liner carriers have 

increased their capacities by launching new services and by increasing the number of ports they call. 

Rank of container fleet capacities of Chinese carriers - December 2004 

Company Name 

Total carrying capacity 

Number of Slots (1.000 

vessels TEU) 

China Ocean Shipping (Group) Company 118 (46) 290,7 

China Shipping (Group) Company 134 (83) 257,2 

China National Foreign Trade Trans (group) Corp. 86 (49) 29,8 

Shandong Yantai International Marine Shipping co. 37 (10) 24,4 

SITC Container Lines Co. Ltd. 22 (3) 16,65 

Min Sheng Shipping Co. Ltd. 37 (37) 6,7 

Shanghai Haihua Shipping Co. Ltd. 11 (1) 6,4 

China Changjiang National Shipping Group 47 (46) 5,9 

Shanghai Jihai Shippping Co. Ltd. 41 (41) 5,0 

Shanghai Jinjiang Shipping Co. Ltd. 7(2) 4,1 

Source: Report on China’s Shipping development 2004. Bracketed numbers indicate Chinese-flag carrying 

capacity 

Major solely overseas owned Shipping Companies- December 2004 

Company Name Country Subsidiaries 

Maerks (China) Shipping Co. Ltd. Denmark 14 

American President Lines (China) Co. Ltd. U.S.A 14 

Orient Overseas Container Line (China) Co. Ltd. Hong Kong 13 

NYK Line (China) Co. Ltd. Japan 8 

Pacific International Lines (China) Limited Singapore 8 

P&O Nedlloyd (China) Co. Ltd. Netherlands 6 

Hanjin Shipping (China) Co. Ltd. Korea 6 

CMA CGM (China) Shipping Co. Ltd. France 5 

Hyundai Merchant Marine (China) Co. Ltd. Korea 4 

Hapag-Lloyd (China) Co. Ltd. Germany 4 

Wallenius Wilhelmesen Lines (China) Co. Ltd. Norway 1 




Major solely overseas owned Container Service Companies- December 2004 

Company Name Country Subsidiaries 

Maerks (China) Shipping Co. Ltd. Denmark 13 

Orient Overseas Container Line (China) Co. Ltd. Hong Kong 10 

P&O Nedlloyd (China) Co. Ltd. Netherlands 8 

APL Logistics China Ltd. USA 6 

ZIM Logistic (China) Co. Ltd. Israel 6 

NYK Logistics (China) Co. Ltd. Japan 8 

PIL Logistics (China) Co. Ltd. Singapore 3 

Norgistics (China) Limited Chile 0 




II.3. Yangtze River Delta Logistic Context 

II.3.1. The Hinterland 

The Yangtze River Delta embraces three provincial governments (Shanghai, Jiangsu and Zhejiang) 

and around 15 municipal governments. The Yangtze River Delta cities are promoting regional 

integration for growth and economic activity and defining common objectives. In the transportation field, 

main goals are to strengthen inter-communication and coordination of infrastructure development and 

build a comprehensive transportation network. 

Zhejiang’s and Jiangsu’s economies are driven mainly by the private sector while Shanghai has still a 

large state sector. The key Yangtze River Delta cities include: 

Key cities in the Yangtze River Delta 

Population Intern’l trade 

City 

(Million) (Million €) 

GDP* per 

capita (€) 

FDI* 

(million €) 

Suzhou 5,99 82.555 5.799,2 3.718 

Wuxi 4,47 17.459 5.282,5 1.558 

Nanjing 5,84 16.510 3.305 1.210 

Changzhou 3,49 5.524 3.166,5 429 

Nantong 7,74 5.434 1.580,6 816 

Zhenjiang 2,67 2.783 2.923,5 448 

Yangzhou 4,54 1.935 1.735,9 602 

Taizhou 5,03 1.005 1.401,4 306 

Jiangsu 74,33 136.648 2.022,3 9,710 

Ningbo 5,53 20.890 3.917,4 1.683 

Hangzhou 6,52 19.597 3.885,8 1.128 

Jiaxing 3,34 6.340 3.150,6 817 

Shaoxing 4,35 6.930 3.025,4 659 

Wenzhou 7,46 4.774 1.884,6 167 

Huzhou 2,58 1.358 2.296,6 489 

Zhoushan 0,97 809 2.185,5 18 

Zhejiang 48,98 68.183 2.435,2 5.345 

Shanghai 17,42 128.015 5.992 5.233 

Source: Jiangsu Yearbook 2005, Shanghai Yearbook 2005, Zhejiang Yearbook 2005 



At the same time, the Yangtze River navigability improvements allow ships of up to 10.000 tons to 

transit along the river until Chongqing, making possible the flow of goods from and to the provinces 

along the Yangtze River. Both Shanghai and Ningbo ports are fostering the development of a modern 

container logistics and distribution network along the Yangtze River. 

Hinterland of Shanghai 

The further economic development of the western provinces and the improvements on logistics 

infrastructures linking western and central coastal provinces will generate an increasing flow of 

containers destined to and sourced from this hinterland for both ports. 

Top 10 ports along the Yangtze River (2005) 

Port Province TEU 

Nanjing Jiangsu 587,671 

Zhangjiagang Jiangsu 377,117 

Nantong Jiangsu 301,156 

Taicang Jiangsu 250,859 

Wuhan Hubei 178,056 

Chongqing Chongqing 170,054 

Changshu Jiangsu 124,942 

Zhenjiang Jiangsu 98,388 

Ma'anshan Anhui 93,178 

Yangzhou Jiangsu 92,392 

Source: Yangtze River Port Branch Association of China Port Association 2006 



II.3.2. Port of Shanghai 

Shanghai Port is the largest container port in China. It is located at the confluence of the Yangtze River 

and the East China Sea, in the middle of the coastline of the mainland of China. Shanghai Port consists 

of sea port areas and inland river port areas. 

Shanghai port is linked to inland provinces through the Yangtze River ports and it is centrally located 

regarding coastal Chinese ports north and south. The port area is also linked to the national railway 

system through the Beijing - Shanghai, Shanghai - Hangzhou and Zhejiang - Jiangxi railways lines. 

The highways network around Shanghai Port connects to major inland provinces. 

Two airports, Pudong International Airport for international services, and Hongqiao Airport for domestic 

services link Shanghai to destinations all over the world. 

Major Figures 

Berths (2003): 1.202 sea port berths , Including 164 berths for over 10,000-ton-class ships 

Total Shoreline: (2003) 87.6 km 

Container Liner in 2005 1.996 ship lines/month, 971 international ship lines/month 

Total Cargo Throughput in 2005 443.17 million tons, Including 184.92 million tons for foreign trade cargo 

Total Container Throughput in 2005 18.08 million TEU, 23.9% of mainland China 

Source: Shanghai Port Authority 

II.3.3. Shanghai Container Terminals 

Currently, Shanghai international container operations are divided into three container handling areas: 

• Terminals along the Huangpu 

River Area: consists of three 

dedicated container terminals, 

Zhanghuabang, Jungonglu and 

Baoshan, known as Shanghai 

Container Terminals (SCT). 

• Terminals in Waigaoqiao Port 

Area (WGQ): include five container 

terminals, Waigaoqiao Phase I to 

Phase V. They are located in the 

Yangtze River mouth. 

• Terminals in Yangshan Port (Deep 

water port): At the end of 2005, 

Phase I has already been completed 

with five berths. Phase II is about to 

start operations in December 10 th 

2007. Phase III will be completed at the end of 2007. 

Since December 2005, the Chinese Government decided to move all the European and 

South-American shipping lines from Waigaoqiao port Area to Yangshan Deep water port. 



Shanghai International Container Terminals 

Container Terminals 

No. of 

Berths 

Source: Shanghai Port Authority. Throughput capacity is still a data to confirm with port Authorities. 

Shanghai Container Terminals (SCT), located along the Huangpu River were the first operating in 

Shanghai. With the vessels size increasing, and the growing traffic demand, the dimensions of the river 

progressively became a bottleneck. So an expansion to other locations turned out to be necessary and 

resulted in the Waigaoqiao Terminals by 1995. However they quickly operated at full capacity. The 

fast development of the Yangtze River Delta has made very difficult to keep infrastructure development 

at the pace of the growth in cargo volume. Besides port facilities weren’t internationally competitive as they 

couldn’t handle Mega Vessels. The Yangshan deep-water port has then been developed to provide enough 

capacity to absorb the fast growing demand and to allow Shanghai port to compete internationally. The 

entire project will take 15 years to complete and will provide a capacity of 25 million TEU. 

Waigaoqiao Layout. 

Berth Depth 

(m) 

Berth Length 

(m) 

Shanghai Container Terminal (SCT) 10 10-13 2.281 

Waigaoqiao Port Area 

Yangshan Port 

Source: Shanghai Pudong International Container Terminal. 

Throughput 

capacity* ( TEU) 

ZhangHuaBang 3 -12.5 784 500.000 

JunGongLu 4 -10.5 857 1.000.000 

BaoShan 3 -10.5 640 500.000 

Waigaoqiao phase I 3 -12 900 900.000 

Waigaoqiao phase 2 3 -13.2 900 600.000 

Waigaoqiao phase 3 2 -13.2 680 400.000 

Waigaoqiao phase 4 4 (+2) -14.2 1.250 1.000.000 

Waigaoqiao phase 5 6 -12.8 1.290 

Yangshan phase I 5 -15 1.600 2.200.000 

Yangshan phase II 4 -15 1.400 2.500.000 

The second phase of Yangshan deepwater port is expected to begin operations at the beginning of 



2007 and add an extra 2.5 million TEU in container handling capacity. 

The Yangshan Deep water Port is aimed to fulfill several strategic needs of China: 

– To be prepared for the future mega size vessels, as they demand deep-water facilities and greater 

efficiency in handling containers. 

– To become a hub for international and domestic transshipment, 

– To become a leader in Port development and management in the world. 

. 

Yangshan Deep Water port 

Source: Lingang Group 

II.3.4. Main Container Terminal Operators in Shanghai 

Shanghai International Port Group (SIPG), originated from Shanghai Port Bureau, is one of the largest 

port management group in China and the major port operator in Shanghai. 

Shanghai International Port Group (SIPG) participates through its major holding companies in the 

major terminals in Shanghai in cooperation with foreign companies such as Hutchison Port Holdings, 

APM Terminals, etc. Foreign companies are only allowed to invest in port facilities through joint 

ventures with local port Authorities. 

The SCT Terminals, located along the Huangpu River, are all managed by Shanghai Container 

Terminal Co., Ltd . (www.sctport.com.cn). It is a 50/50 joint venture between Shanghai Port Container 

Company Ltd (SPC), a holding company of Shanghai International Port Group (SIPG), and Hutchison 

Port Holdings Ltd (HPH), officially established on 1993. 

Waigaoqiao Port Area Terminals are operated by Shanghai Pudong International Container Terminal, 

Shanghai Container Group, Waigaoqiao Terminal Branch, Shanghai East Container Terminal Co., Ltd 

and Shanghai Mingdong Container Terminal. 

– Shanghai Pudong International Container Terminal Co., Ltd (www.spict.com) operates the 

Waigaoqiao Phase I container terminal. It is a joint-venture co-established by Shanghai Waigaoqiao 

Port Co. (subsidiary of SIPG), Ltd, Hutchison Port Holdings, COSCO Pacific, COSCO terminals. 

– Shanghai Container Group Waigaoqiao Terminal Branch Co., Ltd (www.spcwt.com) is the branch of 



Shanghai Container Group, and it operates the Waigaoqiao Phase II and Phase III container 

terminals. 

– Shanghai East Container Terminal Co., Ltd (www.sect.com.cn) a joint-venture enterprise 

co-established by Shanghai International Port Group Co. Ltd (SIPG) and APM Terminals (Shanghai), 

to operate Waigaoqiao Phase IV container terminal. 

– Shanghai Mingdong Container Terminal Co., Ltd (www.smct.com.cn) operates Waigaoqiao Phase V 

container terminal. It is a joint-venture co-established by Shanghai International Port Group Co. 

(SIPG), Ltd and Hutchison Port Holdings. 

The Yangshan Phase I Container Terminal is operated by Shengdong Container Terminal Co. Ltd. 

(www.shsict.com) which is invested by Shanghai International Port Group (SIPG) and Shanghai 

Container Terminal Co., Ltd. 

The Yangshan Phase II Container Terminal has 5 investors: APM Terminals (32%), Hutchison Port 

Holdings (32%), Shanghai International Port Group (16%), Cosco Pacific (10%) and China Shipping 

Group (10%). 

II.3.5. Logistic infrastructures in Shanghai 

A. Bonded Policies in China 

The bonded policy is named “Baoshui” in Chinese, which in general means tax free. 

– Bonded Zone (Baoshui Qu) 

“Baoshui Qu” is used for Bonded Zone, Bonded Area or Free Trade Zone. The first bonded zone was 

established in Shanghai Waigaoqiao in 1990. Since then China has developed 15 bonded zones in 

total, all in coastal areas. 

Main Bonded zones features are: 

� International trade, export processing, warehousing, transit trade, inside-the-zone trade, distribution, 

processing and other related operations are permitted. 

� Foreign wholly-owned trade companies can only set up their companies in a bonded zone. 

� Merchandises entry and exit the Zone are free of customs declaration formalities, customs duty, import 

and export license, and only EDI electronic filing is required. Except for the passive quota control, no 

export quota or permit management will be imposed on goods moving between the area and foreign 

countries. 

� Financing and Foreign Exchange 

� Merchandise entry and exit the Zone when transported to non-free trade areas, they are to be treated as 

imported goods on which taxes should be duly levied by the customs. 

� Raw materials, parts, components, packaging materials, and other consumptive materials for the 

processing of re-export products used by the inside enterprises are to free from duties. 

� Entrepot and storage merchandise are bonded. 

� Goods wholly made of imported materials leaving the zone for the other areas should go through 

customs procedures as imported goods and should be taxed as finished products. If the products are 

under permit control, the owner should submit valid import permits to the customs for inspection. Goods 

partially made of imported materials and transported to the other areas should be taxed on the imported 

pieces. 



– Bonded Logistics Park (Baoshui Wuliu Yuanqu) 

Bonded Logistics Park is a special logistics park established under a bonded area and located close 

to a port area. They enjoy a special policy named “Port-Area Linkage”. The purpose of the bonded 

logistics parks is to warehouse the import goods from abroad. Only simple processing is allowed in 

the park, such as package and sort. Bonded Logistic Parks are supervised by a special Custom 

office. 

� Logistic parks enjoy the Free Trade Zone policies and Export Processing Zone policies. 

� Custom operation is simplified 

There are only 8 Logistic parks with these characteristics in China. 

Bonded areas Province Area Port-Area Linkage 

Shanghai Waigaoqiao 

Shanghai 

5,5 

yes 

Shenzhen Yantian Guangdong -- yes 

Shenzhen Shatou Jiao Guangdong 0,2 no 

Dalian Dayao Liaoning 1,25 yes 

Guangzhou Guangdong 1,4 no 

Tianjin Tianjin 5 yes 

Qingdao Shandong 2,5 yes 

Shenzhen Futian Guangdong 1,35 no 

Zhangjiagang Jiangsu 2 yes 

Haikou Hainan 1,93 no 

Ningbo Beilun Zhejiang 2,3 yes 

Fuzhou Fujian 1,8 no 

Xiamen Xiangyu Fujian 0,6 yes 

Shantou Guangdong 2,3 no 

Zhuhai Guangdong 3 no 

Source: Provincial governments 

– Bonded Logistics Center (Baoshui Wuliu Zhongxin) 

Two kinds of bonded logistics center exists 

� Type-A bonded logistics center: run by a domestic company and is approved by the custom. Specially run 

the bonded warehousing business. Also can have public logistics center and internal logistics center 

� Type-B logistics center: is the one which can be run by one domestic company and many companies 

entered 



B. Logistic Parks description 

The major logistics parks in Shanghai are: 

– Waigaoqiao Bonded Logistics Park 

– Yangshan Deep Port Logistics Area, 

– Pudong Airport Logistics Area, 

– North West Comprehensive Logistics Area, 

Other minor Logistic parks in the area of Shanghai are Wusong Logistics Park, South Logistics Park, 

Baihe Business Trade Logistics Area. 

1. Shanghai Waigaoqiao Bonded Logistics Park/Zone 

Shanghai Waigaoqiao Bonded Logistics Park/Zone, operating since 2004, is located at the east part of 

Waigaoqiao Port Area, linking with Waigaoqiao Port (Terminal Phase III) and close to Waigaoqiao Free 

Trade Zone. It is China’s first logistic park linking a bonded zone with a port area, and aimed to facilitate 

the interaction of port, bonded area and logistic services. (Free Trade Zone and Port Collaboration 

project). 

Waigaoqiao Area 

Source: Waigaoqiao Group 

Waigaoqiao Bonded Logistics Park total project area should have around one million square meters. At 

the end of 2006, the total warehouse area is planned to have 700.000 square meters and reach the 

capacity to handle 1 Million TEUs per year. 

WBLP is aimed to attract shipping companies, multinational companies purchasing centres, third party 

Logistics enterprises, and other logistic service providers. 



The main functions and services expected for the WBLP are mainly: 

– International Transshipping: Foreign or domestic cargo may be separated and consolidated, then 

transshipped to another port home or abroad. 

– International Distributing: Imported bonded goods may be sorted, distributed or after only simple 

commercial processing, then distributed to domestic or international markets. 

– International Purchasing Purchased domestic goods may be carried out comprehensive handling or 

simple commercial processing, and then sold domestically or abroad. 

– Entrepot Trade: Imported goods may be exported to another country or area after storage in WBLP 

without processing. 

WBLP enjoys the policies of both Free Trade Zone and Export Processing Zone. Some of the major 

companies already based in Waigaoqiao are OOCL, P&O Nedlloyd, MOL Logistics, DHL, Nippon 

Express, etc. WBLP is managed by Waigaoqiao Logistic Center, established by Shanghai International 

Port Group and Shanghai Waigaoqiao Group. 

2. Yangshan Lingang/Tongsheng Logistics Park 

Yangshan Logistic Park is located in the Shanghai Lingang Industrial Area. It is connected to Yangshan 

deep water Port by the East Sea Bridge. It is not a bonded area. The bonded area is located next to the 

logistic park and should be operating as a Free Port already. 

YTLP is 25 km far from Pudong International Airport. 

Lingang Industrial Area 

Source: Lingang Group 

3. Pudong Airport Logistics Area 

The Pudong Airport Logistics Area is thought to provide Pudong International Airport with several 

logistic services (warehousing, transit, value-added services) 



4. North West Comprehensive Logistics Area 

The North West Comprehensive Logistic Area is located in the northwest of Shanghai and is aimed to 

become a distribution center for inter-provincial logistics. Its main function is to act as a logistics hub 

radiating to the Yangtze River Delta and interior provinces through land highways. 

5. Other important logistic areas in the Hinterland of Shanghai 

Zhangjiagang Area 

Zhangjiagang Area is located in the southeastern part of Jiangsu Province, two hours far from 

Shanghai. Zhangjiagang Area includes Zhangjiagang Free Trade Zone, Zhangjiagang Bonded Logistic 

Zone, Jiangsu Province Yangtze River International Chemical Industrial Park and Yangtze River 

Hi-tech Industrial Park. 

The area is located next to the largest inland port along the Yangtze River, Zhangjiagang Port. The 

Port is focused both in international traffics (Asia, North America and Europe) and transit port between 

overseas and provinces along Yangtze River. The annual handling capacity is 10 million tons. 

II.3.6. Port of Ningbo 

Ningbo Port is a natural deep-water port with 5 port areas: Beilun, Zhenhai, Ningbo old port, Daxie and 

Chuanshan. It has currently 191 operational berths including 39 deep-water berths of 10.000 and more 

tonnage. 

The main traffics through Ningbo Port are imported iron ore, crude and finished oil, liquid chemicals, 

coal and other bulk and general goods. It has been one of the fastest-growing ports in container traffic 

in China as container facilities have been developed. In 2005 Ningbo Port handled 5,2 million TEU. 

By 2010 Ningbo Port capacity will be raised to 10 million TEU. Up to now shipping lines have been 

opened to more than 560 ports of over 90 countries and regions. 

II.3.7. Ningbo Container Terminals 

Currently, Ningbo international container operations are distributed in the following container areas. 

Lines to Europe are not assigned to any concrete terminal. 

Ningbo International Container Terminals 

Container Terminals 

No. of 

Berths 

Berth 

Depth 

(m) 

Berth 

Length 

(m) 

Throughput 

capacity 

(million TEU) 

Container 

Throughput 

( million TEU) 

Ningbo Beilun Intern’l Container Terminal 3 -13.5 900 1.8 1.785 

Beilun Second ContainerTerminal 4 -15.0 1.238 2 2.314 

Gangji Container Terminal (Beilun 4th phase, under construction) 

5 -17.0 1.400 2 0.846 

Daxie Merchant Container Terminal 

(under construction) 

4 -17.0 900 2.4 0.015 

Total container Terminals 8.2 4.9 

Source: Ningbo Port Authorities. Throughput capacity is still a data to confirm with Ningbo Port Authorities. 

A new terminal, called Far-East Terminal (Beilun fifth phase) is planned to be constructed in the near 

future. 



II.3.8. Main Container Terminal Operators in Ningbo 

Ningbo Port Group Limited is the major port operator in Ningbo Port. It was established in 2004, 

originated from Ningbo Port Bureau. Ningbo Port Group Limited participates through its major holding 

companies in the major terminals in Ningbo in cooperation with foreign operators such as Hutchison 

Port Holdings. 

NBCT-Ningbo Beilun International Container Terminal (NBCT) is managed by a joint venture 

between Hutchison Port Holdings (HPH) and Ningbo Port Group Limited. (http://www.nbct.com.cn/ ) 

NBSCT-Ningbo Beilun Second Container Terminal (NBSCT) is managed by subsidiaries of Ningbo 

Port Group Limited ( http://nbsct.nbport.com.cn/ ). 

Gangji Container Terminal (Ningbo Beilun Phase IV Terminal) is operated by Gangji Co., Ltd 

(http://csct.nbport.com.cn/ ). It is located in the Chuanshan Island. 

Daxie Merchant Container Terminal is operated by Ningbo Port (35%), Merchant Group (45%), and 

China International Trust and Investment Corporation (20%).It is located in the Daxie Port Area in 

Ningbo. ( http://www.cmict.com.cn) 

Far-East Terminal (Beilun fifth phase) is invested by OOCL and COSCO. 

II.3.9. Logistic infrastructures in Ningbo 

Ningbo has established three special zones in the area near Ningbo Beilun Port which enjoy 

preferential policies in tax and custom clearance: Bonded Zone (NEFZ), Export Processing Zone 

(NEPZ), and Bonded Logistics Park (NBLZ). The three areas are all operated and managed by Ningbo 

Free Trade Zone management committee, which is subsidiary of Ningbo City Government 

1. Ningbo Free Trade Zone (NFTZ) 



Ningbo Free Trade Zone (NFTZ), also called Ningbo bonded area, is located in the east of Ningbo City, 

next to the Beilun deep water sea port. NFTZ was approved by the China central government in 

November 1992. It has covers an area of 2.3 square kilometers, and it is the only free trade zone in 

Zhejiang province currently. Ningbo Free Trade Zone has as main economic functions Export & Import 

Processing, International trade, Warehousing & Logistics, Commodity Exhibition. Around 5.500 

enterprises are set up in the zone (917 foreign investment companies included). 

2. Ningbo Export Processing Zone (NEPZ) 

Ningbo Export Processing Zone (NEPZ) was established in June 2002, covering an area of 3 square 

kilometers. NEPZ enjoys policies of Free Trade Zone, including financial support, taxation, and foreign 

exchange but is especially set up for the Export processing companies, so the policies for Export & 

Import are more favorable 

3. Ningbo Bonded Logistics Park ( Baoshui Wuliu Yuanqu ) (NBLZ) 

Ningbo Logistic Park started activity in mid 2004 to support the activity of the Ningbo Port, the Ningbo 

Free Trade Zone and the Ningbo Export Processing Zone. It is one of the eight “Port – Area” in China 

and will focus to support the container traffic of the international container Terminal Beilun fourth phase. 

It has an area of 0.95 square kilometer and enjoys the most preferential policies; as a Free trade Zone 

(tax refund on domestic goods) and as an Export Zone in export and import policies. 

The functions in the park include International Transit, International Purchase, International Distribution 

and International Trade. 

5. Other Logistic areas in the Hinterland of Ningbo 

Ningbo’s government is planning to develop other logistics parks, although Ningbo Bonded Logistic 

Park in Beilun will be the only one to enjoy bonded policies. Currently except the Ningbo Bonded 

Logistics Park and Jiangdong Logistic Park, the others are still under construction or under planning. 

– Jiangdong Logistics Park 

Its location will be set up close to the old city town of Ningbo, and it will focus on the city 

distribution. 

– Zhenhai Logistics Park 

Planned to be located close to Zhenhai Port and to the Chemistry industrial area, this logistic 

park is going to cover the function of international transshipment center and regional 

distribution center. 

– Cixi Logistics Park and Zhuangqiao Logistics Park 

Both are planned to be located close to Cixi and to the future Hangzhou bay cross-sea Bridge 

and act as a distribution center and combine the function of regional distribution and city town 

distribution center. 

– Shiqi Logistics Park 

Shiqi Logistic Park will be set up close to the Dongshe airport and Yinzhou area development. 

– Ninghai Logistics park 

No data available about this park. 



II.4. Container flows to Europe 

II.4.1. Main European ports involved in container traffic with China 

Annual container traffic between China (including Hong Kong) and Europe (EU-15) accounted in 2005 

for more than 6.6 million TEU and has grown on average by more than 30 per cent yearly since 2002. 

However, since 2003, annual growth rate seems to be decreasing yearly. 

Westbound container traffic surpassed 4.2 million TEU representing the 64% of all traffic between 

China (incl. HK) and Europe (EU-15) while Eastbound containers accounted for 2.4 million TEU. 

Heavy imbalance in the Chinese container trade with Europe 

Containers exported from China (incl. HK) to European ports almost doubled the containers imported 

by China, showing up the increasing imbalance between the two flows. In 2005, the number of 

containers arisen from the trade imbalance was 2.5 times bigger than in 2002 reaching 1,85 million 

TEU, although in proportion, it still represents around one third of the total traffic. 

Total Container Traffic China (incl. HK)–Europe for the main European ports (EU -15 ), TEU 

Year Total traffic Growth Westbound Growth Eastbound Growth 

2002 2.524.252 -- 1.633.499 -- 890.760 -- 

2003 3.639.212 44% 2.343.022 43% 1.296.197 46% 

2004 5.013.680 38% 3.200.996 37% 1.816.359 40% 

2005 6.637.710 32% 4.246.534 33% 2.397.054 32% 

Source: Eurostat 

Taken together, two North-European ports, Hamburg and Rotterdam, accounted in 2005 for 45 per 

cent of the total container traffic between China (incl. HK) and Europe (EU-15). The Top 10 ports 

summed up almost 90 per cent of all traffics showing up the concentration of traffics in a few ports. The 

traffic imbalance between incoming and outgoing containers is evident in almost all the ports but it is 

especially notable in absolute numbers for the Top three ports. On the other hand, trade imbalance is 

significantly low for Southampton or Zeebrugge. Antwerp is the only port with more outgoing than 

incoming containers from China. 

The port of Barcelona ranked number 8 with 244 thousand TEU container traffic with China, and is the 

second Mediterranean port, after the port of Valencia in the general ranking. The port of Valencia 

reached 382 thousand TEU container traffic in 2005 and is the first Mediterranean port for Chinese 

container traffic. 



Main Ports* in Europe for container traffic with China (including Hong Kong). 2005. 

Port Total Westbound Eastbound 

Hamburg 1.686.493 1.101.216 585.277 

Rotterdam 1.337.513 848.071 489.441 

Felixstowe 660.970 425.707 236.246 

Southampton 516.295 271.698 244.620 

Valencia 382.094 294.384 88.674 

Antwerp 379.979 151.155 228.824 

Bremerhaven 266.144 145.914 120.230 

Barcelona 244.541 159.095 87.041 

Le Havre 231.042 168.489 62.555 

Zeebrugge 140.758 73.787 66.971 

Piraeus 118.494 93.024 25.470 

Taranto 109.066 97.166 11.900 

Algeciras 91.094 71.849 19.760 

Genoa 88.938 55.753 33.185 

Marseille 84.008 67.825 16.183 

Thessaloniki 61.209 38.580 22.629 

Bilbao 38.735 29.887 9.566 

La Spezia 36.151 31.927 4.224 

Trieste 33.430 24.777 8.653 

Napoli 19.033 15.747 3.286 

Gioia Tauro 18.226 10.115 8.111 

Dunkerque 12.957 8.314 4.643 

Medway 12.686 11.276 1.445 

Las Palmas, Gran Canaria 11.533 8.704 2.987 

Total Europe (EU-15) 6.637.710 4.246.534 2.397.054 

Source: Eurostat. 

Note*: Ports with more than 10.000 TEU traffic with China 

Distribution of traffics in Europe 

North-European ports outstripped the rest of ports in Europe attracting 77 per cent of exports coming 

from China (incl. HK) whereas Mediterranean ports only attracted 23 per cent of the export container 

flows. The share of North-European ports is even higher and reached 85% in flows from Europe to 

China. Western Mediterranean ports attracted more containers than Eastern Mediterranean ports, 

achieving 17 per cent of exporting containers from China and 11% of flows eastbound. 

Distribution of Container Traffic between North European and Mediterranean Ports, 2005 (TEU) 

Port areas Total traffic share Westbound share Eastbound share 

North- European Ports 5.232.151 80% 3.194.351 77% 2.038.807 85% 

Western Mediterranean Ports 964.085 15% 706.695 17% 260.464 11% 

Eastern Mediterranean 322.199 5% 253.547 6% 68.652 3% 




Traffic evolution of the Top10 ports 

The port of Hamburg has gained since 2003 around 735.000 TEU while Rotterdam increased in 

637.000 TEU its total traffic with China. Valencia, which is the first Mediterranean port in the Top 10, 

achieved the highest growth rate in 2005 and grew by 56%. Together with Le Havre, they were the only 

ports in the Top 10 who achieved higher growth in 2005 than in 2004. The rest of ports, although 

showing increases of around 30% in 2005, all experienced lower growth rates than in 2004. The port of 

Barcelona has achieved since 2003 increases of near 60.000 TEU per year but has seen its growth 

decrease from 46% to 31%. 

Evolution Top 10 ports. Total Container traffic China (incl. HIK)-Europe (EU15) (TEU) 

Ports Total 2003 Total 2004 Total 2005 

growth 

03-04 

growth 

04-05 

Hamburg 950.905 1.272.734 1.686.493 34% 33% 

Rotterdam 700.465 1.024.005 1.337.513 46% 31% 

Felixstowe 377.232 520.970 660.970 38% 27% 

Southampton 275.968 451.277 516.295 64% 14% 

Valencia 167.937 244.213 382.094 45% 56% 

Antwerp 134.033 291.089 379.979 117% 31% 

Bremerhaven 136.677 201.590 266.144 47% 32% 

Barcelona 127.803 187.220 244.541 46% 31% 

Le Havre 126.089 165.796 231.042 31% 39% 

Zeebrugge* 53.846 26.702 140.758 -- -- 


Note*: Data from Zeebrugge in 2004 is not complete. 

The port of Valencia maintained a high growth in westbound traffics at around 45% but saw an amazing 

increase in the eastbound traffics for the second consecutive year, achieving a growth of 105% and 

seeing its traffic directed towards China double to more than 80.000 TEU. 

Barcelona also achieved a higher growth for eastbound traffics, reaching 60%, but experienced a far 

lower growth rate in westbound traffics in 2005 than in 2004, growing only by 17%. 

Evolution of the ports’ traffic. Westbound container traffic China (incl. HIK)-Europe (EU15) (TEU) 

Ports 

North European Ports 

2003 2004 2005 

growth 

03-04 

growth 

04-05 

Hamburg 594.175 828.495 1.101.216 39% 33% 

Rotterdam 480.330 632.954 848.071 32% 34% 

Felixstowe 245.610 337.953 425.707 38% 26% 

Southampton 159.475 237.264 271.698 49% 15% 

Le Havre 85.733 121.156 168.489 41% 39% 

Antwerp 37.821 108.671 151,155 187% 39% 

Bremerhaven 82.397 115,913 145,914 41% 26% 

Zeebrugge 26.558 12.555 73.787 -53% 488% 

Dunkerque 12 6.501 8.314 54075% 28% 



Western Med. Ports 

Eastern Med. Ports 

Valencia 142.442 202.625 294.384 42% 45% 

Barcelona 87.676 135.776 159.095 55% 17% 

Algeciras 36.057 26.114 71.849 -- -- 

Marseille 35.034 54.039 67.825 54% 26% 

Genoa 98.700 23.944 55.753 -76% 133% 

La Spezia 37.275 18.813 31.927 -50% 70% 

Napoli 4.399 16.636 15.747 278% -5% 

Gioia Tauro 20.222 7.541 10.115 -63% 34% 

Taranto (IT) 24.064 118.316 97.166 392% -18% 

Piraeus 84.188 88.290 93.024 5% 5% 

Thessaloniki 231 16.480 38.580 7034% 134% 

Trieste 2.802 17.994 24.777 542% 38% 


Note*: Data from Zeebrugge in 2004 is not complete. 

Evolution of the ports’ traffic. Eastbound container traffic China (incl. HIK)-Europe (EU15) (TEU) 

Ports 

North European 

2003 2004 2005 

growth 

03-04 

growth 

04-05 

Hamburg 356.730 444.239 585.277 25% 32% 

Rotterdam 220.135 391.050 489.441 78% 25% 

Southampton 116.493 214.014 244.620 84% 14% 

Felixstowe 131.622 183.018 236.246 39% 29% 

Antwerp 96,215 182,420 228.824 90% 25% 

Bremerhaven 54.280 85.677 120,230 58% 40% 

Zeebrugge 27.288 14.147 66.971 -48% 373% 

Le Havre 40.358 44.641 62.555 11% 40% 

Dunkerque 

Western Med. Ports 

0 2.377 4.643 -- 95% 

Valencia 25.495 43.218 88.674 70% 105% 

Barcelona 40.127 52.442 87.041 31% 66% 

Genova 61.377 24.862 33.185 -59% 33% 

Algeciras 26.417 8.358 19.760 -68% 136% 

Marseille 12.428 14.442 16.183 16% 12% 

Gioia Tauro 10.113 5.737 8.111 -43% 41% 

La Spezia 26.385 5.491 4.224 -79% -23% 

Napoli 

Eastern Med. Ports 

614 11,125 3,286 -- -70% 

Piraeus 21.351 22.793 25.470 7% 12% 

Thessaloniki 0 7.321 22.629 -- 209% 

Taranto (IT) 7.167 20.593 11.900 187% -42% 

Trieste 1.875 10.991 8.653 486% -21% 

Source: Eurostat. Note*: Data from Zeebrugge in 2004 is not complete. 



II.4.2. Container traffic from Shanghai Port 

The management of the Port of Shanghai is very conservative in terms of providing information. It has 

not been possible to collect the volumes of container traffic between the port of Shanghai and the main 

ports in Europe. The port of shanghai only provided the main volumes of the container traffics between 

Shanghai port and European countries. 

Comparing with the container traffic between Chinese and European ports provided by Eurostat, some 

remarks can be done: 

The main container traffic volumes between the port of Shanghai and Europe are traffics with North- 

European countries (Germany, Netherlands and United Kingdom) which coincide with the main 

European ports for Chinese related traffic (Hamburg, Rotterdam, Felixstowe and Southampton). 

Belgium doesn’t appear between the countries in Europe with major traffics with Shanghai port. 

Although the ports of Barcelona and Valencia have higher container traffics with China (incl. HK) than 

Italy, container traffics between the port of Shanghai and Spain are less important than with Italy. 

Major Container Traffic between port of Shanghai and European Countries, 2005 (1.000 TEU) 

Country Total Export Import 

Germany 620 363 257 

The Netherlands 436 238 198 

United kingdom 375 221 154 

Italy 266 165 101 

France 179 106 73 

Spain 160 84 76 

Russia 88 46 42 

Others 448 201 247 

Total Europe 2.572 1.424 1.148 

Source: Shanghai Port Authority 

700 

600 

500 

400 

300 

200 

100 

0 

363 

257 

Container traffic between Port of Shanghai and major countries 

in Europe, 2005 (1.000 TEU) 

238 

198 

221 

154 

Germany Holland United 

kingdom 

165 

101 

CEIBS Port of Barcelona Chair of Logistics 32 

106 

73 

84 

76 

46 

42 

201 

247 

Italy France Spain Russia Others 

Import Export


Number of Ship Liners from Shanghai to the World by destination, 2005 

Country 

Ship Liners/per month 

North Europe& Med. ports 108 

East and West Coast of USA 178 

South America 61 

South-East Asia 100 

Australia 39 

Red Sea& Persian Gulf 61 

Africa 17 

Japan 307 

Korea 52 

Black Sea 26 

Hong Kong 26 

Taiwan 86 

Others 17 

Source: Shanghai International Port Group 

II.4.3. Container traffic from Ningbo Port 

Until now, an interview with the port of Ningbo has been impossible to fix and no further data from 

container traffics between the port of Ningbo and European ports has been provided. 

Number of Ship Liners from Ningbo to Europe, 2005 

North Mediterranean 

Country 

Europe ports 

Total Europe 

The Black 

Sea 

Ship Liners 15 8 4 

Source: Ningbo Port Authority 



III. EXPORT FLOWS FROM CHINA TO EUROPE 

The Chinese exports to Europe (EU-25) measured in value accounted in 2005 for 19% of the Chinese 

exports worldwide. The Yangtze River Delta (Shanghai, Jiangsu, Zhejiang) is the origin of almost 50% 

of the Chinese exports to Europe in value. Jiangsu province provides 42% of the exports coming from 

the Yangtze River Area, followed by Zhejiang province and Shanghai. 

Value of goods exported from China in 2005 (million €) 

Origin of export World % EU-25 % 

China 596.107 112.102 

Yangtze River Delta 230.006 39% 54.336 48% 

Shanghai 68.062 30% 15.399 28% 

Jiangsu 98.288 43% 22.674 42% 

Zhejiang 63.656 28% 16.263 30% 

Source: China Development Center, data source: China Customs (aggregated monthly data) 

Note*: Yangtze River Delta includes Shanghai, Jiangsu, Zhejiang. 

Almost 60% in value of Chinese exports worldwide and to Europe correspond to three categories of 

products: Electronics, audio, TV sets and parts; Machinery and parts and Textile and Apparel 

products. Almost one fifth of the Electronics and Textile Chinese exports and one fourth of the 

Machinery and parts category are exported to Europe. 

Main category of goods exported from China worldwide in value in 2005 (million €) 

Categories of goods World EU-25 

Electronics, Audio and TV sets facilities and their parts 133.499,9 23.385,3 

Machinery and their parts 119.805,1 30.274,3 

Textile and Apparel Products 86.149,6 13.736,9 

Base Metal Material and Products 45.360,3 7.473,8 

Chemical Industrial and Other related products 25.395,3 4.853,4 

Optics, Medical Instrument; Watches and Clocks, Musical Instrument 20.344,0 2.638,2 

Plastics and products; Rubbers and Products 18.597,8 3.065,5 

Shoes, Hats, Umbrellas, Feather products, Man made flower 18.216,8 3.299,9 

Mineral 16.490,6 1.791,4 

Furniture, Lights, bed clothing 15.555,3 3.394,5 

Toys, Game and Sports products and their parts 15.303,2 3.761,8 

Leather, Fur and their products; Bags and Luggage; Catgut 11.863,4 2.400,1 

Automotive and their parts ( including motorcycle and bicycles) 11.581,6 1.796,7 

Mineral Products, China, Glass 9.768,9 1.753,7 

Food, Drink, Wine, Vinegar, Tobacco and their products 7.996,6 887,3 

Plants 6.590,8 734,6 

Wood and wooden products, Charcoal, Cork, Knot work 5.579,6 1.204,2 

Live Animal, Animal products 5.357,2 934,9 



Trains, Railway Vehicles, Railway machinery, Signal facilities 5.124,2 1.164,0 

Jewelry, Noble Metal and their products, Coins 4.425,0 723,4 

Waste paper, Paper and Paper products, Wood pulp 4.093,1 441,9 

Ships and other floating vehicles 3.775,1 1.519,0 

Other Miscellaneous 3.089,7 683,5 

Special Trade and Other Products 1.286,1 18,2 

Aircrafts and their parts 595,0 110,0 

Animal and Vegetable Oil , fax, wax; Edible Oil 227,3 42,8 

Artwork, Collection and Antique 35,8 12,5 


Total 596.107,3 112.102,2 

The Yangtze River Delta is the major source of exports to Europe for the three main categories. 

Jiangsu is the main source of both Machinery and Electronics categories while Zhejiang provides 50% 

of the textile goods exported to Europe. 

Origin of the main category of goods exported from YRD to Europe in value in 2005 (million €) 

Categories of export China 

CEIBS Port of Barcelona Chair of Logistics 35 

YRD 

YRD Shanghai Jiangsu Zhejiang 

Machinery and their parts 31.616 19.394 33% 56% 11% 

Electronics, Audio and TV sets facilities and their parts 25.359 9.487 37% 43% 21% 

Textile and Apparel Products 18.832 8.521 21% 28% 51% 


Germany, The Netherlands, United Kingdom, France, Italy and Spain are the major commercial 

partners in Europe of the Yangtze River Delta provinces exports. 

Main categories of exported goods from Shanghai to Europe in value and main destinations in Europe (million €) 

Categories of goods EU-25 Germany Netherlands U.K France Italy Spain 

Machinery and their parts 6.241,5 1.085,9 1.202,0 705,5 829,0 227,8 228,9 

Electronics, Audio and TV sets facilities and parts 3.424,5 977,8 936,5 264,7 194,8 91,2 74,0 

Textile and Apparel Products 1.589,1 316,4 91,8 239,6 240,1 211,5 138,3 

Base Metal Material and Products 759,9 134,2 63,7 111,7 46,0 146,6 57,9 

Chemical Industrial and Other related products 438,7 83,2 80,5 60,8 55,5 48,7 26,1 

Ships and other floating vehicles 387,2 53,0 0,2 3,1 0,8 0,7 0,2 

Optics, Medical Instrument; Watches and Clocks, 

Musical Instrument 

356,0 127,5 42,3 34,9 16,9 15,9 9,5 

Toys, Game and Sports products and their parts 310,1 50,2 43,5 54,4 29,7 21,4 28,8 

Total 15.399,3 3.266,1 2.618,8 1.803,8 1.610,6 933,4 701,8 

Source: China Development Center, data source: China Customs (aggregated monthly data)


Main categories of exported goods from Jiangsu to Europe in value and main destinations in Europe (million €) 

Categories EU-25 Germany Netherlands U.K France Italy Belgium 

Machinery and their parts 10.932,1 3,372.2 3,499.3 679.7 497.5 230.3 275,8 

Electronics, Audio and TV sets facilities and parts 4.050,2 921.3 973.5 490.1 332.4 139.9 177,4 

Textile and Apparel Products 2.416,0 520.9 179.9 423.5 269.6 394.3 126,5 

Base Metal Material and Products 944,4 151.1 153.7 139.3 61.1 109.2 57,1 

Chemical Industrial and Other related products 876,4 185.1 170.5 114.2 61.1 99.0 107,5 

Optics, Medical Instrument; Watches and Clocks, 

Musical Instrument 

718,0 183.8 70.9 164.0 45.8 19.8 15,2 

Miscellaneous Products: Including Toys 590,4 98.0 53.5 145.8 41.7 63.9 44,1 

Plastics and products; Rubbers and Products 439,2 94.9 50.1 62.6 29.4 86.7 28,8 

Ships and other floating vehicles 364,8 156.7 22.2 7.3 63.3 0.0 0,0 


Total 22.673,9 5,970.5 5,349.7 2,476.7 1,532.5 1,276.1 924,3 

Main categories of exported goods from Zhejiang to Europe in value and main destinations in Europe (million €) 

Categories of goods EU-25 Germany U.K Italy France Spain Netherlands 

Textile and Apparel Products 4.316,0 901.9 562.0 777.9 447.4 409.1 315.9 

Machinery and their parts 2.087,7 560.3 236.5 246.9 144.2 177.9 204.8 

Electronics, Audio and TV sets facilities and parts 1.948,6 453.1 255.7 182.2 376.5 117.2 149.7 

Base Metal Material and Products 1.437,9 251.3 233.2 154.6 100.7 157.5 177.8 

Furniture, Lights, bed clothing 1.113,8 240.2 160.4 99.2 91.5 84.8 145.7 

Shoes, Hats, Umbrellas, Feather products, 

Manmade flower 

892,4 161.2 84.4 104.1 73.9 121.2 54.7 

Chemical Industrial and Other related products 842,9 208.3 69.2 112.2 51.0 122.4 134.6 

Plastics and products; Rubbers and Products 672,2 107.6 91.0 73.6 75.3 72.0 83.3 

Cars, Aircraft, Ships and other transport facilities 637,8 169.2 75.0 51.1 97.8 63.1 38.5 

Leather, Fur and their products; Bags and 

Luggage; Catgut 

617,2 121.9 94.6 88.2 52.1 84.7 50.1 

Toys, Game and Sports products and their parts 378,6 73.7 72.3 38.7 33.4 27.1 44.8 

Other Miscellaneous 342,0 49.5 52.4 24.0 21.0 31.9 75.7 

Total 16.262,8 3,500.4 2,095.6 2,038.3 1,637.6 1,627.4 1,581.5 

Source: China Development Research Center of the State Council, data source: China Customs (aggregated monthly data) 

Other important categories of goods exported form the Yangtze River Delta to Europe are Base Metal 

materials and products, Chemical and other related products. 



IV. MAJOR INDUSTRY SNAPSHOTS 

IV.I. Automotive and components/parts Industry 

China Central government has pointed the Automotive industry as one of the key industries of China 

and is encouraging local OEM’s (original manufacturers) to initiate exports. 

Automotive industry overview 

China is the fastest growing vehicle producer worldwide. With an annual production of near 6 Million 

vehicles manufactured, China surpassed Korea and France and was near to overtake Germany in 

2005 and become the third national vehicle producer, after USA and Japan. 

China, India and Thailand, major manufacturing centers in Asia, are increasingly challenging the 

dominance of Korea and Japan. Since 2000, China’s output was mainly constituted by heavy vehicles 

but since 2000, the output growth is due to the increase in passenger car production, which in 2005 

account for half of the total production. 

China Passenger car ownership is still very low, 7 per 1.000 in 2004. (EIU). Economic growth, low car 

ownership rates and rising incomes are likely to steadily increase car sales. However domestic 

demand is still low and may not be able to absorb planned production capacity in the near future. 

Unlike other Asian major vehicle producers like Thailand or India, exports haven’t been important for 

China. China became a net exporter for the first time in 2005, exporting less than 2-3% of its total 

production, and the main destinations of the vehicles were Russia, Ukraine and the Middle East. 

China automotive industry has developed through foreign investment from major international 

manufacturers (Volkswagen, General motors, etc.) which until now, are not willing to begin exports to 

European markets. However Chinese domestic automakers have also become important players in 

the domestic market and are now increasing its overseas investment activities, mainly in the 

Asia-pacific area although some steps are done towards western markets. Moreover, the Automotive 

sector in China suffers from over-investment and manufacturers are beginning to look to exports as a 

way to manage overcapacity in the Chinese market. 

China’s vehicle production capacity more than doubled from 3.96 million units in 1998 to 8.32 million in 

2004. According to Industry reports, there are 184 vehicle production plants existing in China in 2005, 

with the capacity to produce 10.81 million vehicles. The capacity is expected to rise to 14.78 million 

units in 2007 and to 17.47 million units in 2010. 

Chinese companies that are planning to export cars to European market are those less dependent on 

international manufacturers. Exports, however, are still slowed down as these vehicles do not meet 

safety and emission standards in Western countries. Moreover, to succeed in the global market, 

Chinese manufacturers have to improve business performance, build overseas sales networks, 

acquire marketing skills for foreign markets and build up trust by providing repair service and quality 

guarantee. 



Total Production Capacity by type of vehicle (million units) 

Type of car 2005 2010 

Passenger Car 6.93 12.51 

Mini Vehicle 1.13 1.40 

Commercial Vehicle 2.99 3.55 

Total 10.81 17.47 

Source: www.Fourin.com. China Automobile Weekly statistics. October 2005 

Passenger Car Total Production Capacity by origin of automaker (million 

units) 

Automaker 2005 2010 

Chinese production capacity 2.87 4.93 

Japanese production capacity 1.62 3.24 

European production capacity 1.23 1.96 

Korean production capacity 0.50 1.17 

US production capacity 0.71 1.21 

Total 6.93 12.51 

Source: www.Fourin.com. China Automobile Weekly statistics. October 2005 

Chinese government is considering regulating overcapacity of the Industry by forbidding companies 

with plants operating below 80% to establish new plants. This new regulation is expected by the end of 

2006. 

Domestic-made passenger car sales by type of vehicle (2005) 

Type of Vehicle 2005 First half 2006 

Medium/ large sedan 703.738 505.312 

Small car 1.159.084 761.811 

Basic Car 898.021 517.371 

MPV 187.441 116.809 

SUV 183.656 116.203 

Utility vehicle 831.450 498.058 

Total 3.963.400 2.516.935 

Source: www.Fourin.com. China Automobile Weekly statistics. August 2006 



Domestic-made passenger car sales by manufacturer (first half of 2006) 

Manufacturers First half 2006 Share 

Volkswagen 281.813 13.9 % 

General Motors 223.110 11.1 % 

Hyundai/Kia 199.380 9.9 % 

Chery Auto 144.271 7.1 % 

Honda 143.509 7.1 % 

Toyota 112.553 5.6 % 

FAW Xiali 106.947 5.2 % 

Geely Auto 105.823 5.2 % 

Nissan 102.318 5.1 % 

PSA 100.173 5.0 % 

Suzuki 85.849 4.3 % 

Ford 58.398 2.9 % 

Mazda 56.570 2.8 % 

Hafei Motor 35.720 1.8 % 

Mitsubishi Motors 35.707 1.8 % 

Audi 33.547 1.7 % 

Brillance Jinbel 26.385 1.3 % 

Others 168.049 8.3 % 

Total 2.018.679 100.0% 


Domestic-made passenger car sales by origin of the maker 

(first half of 2006) 

US, 13.9% 

European, 22.2% 

Korean, 9.9% 

Japanese, 26.6% 

Chinese, 27.4% 




Overseas markets 

Chinese manufacturers are using foreign partners to build overseas sales networks. Some examples 

are: 

� Chery Automobile has partnered with Visionary Vehicles in the US, aiming to sell 1 million units of 

passengers’ cars in 2010, starting in 2007. 

� Jiangling Motors set up an agreement with the import company Sino Motors, to start selling in 

Spain around 1.500 units. The Chinese automaker Great Wall is planning to develop a sales 

network around Europe. 

� Jiangling Motors also signed an agreement with Peter Bijvelds (Netherlands, Automobile Sales) to 

sell two thousand units the first year. 

� Zhongxing Automobile signed a sales cooperation agreement with ZXNA, which is a subsidiary of 

CHAMCO (China America Cooperative, Inc.) to sell 40 thousand units by 2007. (Products to be 

sold are the Landmark (SUV) and Grand Tiger (pickup)) 

Foreign plants are planed for the near future or being built overseas by Chinese manufacturers to 

conduct assembly of Chinese automobiles. Some examples are: 

� Chery Automobile has established assembly plants and began a small-scale assembly of the QQ 

model and other 3-4 passengers’ cars. Some of the partners are SKT in Iran ( Parts Supplier), 

Daewoo Motors Egypt in Egypt ( Automobile Assembly), Avtotor in Russia. 

� Nanjing Automobile and Oklahoma Sovereign Development LLC (US, Investment Group) have set 

up a JV in the US for the construction of a plant early in 2007. Operations are scheduled to start at 

the end of 2008 for the production of passengers cars. 

In the vehicles segment, Chinese companies with major plans to export are the producers without 

major joint-venture tie-ups with large international producers. Although vehicle manufacturers in China 

still focus on the domestic market, it is likely that they will start to export as quality and efficiency 

improves. The industry reports agree that a competitive Chinese Automotive Industry will be ready in 5 

to 10 years. And Chinese vehicle exports will in several years arrive to European and US market. 

Automotive parts Industry 

To remain competitive, carmakers need to reduce their components costs. The components industry 

has traditionally been a local one, but the situation has changed considerably over the last decade and 

will see even more changes in the next years. There has been increasing investments from European 

and North American parts manufacturers in Asia, and China especially. 

Chinese automotive parts exports have been growing fast and are already important with the U.S.. For 

the US market, many of these exports are aimed at the aftermarket as main products are wheels, brake 

parts and electronics. 

The component industry in Asia will develop considerably in the next years. As Asian local components 

manufacturers improve and progressively meet multinational vehicle manufacturers’ requirements they 

will not only serve the sector within Asia but will become a source of components for the rest of the 

world. 



The component industry is still very fragmented with the top 10 component manufacturers contributing 

only around 20% of the total revenue. 1.700 components manufacturers are registered, of which 450 

are foreign invested companies. Estimations say that there are 3.000 more manufacturers of the 

aftermarket sector. 

China’s Automotive-parts Industry, top 10 companies by revenue, million US$ (2002) 

Company names Revenue Ownership 

Wangxiang 1.428 Collective 

Wuxi Weifu 510 State-owned 

Dongfeng Honda Engine 501 Foreign investors 

Shanghai Huizhong automotive 

manufacturing 

471 Foreign investors 

First Automotive Works (FAW) 391 Joint Venture 

Shenyang 

Automobile parts 

Xianyuandong 387 Foreign investors 

Shanghai Yangfeng Johnson 

Controls seating 


United Automotive Industry 255 Joint Venture 

United Automobile electronic 

systems 


Shanghai Automotive Industry 210 Joint Venture 

Source: McKinsey Quarterly, Supplying auto-parts to the world. 2004 

Sources: 

– China’s Impact on the U.S. Automotive Industry (Congressional Research Service. The Library of the 

Congress- April 2006) 

– Automotive and components market in Asia, 2005. KPMG. 

– China automotive and components market. Feb. 2005. KPMG. 

– Fourin. China Auto Weekly (www.fourin.com) 

– China Automotive industry. Dec. 2005. the Economist Intelligence Unit. 

– The Asia-Pacific Automotive sectors. Mergent. December 2005 



IV.2. Textile Industry 

China Textile Industry is currently one of the main industries in China's economy and has become a 

major export sector, accounting for almost 10% of the country’s total trade of goods in 2004. Exports 

and imports of Textile and Apparel Industry accounted for 16% and 3% respectively of the country’s 

total export and import of goods. 

Textile industry overview 

When in the 1980’s China started its economic reform process all textile enterprises were owned by the 

state. The speed of reforms and restructuring led to significant improvements in productivity and 

profitability. Nowadays, more than twenty years later, the current environment will allow Chinese 

companies to compete in other fields instead of taking price as the only advantage. 

However, following trade liberalization, China Textile industry faces severe challenges from opening 

market and fierce competition. After the entry into WTO, China will compete with other big textile 

exporters to obtain larger market share and the liberalization in trading will lead to a stronger 

competition among domestic textile enterprises. 

Moreover, the final of the quota system arrived in 2005 although real free trade of textile has not yet 

materialized and China has been involved in many conflicts in International textile trade especially with 

the United States and the European Union. On the other hand, the removal of the quota system may 

attract more foreign capital to be invested in China’s Textile industry, which would foster the 

technological upgrading of the industry. 

The Textile Industry in China is also threatened by the appreciation of the Renminbi as the industry’s 

profits are tight. Moreover, a currency appreciation may raise the labor costs and fixed costs which 

neighboring competitors might take advantage of. 

Textile and Apparel Production in China 

In 2004 Zhejiang province overtook Guangdong as the major exporting province in China for Textile 

and Apparel. Guangdong, Jiangsu, Shanghai and Shandong are the other four leading Chinese export 

provinces. The five leading provinces aggregated export value accounted for more than ¾ of the 

country’s total. 

Textile Industry Exports and Imports per provinces (million €). 2005 

Provinces Export Growth Import Growth 

Zhejiang 19.548,1 24,3% 918,8 6,27% 

Hangzhou 5.072,1 24,9% 227,6 18,7% 

Ningbo 3.993,7 21,3% 194,2 -1,31% 

Jiangsu 15.055,7 26,3% 1.633,3 5,07% 

Nanjing 2.767,3 16,4% 151,8 -3,47% 

Shanghai 10.94,9 10,5% 1.820,4 0,94% 

Source: China Chamber of Commerce for Import & Export of Textiles 



Main Export markets 

Hong Kong, Japan, the European Union, the United States and Russia were the five biggest export 

markets for China’s Textile and Apparel sector in 2004, accounting nearly for 2/3 of the total. The 

Chinese export to all major markets increased, achieving remarkable growth. Several developing 

countries especially South Africa, India, Kazakhstan or Romania, experienced growths over 50% on 

China’s exports, driving forward the industry. 

Major import markets 

According to the National Bureau of Statistics of China, more than 50% of exported clothes are made 

using imported materials while China’s production of clothing materials is far exceeding demand. 

Japan, Taiwan, South Korea and Kong Kong are still China’s major import resources. Except imports 

from Hong Kong, China’s Textile imports from the other economies all increased steadily. 

Major Export and Import markets for the Chinese Textile Industry. (million €). 2005 

Markets Export Growth Import Growth 

Asia 43.798,2 2,9% 12.475,3 0,3% 

Europe 21.943,2 45,2% 840,8 20,0% 

North America 16.646,9 68,6% 326,6 18,0% 

Africa 3.902,6 20,2% 11,2 64,0% 

South-America 3.683,5 4,6% 21,3 22.8% 

Oceania 2.051,8 15,2% 32,7 -18.7% 

Total 92.026,7 20,9% 13.708,9 1,7% 


Main Export products 

Finished clothing (excluding accessories) accounted in 2004 for almost 60% of the total Chinese 

exports of Textile and Clothing industry, remaining the main category of goods exported in the textile 

sector. Moreover, finished clothes exports experienced growth of around 18% over the last year. 

Exports of fabrics and textile made products increased 24% and 30% respectively, achieving the 

biggest growth among all Textile exports. Among them, exports of silk, wool and synthetic fiber fabrics 

experienced the fastest increases. 

Main Import products 

Fabrics and yarns were the two main product categories imported. Among them, import of silk and 

wool, cotton fabrics and silk yarns experienced the highest growths, over 10%. 



Main Chinese export companies 

In the post-quota era, Chinese Textile Companies start to share equal opportunity to develop in the 

domestic market but also in the international one. The influx of foreign companies 

The 20 major Chinese Textile companies in Export value. (million €). 2005 

Company Name Export Value 

Orient International (Holding) Co., Ltd. 1.014 

Guangdong Silk Imp. & Exp. Corp. (Group) 752 

Jiangsu Guotai International Group Co., Ltd. 651 

Weiqiao Textile Pioneering Group Co., Ltd. 598 

China Worldbest Group Co., Ltd. 567 

Shanghai Silk Group Co., Ltd. 446 

Jiangsu Skyrun International Group Co., Ltd. 434 

Jiangsu High Hope International Group Co., Ltd. 409 

Suifenhe Longjiang Shanglian I/E Co., Ltd. 395 

Jiangsu Sainty Corp. 389 

Dongguan Foreign Processing & Assembling Service Co. 386 

Glip & Gdtex (Holdings) Corp. 342 

Nanjing Textiles Imp. & Exp. Co., Ltd. 341 

Dongguan Texwinca Textile & Garment Co., Ltd. 320 

Shanghai Shenda Group Co., Ltd. 310 

Dongguan Fu’an Textile Dying & Printing Co., Ltd. 294 

Zhejiang Cathaya International Co., Ltd. 283 

Jiangsu Soho International Group Corp. 278 

Zhejiang Orient Holdings Co., Ltd. 276 

Shenzhen Bao’an Foreign Economic Development Co., Ltd. 245 


Sources: 

– Annual Report on China’s textile and Apparel trade, 2004. China Chamber of Commerce for Import & 

Export of Textiles. 

– Challenges Rising for China’s Textile Exports in Post-Quota Era. Xu Song. China’s Foreign Trade 

Magazine. 2005 



IV.3. High-Tech - Electronics Industry 

High-Tech Industry overview 

The Chinese high-tech Industry is growing at an impressive pace. Depending on the product category, 

30 to 75 percent of future growth in the global high-tech industry will come from emerging markets, with 

China expected to generate a significant portion. 

Currently, China’s production and export value of Televisions, Digital Video Disc, mobile phones, 

Display and Switching ranks first in the world. The main segments for both export and import in value in 

the high-tech industry are computing products, communication technology products, and electronics 

products. 

The high-tech exports are mainly originated in coastal provinces. Guangdong still has the largest value 

for export of electronic products followed by Jiangsu and Shanghai, in the Yangtze River Delta, as the 

two other important sources of electronic exports. 

In Shanghai, computing and communication products, electronics products and optic technology, 

accounted in 2005 for the 96.27 percent of all the hi-tech products for export. The United States, Hong 

Kong and the ASEAN countries are the Top three export markets. Still export and import are dominated 

by foreign invested companies. The 95.7 percent of import and export volumes of high-tech products 

are related to foreign investment companies. The top 10 companies by import and export volume are 

all foreign invested companies. 

Trade in value of High-Tech products by province. 2005. (million €) 

Province Export Import 

Guangdong 68.086 57.596 

Jiangsu 42.424 32.743 

Shanghai 28.826 28.720 

Tianjin 10.044 8.834 

Fujian 6.238 3.977 

Beijing 6.179 10.634 

Zhejiang 4.876 3.795 

Liaoning 2.117 2.553 

Shandong 3.382 3.459 

Source: Yearbook of China information industry 2006 



Industry main players 

According to industry reports, since 2003, the revenues of the 100 largest high-tech companies in 

China have grown by 26% annually, while among them, nearly 20 midsize and large companies have 

grown at 50% or more a year. 

Comparing Chinese domestic companies with multinational, the first grew three times faster, on 

average, than their foreign competitors, according to McKinsey’s research. Chinese companies are not 

only gaining domestic market in the mainland but steadily increasing its strength overseas. Lenovo, 

TCL, Haier and Huawei are examples of Chinese High-tech companies with increasing success in 

international markets. 

Leading Chinese companies in the High-Tech Industry by revenue. 2006. (million €) 

Company name Major products Export value 

Lenovo ( Holding ) Co., Ltd Personal Computer, Mobile phone 

Electronics, Communication, 

11.520 

Haier Group Inc. 

Computer and its components, 

Software, Home Appliance 

10.739 

BOE Technology Group Co., Ltd LCD and other Display 8.326 

TCL Group Co., Ltd TV, Mobile Phone, PC, Air conditioner 9.585 

Huawei Technology Co., Ltd Communication, Data Switching 

Air condition, Refrigerator, Wash 

17.334 

Midea Group Co., Ltd 

machine, Home appliance, 

Compressor, Electronics Machinery 

14.557 

Hisense Group Co., Ltd 

Air Conditioner, Color Television, 

Refrigerator, Mobile Phone 

3.702 

Shanghai Media Group Co., Ltd 

Color Television, LCD and Display, 

Mobile phone 

15.563 

Panda Electronics Group Co., Ltd 

Wireless Station, Data Switching, 

Colored TV, Mobile Phone 

14.745 

Founder Group Co., Ltd PC, Server, Electronic publisher 869 

ZTC Communication Co., Ltd 

Communication , Data switching, 

mobile phone 

9.264 

Changcheng Science and Tech.Co., Ltd Driver, PC and its part, Display 12.374 

Shanghai Feilo Co., Ltd 

Automotive Electronics, Electronics 

Material, Electronics Machine 

2.968 

BYD co., Ltd LCD, Battery, Automotive 4.633 

Source: Top 100 Electronic companies. China Electronics and Information Industry Association. www.ittop100.gov.cn. 

Leading foreign companies in the High-Tech Industry 

Company name Sector 

Motorola Communication and other electronics equipment 

Nokia Electronics 

Siemens Electronics, Home Appliance, Mobile 

Philips Home Appliance, Electronics 

Cannon Digital Camera 

Fuji Digital Camera 

Ericson Mobile Phone 

Source: China Electronics and Information Industry Association 



Electronics and IT Export value by companies’ origin. 2005 

Company type 

Export value 

(million €) 

Growth 

Foreign-owned enterprises 142.248 35.7% 

Sino-Joint Venture 41.256 20.1% 

State-owned enterprises 15.960 2.6% 

Chinese Private enterprises 7.368 42.9% 

Source: Yearbook of China information industry 2006. 

Total 206.832 29.2% 

Sources 

- Shanghai Economic Year Book 2005 

- Yearbook of China Information Industry. 2006 

- China Ministry of Information Industry of P.R. China. www.mii.gov.cn/ 

- How foreign companies can compete in China’s high-tech market. January 2006. China’s high-tech 

market: a race to the middle. September 2006. McKinsey. 



IV.4. Machinery Industry 

The machinery Industry is a huge sector in China as it includes 12 major sub-categories of machinery 

(automotive industry, electrical equipment manufacturing, heavy-duty and mining equipment 

manufacturing, petrochemical and general machinery, agricultural machinery, construction machinery, 

internal combustion engine manufacturing, machine tool and tools industry, instruments and meters, 

general machinery basic components, environmental protection machinery, food-processing and 

packaging machinery). 

Little information and seldom updated data can be found about the sector. 

According to the National Bureau of Statistics, the total number of companies in the machinery sector, 

both stated-owned and private, with annual revenue above 5 million RMB (500.000 euros) was 40.700 

in 2000. In the machinery industry, the number of State-owned corporations accounts for 69.8 percent 

of the total. The number of Sino-foreign joint ventures, cooperative businesses and exclusively 

foreign-owned enterprises in China accounts for 15.7 percent of the total. 

The distribution of the machinery industry in China is as for the rest of industries imbalanced. Most of 

the main companies lie in the eastern coastal areas. Jiangsu, Guangdong, Shanghai, Shandong rank 

the top five among all the provinces in China both in terms of the number of companies and the 

industrial added value and profits. 

Leading Chinese companies in the Machinery Industry. 2006. 

Company name 

SANY Heavy Industry Co., Ltd 

Taiyuan Heavy Industry Co., Ltd 

Hudong Heavy Machinery Co., Ltd Guangzhou Shipyard International Co., Ltd 

Zoomlion Heavy Industry & Science Co., Ltd 

China International Marine Containers (Group) Co., Ltd 

Anhui Heli Co., Ltd 

Guangxi Liugong Machinery Co., Ltd 

China National Heavy Duty Truck Group Corporation 

SHANTUI Construction Machinery Co., Ltd 

Shenyang Machine Tool (Group) Co., Ltd 

Xi’an Aircraft International Corporation 

Zhuzhou Times New Material Technology Co., Ltd 

Dalian Refrigeration Co., Ltd 

Nari Technology Development Company Limited 

Pinggao Electric 

XJ Group Corporation 

Siyuan Electric Co., Ltd 

Guodian Nanjing Automation Co., Ltd 

Jinxi Axle Co., Ltd 

Source: China Machinery Industry Federation. 



V. Organization of the Logistic chain 

This chapter aims to illustrate the organization of the logistic chain that supports the trade between 

China and Europe through: 

� Portraying the decision-making stages along the logistic chain and identify the major 

players involved. 

� Gathering the criteria involved in the decision-making process in the flow of goods 

between China and Europe. 

� Identifying the requirements of the shippers in China and the customers in Europe and 

how they impact on the organization of the logistic chain. 

The findings presented in this chapter are based in 15 personal in-depth interviews with key players 

and supplemented by a survey plus a phone interview performed to 14 shippers (see annex II). The 

point of view of the logistic service providers and transport operators along the logistic chain has also 

been analyzed to identify their role and power in the decision-making stages along the logistic chain 

between China and Europe as well as how their own evolving scenarios are impacting the structure 

and operating of the logistic chain. 

V. 1. The logistic chain overview 

Plant 

Procurement 

center 

Sales agreement 

Customers 

consolidation 

center 

Freight Forwarder 

consolidation 

center 

Chinese Port 

Chinese Airport 

Container Yard 

European Port 

Freight 

Forwarder’s Hubs 

in Europe 

Customers 

warehouse 

European Airport Customers shops 

The exports from China to Europe are mainly based on FOB terms. From the interviews performed, it is 

considered that around 80% of the export business to Europe is based on FOB terms. CIF mode still 

represents a considerable percentage within the exports to Europe. Freight forwarders interviewed 

agree that CIF is the transaction mode chosen by European customers, usually small and medium 

companies, which lack of knowledge about international transportation and are especially reluctant to 

do any arrangement in China therefore letting the shipper manage the international transport until the 

European port. (Ex Works also have a small percentage) 



Mode of transportation 

In China, the land transportation of goods between factories and logistic facilities and to the port of 

shipment is mostly done by truck as rail network is almost non-existent and not reliable when existing. 

The mode of transportation for international transportation is usually decided depending on the product 

characteristics and requirements of the market. When the products are high-valued, rapidly outdated, 

or the lead time is critical, goods are shipped by air. In the case of companies sourcing in China, in 

order to accelerate the process, product samples may also be shipped by air. For the rest of products, 

like commodities or products with big volume, goods are shipped by sea. 

Within Europe, intermodal transportation is more available, especially in the Northern part. Road, rail 

and barge modes share the transportation from the port to the hinterland, although road transportation 

still takes up the highest percentage. 

Transport operators 

In the international trade between China and Europe, the main part of cargo, around 70% as an 

approximation, is still moved through international forwarders as the cargo owners move mainly small 

and medium volumes of cargo. As a comparison, note that for the China-USA trade, the cargo owners 

are bigger and 50 to 60% is managed by shippers directly through shipping lines. 

To support the flow of goods between China and Europe, companies mainly rely on international 

forwarders with a wide European network and an important footprint in China. In general, international 

freight forwarders stand out in certain vertical industries and use this know-how to attract customers in 

the same segment as well as experience operating in China. 

However, in the China-Europe trade, shipping lines are competing more and more for direct customers 

as they become intermodal logistics organization and expand their scope of services to terminal 

operations and hinterland transportation. 

Plant or 

procurement office 

FOB 

CIF 

door-todoor 

Shipper/ 

Customer’s 

facilities 

Chinese transportation provider 

Port in China 

Chinese / International Freight Forwarder 

Buyer’s International freight forwarder 

Port in Europe 

International freight forwarder / Global intermodal transportation provider 

Shipper/ Customer’s 

facilities 

European / Int’l Freight 

forwarder or 3PL 



Sea transportation-Shipping lines 

Shippers find the sea-transportation one of the most challenging parts of the logistic chain between 

China and Europe. The high variability of the sea-freight rates, shortage of space in vessels in the peak 

seasons, the unreliability of the vessels schedules are main concerns for the companies. 

Big cargo owners usually negotiate directly long-term agreements with shipping lines while shippers 

with small and medium cargo volumes rely on forwarders for the relationship with shipping lines. 

International forwarders usually have long-term relationships with shipping companies in order to 

ensure cargo space and favorable freight rates for their customers. These agreements between 

forwarders and shipping lines are generally negotiated at a global level, involving main headquarters. 

Shipping companies, in the China-Europe trade, need to deal with the up and downs of the demand 

market and of their profits. The selection of their customers has to ensure volume and profitable freight 

rates. Shipping companies need to find a balance between direct customers, which are big cargo 

owners with stable demand but that involve lower freight rates, and small and medium size customers 

managed through forwarders. 

The destination of the shipper’s cargo and the type of cargo are key aspects in the negotiation with 

shipping companies. Container imbalance in flows between Europe and China is one of the main 

challenges for shipping companies which try to minimize destinations with no return-cargo, as moving 

empty containers can ruin profitability. Owners of hazardous and other special cargo can also meet 

more difficulties to ship their cargo as shipping companies, especially in peak seasons, tend to turn 

down this cargo in the first place. 

Ports and shipping routes 

The trade from China to Europe is mainly directed to the North European ports. The main ports of 

destination are Rotterdam, Hamburg, Antwerp, Bremen, Le Havre and Zeebrugge, (Felixstowe and 

Southampton) from where the cargo is distributed within Europe. Only around 20% of the cargo is 

shipped to Mediterranean ports. Northern and Mediterranean range of ports are considered to 

embrace different markets although the Northern range is also seen as a gateway to the whole Europe. 



In the following table are gathered the comments of the interviewees about the ports in Europe. 

View of the European ports by the players in the logistic chain 

North-European Ports Mediterranean Ports 

Ports hinterland � Big Economies (Germany, UK, etc.), 

strong industries. 

� Big markets. For North-European 

markets and East-European markets 

same vessels and same routes are 

used. 

� Shared Hinterlands between ports. 

� Easier to find return cargo. 

Logistic and 

transportation 

network in the 

Ports’ hinterland 

Port 

Performances 

and Services 

� Traditionally developed 

� Extended scope (South and 

East-European markets) thanks to: 

– Multimodal connections with 

hinterland (road, rail, barge). 

– Inland terminals 

� Integrated hinterland developments 

(ex: Ports of Rotterdam, Antwerp, 

Zeebrugge connected to Duisport) 

� Congestion in the hinterland. 

� Smaller economies generating less 

trade 

� Fragmented markets 

� Regional hinterlands 

� Difficulties to find return cargo. 

� Recently started to be developed 

� Short scope (reaching only regional 

markets) because 

– Limited multimodal connections (rail 

mode is very limited) 

– Connections not reliable 

(congestion, strikes, incidents) 

� Not integrated developments (ex: rail 

Spain-France). 

� Congestion in the hinterland. 

� Congestion in terminals because of lack of capacity in all European ports. 

� Limited berth windows. (Berth windows are key for shipping lines to choose the first 

port of call) 

� Limited productivity in terminals compared to Chinese Ports. 1 

� Different holidays periods per country, too many holidays in the European Union. 

� Although the same regulation controls customs in the E.U., the flexibility with which 

the law is enforced seems to vary considerably from port to port. Shippers and 

logistic providers, especially for hazardous cargo, prefer to call ports where 

customs are known to be quicker and more flexible to avoid delays in the delivery of 

the cargo (even if the port is further from the destination of the cargo). The 

Netherlands for example, is quoted by several interviewees, to have the most 

flexible customs procedures. 

� Not enough frequency of calls 

� Transit times too long because vessels 

call too many ports. (first port of call 

preferred by customers) 

� Limited liner services schedules 

� Limited feeder services 

The port of destination in Europe is mainly selected by the European buyer (sometimes with the 

Forwarder’s advice). The most important decision criterion is the port’s proximity to the buyer’s location 

in order to minimize the cost of land transportation within Europe. Sea freight rates for transportation 

from China to Western European ports are similar. 

1 

: For example, comparing the use of space in container terminals, the average land utilization is more efficient in China than in 

Europe or USA. (China: 18.000 TEU/pa; Europe: 6.000 TEU/pa; USA: 4.500 TEU/pa). Source: Global institute of Logistics. 



Companies exporting to Europe put big emphasis in the importance of the transit times between the 

port in China and the port in Europe, and if the carrier has direct or non-direct call to the destination 

port. 

Shipping routes (schedules, ports of call and frequency) are established by shipping lines according to 

the flows of cargo. Several key elements determine the order to call ports: cargo volumes, feeder 

frequency and transshipment cost, berthing windows, cost of handling containers, logistics and 

transportation network of the port’s hinterland, terminal’s level of service among others. 

Logistics facilities 

Companies’ main requirement in China is a consolidation center. The consolidation centers are usually 

managed by International forwarders. The location and type of facility depends mainly on the price 

requirements and on the level of sophistication of the product and services required. Facilities in 

Logistic parks, trade zones and bonded areas are more expensive and sometimes still in an initial 

phase of operating so policies are not clear enough and operations can suffer from it. 

The distribution within Europe is usually decided and organized in Europe by the company or through a 

3PL, with the support of distribution centers or through shipments of FCL directly to customers’ 

facilities. 

The Logistic department in China does not participate in the decision-making and has a superficial 

knowledge of the European part of the logistic chain. 

Companies usually make the difference on the kind of infrastructure they need depending on: 

� When the goods are in a transit country, companies require facilities in bonded areas. 

� When the goods need processing (assembly, packaging, etc) or for further distribution, 

companies require facilities in logistic parks with good land connections. 

On the other hand, when Chinese exporters are starting in a new market within Europe, before 

organizing their own distribution center, they demand warehousing space to freight forwarders to 

storage some goods to ensure a good service to new customers, reliability and to shorten delivery 

times, etc…Later, if the business is working, they will create their own distribution center. 



Main difficulties for companies in the organization of the logistic chain 

Main difficulties along the logistic chain 

Actor Challenges and problems 

Shippers 

Consignees 

Shipping 

Lines 

� Companies in China have to deal with a large number, sometimes more than 100, 

different freight forwarders from European customers, making the day by day follow up 

and monitoring very complicated. 

� Booking space in vessels, especially in peak seasons and for hazardous cargo or with 

special requirements’ cargo. 

� High costs of the transportation between China and Europe. 

� Transit times between China and Europe are too long. 

� Difficulties in follow-up of shipments arrival to destination. 

� Slow response to incidents and mistakes during transportation. 

� To coordinate holidays periods for each country in Europe as well as holidays in China. 

� Frequent delays of the shipments. 

� Lack of information about the shipment (date of arrival, delays …). 

� Mistakes and omissions in documentation leading to trouble with European Customs. 

� Damage of goods because of too much manipulation. 

� Container demand variability 

� Congestion in European container Terminals and in hinterland networks 

� Short berth windows in European Ports 

� Pre-booking of space from shippers 

� No return -cargo from Europe to China 



V.2. Decision-making centers 

From the interviews and the survey, it seems clear that the decision makers of the logistic chains 

supporting the trade between China and Europe are located in the main headquarters of the 

companies (for foreign multinational companies). The headquarters in China only take part at an 

operational level, implementing the decisions taken at the headquarter, but unaware of the logic behind 

them. Global headquarters of multinational companies are responsible for the strategic design of the 

logistic chain from the factory in China (or the cargo consolidation center) to the distribution of the 

goods within Europe. 

However, the Chinese guanxi, understood as the personal connections for mutual beneficial business 

relationships, is reported to influence to some extent the decision-making. For example, several 

interviewees explained that reporting incidences and assessment about the service of logistic 

providers can be tendentious and aimed to favor companies belonging to the own network. Even the 

selection of a port of destination in Europe may also be influenced by the guanxi established by the port 

Authorities with Chinese companies. 

Location of the decision-makers in the organization of the logistic chain 

Decision centers Level of decision Functions 

Global Headquarter Strategic design of 

the logistic chain 

China Headquarter Oversee logistic 

chain at an 

operational level 

� Logistic chain design at a global level 

� Selection and negotiation with global logistics 

providers (shipping lines, International forwarders, 

3PLs, etc.) 

� Design the distribution network within Europe 

(number and location of distribution centers, 

warehouses, logistic facilities, etc). 

� Leading projects to improve logistic chain efficiency. 

� Prepare periodical forecasts of shipments for the 

shipping company (in order to book space). 

� Accomplish shipping procedures and prepare 

documentation. 

� Monitor shipments. 

� Follow-up and communication with logistics provider 

office in China (incidents, delays, etc.) 

� Report incidences and assessment about the logistic 

providers. 



For foreign companies sourcing from China or with manufacturing plants in China, the main logistics 

decisions for exports to Europe are taken in the global headquarter of the company. The Headquarter 

in China may participate in the decision-making through a constant feedback and assessment about 

the service provided by the Logistics operators. Interviewees agree about a distribution of the 

decision-making of 80% global Headquarter; 20% China Headquarter. 

In an opposite trend, to supply the Chinese market, foreign companies are moving the logistics 

decision centers towards China. As the company’s subsidiary in China gains knowledge and maturity 

within the country it also makes over the management of the distribution within the country. 

In the case of Chinese companies, the decisions are taken in the headquarter in China and the size of 

the company is key. 

� Big companies: The process is similar as in Europe. There is a logistic department in the company 

with a specialized team. The person in charge has many years of experience in the company and 

deep knowledge in logistics. The more experienced the logistic manager is, the more decisions he 

wants to take and thus fewer decisions are in the hands of the freight forwarders. 

� Medium and Small companies: Usually, the decision making is a process shared by the 

purchasing/export manager and the General Manager. If the company is small, then the General 

Manager is the decision maker. In these cases, logistic decisions rely more on the freight 

forwarders advice. 



Decision-making criteria 

Specific decision-making criteria have been gathered from the interviews to shippers and transport 

operators. However, for the report, they have been grouped in more general key elements that can 

apply to different sectors. They are not written in order of importance as priorities are different in every 

industry but the most quoted ones are highlighted in bold. 

Key elements in the decision-making of the logistic chain 

Decisionmaker 

Shippers 

Shipping 

companies 

Provider Criteria 

Freight 

forwarders 

Shipping 

companies 

Port of 

shipment 

Port of 

destination 

Ports 

� Good and reliable service in Europe (emphasis on fast response to 

incidences). 

� Brand 

� Competitive price 

� Global network and presence in China 

� Experience and industry know-how (especially for hazardous cargo) 

� IT capabilities (cargo visibility) 

� Freight price 

� Service (Reliable in transit time and schedule fulfillment, flexible in 

pre-booking space, easy in documentation procedures) 

� Other services (Payment conditions, free storage time in European port 

of destination, etc...) 

� Proximity to factory or cargo location (minimize road transportation) 

� Shipping schedules 

� Speediness of customs clearance 

� Price and service (handling cargo) 

� Proximity to cargo destination (minimize road transportation) 

� Speediness of customs clearance. Flexibility around the regulations, 

(e.g. dangerous goods). 

� Inland transportation network 

� Frequency of calls 

� Transit times 

� Access to big volumes of cargo 

� Level of service of the terminals 

� Logistic and transport infrastructures linking port with its 

hinterland 

� Feeder frequency and transshipment cost 

� Cost of handling containers 

� Berthing windows 

� Terminal and network congestion 



V.3. The main players in the logistic chain 

Shippers and consignees 

The trend in China towards more high-value manufacturing and the increasing competition to lower 

costs at a global scale will drive the logistic outsourcing requirements for the shippers in China and the 

customers in Europe. Speed to market, more sophisticated logistic services, a more reliable and 

flexible logistic chain and less fragmentation in the flow of information and money are some of the 

cargo owners increasing requirements. 

Speed to market 

Shippers producing in or sourcing from China agree about the fact that the time required for a product 

sourced or produced in China to reach the European market is currently too long and needs to be 

reduced. This requirement becomes especially critical in some sectors and lead to use air 

transportation. 

� For a European retailer sourcing in China, from placing an order to reach the store, a product 

needs more than 100 days. If the sourcing process of choosing a supplier, sending samples, 

quality control, etc. is taken into consideration, then the whole process can last for more that one 

year. 

� In the consumer electronics sector, products with a high volatility price, and fast obsolescence 

after being launched, are shipped to Europe by air to reach the speed required. 

Logistic chain’s integration 

More and more customers in Europe are demanding door-to-door services to the manufacturing 

companies in China. Therefore, companies in China have shift from dealing with several logistic 

providers, usually their customers’ freight forwarder, to look for a contract with one global and 

comprehensive logistic provider who can manage the whole logistic chain for their exports from China 

to Europe. This global operator can be an international forwarding company (Kuehne&Nagel, 

Panalpina, Exel, etc…) as well as global intermodal companies (Maersk, …). The main requirement is 

to take care of all the necessary range of services to handle the flow of exports between the 

manufacturing site in China and the customers in Europe. A comprehensive network within Europe is a 

must. However an important presence in China is also required to ensure a smooth communication 

and easy the shipments’ follow-up in the Chinese part of the logistic chain. A reputation of good service 

in Europe, financial advantages and Chinese market know-how are also quoted by the companies 

interviewed as important issues in the selection of this kind of Logistic provider. 

Building direct-to-shop delivery containers 

For certain industries like retail or garment, freight forwarders and 3PL’s are starting to build logistic 

platforms in China to consolidate cargo and build containers to delivery directly to stores. Consolidating 

and performing specialized value added services (labeling, CQ, ironing, etc...) in China eliminate 

deconsolidation at destination in Europe creating a cost advantage. 



Freight Forwarders 

Freight forwarders are reaching a global scope through alliances or consolidation through M&A, 

becoming able to provide international logistic services required by more and more globalized shippers 

and allowing them to negotiate with shipping lines at a global level. 

So far, Chinese forwarders cannot compete with international forwarders as long as they don’t have a 

well established overseas network. Forwarding companies without an international network can’t 

ambition global customers. 

Moreover, Chinese logistic companies seem to lack of expertise to organize sophisticated logistics for 

complex supply chains. A high turnover in management positions and shortage of qualified 

professionals makes logistics capabilities in Chinese logistic service providers still limited. 

Shipping Lines 

Shipping lines are increasingly becoming key players in the logistic chain. As they extend services and 

increase their market share through consolidation, they are becoming more decisive in the 

organization of the logistic chain. 

In order to cope with container cargo growth in the international trade worldwide and especially in the 

East-West trade, shipping lines are going through a range of measures. To ensure customers need for 

more space while reducing operating costs, shipping lines are incorporating new and bigger vessels 

and reducing direct calls to ports therefore increasing ports competition. 

Moreover, to escape the shortage of port capacity and land infrastructure in Europe which often leads 

to congestion, shipping lines are increasingly investing in Ports terminals. In an environment of high 

competition, the involvement in terminal operations allows shipping lines to control operating costs 

while increasing efficiency for their customers’ logistic chains. Some of the strategies are: 

– Investments in neighboring ports to escape congestion in main ports (for example, investing in 

Antwerp to avoid Rotterdam) or create a network of ports that allow to make-up for any incident 

or delay occurred in former stops. 

– Investments in ports where return-cargo is secured. 

On the other hand, existing strategic alliances between shipping lines are also providing many 

synergies as shared use of terminals, common operating of liner services, vessel space exchange, etc. 

Finally, as seen before, shipping lines through subsidiaries are also extending their scope, enlarging 

their services from port-to-port to door-to-door services to add value and differentiate from their 

competitors. However, shipping lines still need to rely on forwarders to accomplish inland 

transportation for a while. 



Ports and Terminal operators 

The surge of China-Europe trade is resulting in an increasing volume of containerized cargo directed to 

European ports. While Chinese ports are experiencing the fastest throughput growth in the world, they 

are able to increase their capacity at a similar pace and to achieve high terminal productivities. On the 

other hand, European ports have to balance port development with environmental protection, deal with 

security issues, government changes, and labor availability and cost. Therefore European ports 

capacity is being developed at an insufficient pace even if the flow of private investments within its 

scope is increasing and becoming also a key drive to improve efficiency within port operations. 

All the main players in the logistic chain manifest serious doubts about the capacity of European ports 

and their hinterland networks to absorb the increase of containerized cargo from China forecasted for 

the next years without causing disruptions to the logistic chains. 

On the other hand, competition between European ports is increasing. Attracting cargo volumes and 

cargo owners’ distribution centers, to maintain shipping lines calling, becoming first port of call, to 

achieve higher productivities in port operations (which is seen as a way to cut investments in 

infrastructure and to avoid overcapacity if demand slows down) are major concerns of European Ports. 

Therefore Port Authorities in Europe are working towards building a network to compete for logistic 

chains, not for hinterlands anymore in order to secure cargo volumes in the hands of increasingly 

powerful shipping lines. 

Terminal operators have become global players, building a network of ports in order to improve their 

service to shippers and carriers as well as improving the integration of the terminals with the hinterland. 



VI. Conclusions 

Players participating in the China-Europe logistic chain are mainly international companies. 

Chinese domestic companies will progressively gain more prominence. 

Main shippers and logistic and transport operators involved in the logistic chain in the trade between 

Europe and China are foreign international companies. As Chinese companies become international 

they will take a more decisive role in the logistic chain. 

Decision-making in the logistic chain is definitely located in Europe (or overseas). 

Cargo owners’ Global headquarter in Europe (or overseas) as well as Forwarder’s headquarters in 

Europe are currently taking care of the strategic design of the logistic chains of exports to Europe. 

Headquarters in China assume the role of monitoring the operations between China and Europe. 

However, guanxi which is deeply present in the way of doing business in China has to be taken into 

consideration, as it seems to have a concealed influence in the decision-making. 

More demand for global logistics packages, less fragmented logistic chain. 

Shippers are manufacturing or sourcing in China and other cost-advantage areas in Asia and selling all 

around Europe, and even worldwide. They are demanding more global logistics packages to all 

transport and logistic operators in order to provide the services required at a global level. The global 

packages refer to a geographical scope, however they also point out to a more extended range of 

services which will help reducing the fragmentation of the logistic chains. 

More operations will be performed in China. 

In some industries, shippers and customers are increasing the operations performed in China and 

therefore streamlining the facilities and operations needed in Europe. International Forwarders and 

3PL’s will need to increase their services in China for their European customers, developing more 

complex logistic facilities and operations as well as performing more value added services to the goods. 

This will also demand more integration with Chinese suppliers. 

The increasing practice to consolidate cargo in China and build direct to customer containers shipped 

directly to the customer facility in Europe will likely have an impact in the need of distribution centers in 

Europe and diversify the ports of destination. 

Fewer players in the logistic chain but more powerful ones. 

In order to take advantage of economies of scale and synergies and sometimes just to remain 

competitive, companies are growing through M&A or using strategic alliances. This progressive 

concentration in fewer actors is also impacting in the organization of logistic chains as companies are 

developing their activities using a network approach to embrace more geographical areas but also to 

establish connections between these areas that can improve the overall efficiency. 

Specialization in niche markets is the path for small and medium size transport operators in order to 

remain competitive. 



More competition but also more collaboration among players of the logistic chain 

Together with competition, the inter-dependencies between players are increasing in order to satisfy 

shippers’ demand of a more cost-efficient, reliable and less-fragmented logistic chain. More 

collaboration is a common demand among actors to effectively coordinate the flow of goods, 

information and money, satisfy security requirements, enable cargo visibility, and increase speed to 

market. 

Ports in Europe 

Northern and Mediterranean ports are considered to embrace different markets although at present, 

Northern ports are also supplying southern markets as they better respond to shippers’ requirements. 

Proximity to the cargo destination is still the main criteria to select the European port of destination in 

order to minimize the cost of land transportation within Europe. However as reliability in the lead times 

become increasingly important for shippers, other criteria stand out. For some special cargo (e.g. 

hazardous cargo) or to avoid unexpected delays, speediness and flexibility in customs clearance can 

determine the selection of a port. Higher frequency of calls and shorter transit times are also key 

aspects in the selection of the port of destination to fulfill the shippers’ requirement of speed to market. 

To attract more cargo from the Far East, Mediterranean ports need to further develop a comprehensive 

offer of logistic services (distribution centers, inland network connections, etc...) that improve the flow 

of cargo from the port to the markets. Becoming a hub for distribution to East European countries or to 

North Africa as well as specializing in certain industries/markets are also some strategies suggested by 

interviewees to increase their share of the Far East trade. 

The Port of Barcelona, particularly, could take advantage of the opportunities originated by Spanish 

companies increasingly importing from the Far East and distributing within Spain and to other 

European markets, which are currently settled in inland areas of Spain. Competitive distribution 

centers in the influence area of the port of Barcelona would be ideally located to distribute the main 

markets in Spain (Barcelona and Madrid) and to organize further distribution to European markets. The 

Port Authority of Barcelona in collaboration with other logistic and transport operators could lead 

actions to bring this solution to the companies’ attention and promote pilot experiences among them. 

The Port of Barcelona, however, will need to deal with regional governments’ subsidies within Spain, 

aimed to retain companies’ facilities in their territory.

Untitled - China Europe International Business School

Create successful ePaper yourself

Delete template?

Save as template?