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Analysis: China's WTO Membership to Hike Demand for HK Logistics Services
Demand for quality freight forwarding and logistics services will escalate after China's accession to the World Trade Organization (WTO), which will result in a significant liberalization in distribution-related services for foreign participation, analysts on foreign trade said Thursday.
According to a recent report released by the Hong Kong Trade Development Council, China's exports are expected to rise by an additional 2.4 percent per year over the first five years of the accession, while the effect on imports could be higher.
Analysts from the council also believed that on the domestic front, restrictions on distribution for most products would be phased out over the next few years, and foreign firms would be able to distribute imported products as well as those made in China's mainland.
"All these imply that the demand for quality freight forwarding and logistics services will escalate in the coming years," the analysts said.
Logistics services in China are still in their infancy, and there are considerable untapped opportunities in a period of extended market growth, they said.
As a result, the analysts said, Hong Kong companies need to position themselves in terms of market sector and geographical area in order to complete effectively in the new environment. And freight forwarding and logistics services providers need to be able to provide modern and integrated services to satisfy the demand generated by "just in time" management, they added.
"The Hong Kong-based freight forwarding and logistics services companies can take advantage of this to fill the gap," they stressed, suggesting a more diversified regional strategy should be adopted.
Statistics showed that there are 1,500 licensed international freight forwarding operators in China, around 450 of which are Sino-foreign joint ventures, mainly responsible for the international aspect of the freight management.
Hong Kong companies account for about 100 of the 450 overseas-invested freight forwarders in the Chinese mainland, and many of them set up their offices in the coastal areas such as Shanghai and cities in South China's Guangdong Province.
"This picture will change in the future when foreign-invested freight forwarders are allowed to conduct domestic business," they said.
Currently, foreign freight forwarders can only set up minority-owned joint ventures in China, although wholly-owned operations have been allowed on exceptional cases.
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