China’s transport and logistics sector is hugely complex and
competitive. Tens of thousands of companies are fighting for a
share of this rapidly growing market, whose total value has more
than doubled since the mid-2000s.
China’s physical infrastructure has developed rapidly, but
executives recognise that regulatory and operational procedures
can often hinder efficiency. The government has acknowledged
the need for change and in 2011, proposed eight areas where it
will target improvements in the logistics sector.
China’s move towards a more consumption-driven economy,
combined with the improved accessibility of inland regions,
has directed the industry’s focus from being externally oriented
towards meeting the needs of new internal markets.
In such a large and diverse market, many companies have
succeeded by experimenting and finding a niche. If anything,
the complexity of the market tends to put the largest operators,
with streamlined processes and more adaptable and scaleable
business models, at an even greater advantage.
There are some signs of consolidation and this may allow
companies to grow more rapidly and profitably. However, buying
up successful local businesses is no guarantee to overcoming the
challenges posed by low-cost competition. To succeed, executives
must consider how they can harness technology and develop
systems that facilitate and de-risk payments, tax and regulatory
processes.
China’s transport and logistics sector is hugely complex and competitive. Tens of thousands of companies are fighting for a share of this rapidly growing market, whose total value has more than doubled since the mid-2000s.China’s physical infrastructure has developed rapidly, but executives recognise that regulatory and operational procedures can often hinder efficiency. The government has acknowledged the need for change and in 2011, proposed eight areas where it will target improvements in the logistics sector.China’s move towards a more consumption-driven economy, combined with the improved accessibility of inland regions, has directed the industry’s focus from being externally oriented towards meeting the needs of new internal markets.In such a large and diverse market, many companies have succeeded by experimenting and finding a niche. If anything, the complexity of the market tends to put the largest operators, with streamlined processes and more adaptable and scaleable business models, at an even greater advantage.There are some signs of consolidation and this may allow companies to grow more rapidly and profitably. However, buying up successful local businesses is no guarantee to overcoming the challenges posed by low-cost competition. To succeed, executives must consider how they can harness technology and develop systems that facilitate and de-risk payments, tax and regulatory processes.
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