Part of the reason why logistics costs are so high as a proportion of GDP is China’s
manufacturing orientation: measured by value, moving industrial products accounts
for around 90 percent of all goods moved; in developed countries, with their far
greater reliance on services, logistics costs are certain to account for a far lower
share of GDP. 14
Another part of the reason is that regulations governing the sector have remained
fragmented. During its World Trade Organisation accession negotiations, China
made no overarching commitment towards opening its transport and logistics
industry. Instead, it reached separate arrangements for different sub-sectors such
as road transport, warehousing and distribution.
Restrictions on most transport and logistics-related businesses were removed by
2005. Foreign companies and private Chinese ones can operate 100 percent wholly
owned businesses in trucking and freight-forwarding, storage and warehousing,
and domestic and international express deliveries. One area that remains off-limits
to all companies is mail. In October 2009, the country’s new postal law granted
China Post exclusive delivery rights for handling packages weighing less than 50
grams within cities and packages weighing less than 150 grams between cities.
The outcome is an industry in which it is tough to survive — let alone thrive. Many
new ventures therefore are experimental — set up to test the waters and see what
is possible.