Distribution and logistics development in China

Abstract

Prior to the economic reform movement, China's centrally planned, three-tier system dominated the distribution sector. After the 1980s, this system gradually shifted away from the socialist mode to the free market mode. Today, China's distribution system lies somewhere between these two modes. Since the reform, China's government has been encouraging export-oriented foreign firms investments in Free Trade Zones along the coast. Foreign firms do not enjoy the same inland distribution and logistics rights as their Chinese counterparts. However, the distribution puzzle is not only faced by foreign firms, but also by Chinese firms that operate nationwide. China's undeveloped infrastructure, government regulations, and regional protectionism fragment distribution channels throughout China. However, there are three main forces that are changing and modernizing China's distribution and logistics system. These are the booming economy, entering the WTO and e-commerce. The inevitable revolution of China's distribution and logistics system is on the way.

A Survey of China’s Logistics Industry and the Impacts of Transport Delays on Importers and Exporters

“…From top to bottom, system performance was measured in terms of fulfilment of the central administration goals as well as alignment with the political interests of the ministry (Luk, 1998). Without competition, state-owned distributors were able to keep 5-17% margins at each layer without offering any value-added and/or logistics service beyond basic transport and warehousing services (Jiang and Prater, 2002). In modern logistics jargon, it was a perfect example of a push supply chain.…”

“…Municipal governments also compete to attract logistics hubs and infrastructure. This local protectionism is driven by the desire to maximize local economic growth, employment, social stability and tax revenues, and less by concern about the efficient utilization of regional resources or the creation of an integrated national transport network (Jiang and Prater, 2002). Local interests and economic development have lobbied for, sometimes unnecessarily, the duplication of logistics parks and transport infrastructure in closely located municipalities.…”

An overview of 20years of Chinese logistics research using a content-based analysis

“…Municipal governments also compete to attract logistics hubs and infrastructure. This local protectionism is driven by the desire to maximize local economic growth, employment, social stability, and tax revenues, and less by concern about the efficient utilization of regional resources or the creation of an integrated national transport network (Jiang and Prater, 2002). With respect to these issues, studies on the spatial effect of logistics regulation at different geographical levels will be very significant in shaping policy changes.…”

International Business Research, Vol.1, No.2, April 2008

“…The distribution system serving the centrally planned economy was a top-down hierarchy operating according to predetermined production targets and geographically constrained marketing channels (Luk, 1998;Taylor, 2003).The operation of this distribution system suffered from various shortcomings associated with the need for a massive bureaucracy that was frequently ineffective at balancing supply and demand in individual regions (Ding, 2006;Holton & Sicular, 1991;B. Jiang & Prater, 2002;Luk, 1998;Taylor, 2003).…”