Japanese Form First Foreign Distribution Network in
China
Following on the heels of its entry into the World Trade
Organization (WTO) in 2001, the first foreign funded and
managed distribution and logistics company has been established
by Sagawa Express of Japan.
The new company has been formed through a tie-up with
China Poly Group Corp., one of the larger conglomerates
in China. It is a 50:50 joint venture, capitalized at
US$10.8 million, and is based in Shenzhen. The new company
will aim for sales of US$25.3 million in its first year.
This is the first time a foreign entity has been able
to handle all aspects of distribution from customs clearance
to trucking and shipping. Before this, foreign companies
were only granted licenses by provincial governments in
certain areas, which limited their growth. Many companies
were forced to set up different companies in each province.
In addition, provincial governments usually favored their
own companies over non-native competitors, which meant
that distribution and logistics in China could be very
chaotic.
The new company is expected to begin operations in September,
and plans to have 30 warehouses in Beijing, Shanghai and
Guangdong province bordering Hong Kong. It will also have
its own truck shipment network.
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