With industrial land prices rising, building one’s own logistics facilities is too expensive for most manufacturers. The emergence of logistics parks, or designated areas for storage and distribution often built to compliment industrial zones, has brought a cheaper and more efficient option to the table.
“Shanghai is still the dominant logistics distribution location due to its strategic coastal location, transportation infrastructure, increasing consumer market and established manufacturing base,” said Lynn Sim, vice president of New City Investment Management China, a real estate investment firm. New City owns, develops and manages logistics projects in the Yangtze River Delta (YRD), including Waigaoqiao Bonded Logistics Center in in the Waigaoqiao port area.
Logistics warehouses in China are classifed as either bonded or non-bonded facilities. In bonded logistics parks (BLPs), occupiers can can transship products duty-free, receive value-added tax refunds upon entry and conduct re-importation under customs supervision where goods are not required to leave the country.
BLPs are often located near ports and serve as cost-effective holding areas where shipping orders can be consolidated from various locations before being exported. They also offer a streamlined customs clearance procedure, since goods transported into BLPs are considered off-shore and can be immediately loaded onto ships bound for overseas markets.
“Once goods arrive in a BLP, it’s as if they’ve already been exported,” Sim said.
Pushing beyond ports
But logistics parks are by no means only a port phenomenon. Non-bonded logistics parks, which do not offer VAT rebates and duty-free storage but have cheaper rental rates, are increasingly being developed on the expanding road network connecting Shanghai to other cities in the YRD.
Shanghai’s Northwest Logistics Park, located north of the Hongqiao airport, has already become the most important distribution center linking manufacturers in the YRD and the retail market in Shanghai. With the opening of the New City Kunshan Logistics Park in fall 2009, 15 minutes drive west on the A-11 Huning Expressway and into Jiangsu province, the area will be able to further tap into large-scale manufacturers in the neighborhood.