China Economic Review
Charting China’s changing economic terrain · Since 1990
Foreign investment in logistics
November 17, 2009
Logistics in China need to improve. They are improving. They need to get a lot less expensive. Halve the current cost and you are down to the cost in the United States. The Ministry of Commerce has issued a Notice on Further Improving the Work of Attracting Foreign Investment into the Logistics Sector. This is the first major liberalisation in the PRC logistics sector since 2002.
The original notice allowed the establishment of joint ventures in the logistics sector (“logistics joint ventures”) on a trial basis. Logistics joint ventures were permitted to take the form of cooperative or equity joint ventures.
Such logistics joint ventures were in the past limited to eight locations in China: the cities of Beijing, Tianjin, Shanghai and Chongqing, the coastal provinces of Zhejiang, Jiangsu and Guangdong, and the Shenzhen Special Economic Zone.
The new notice permits logistics enterprises with foreign investment to be established in the form of equity joint ventures, cooperative joint ventures as well as wholly foreign-owned enterprises. Such enterprises may now be established throughout China without any regional restrictions and shall no longer be subject to the minimum registered capital requirement under the original notice of 2002.
However, a logistics enterprise with foreign investment shall comply with the minimum registered capital requirements and other requirements specified in the various regulations governing foreign investment of the business or businesses that it wishes to engage in.
Articleflix.com reports further that the notice says that logistics enterprises with foreign investment may engage in international logistics and third party logistics. Generally, it is a loosening of the restriction all around and the hope is that the logistics industry will take a further step forward in becoming internationally competitive.