60 People, 60 Stories

Customers always right

By Mui-Fong Goh (China Daily)
Updated: 2009-09-30 08:26

China's logistics industry has progressed greatly since 1949.

The big changes have been the large foreign multinationals coming into the market in the 1980s, the development of State-owned enterprises and the emergence of many homegrown private sector enterprises.

The industry is still inefficient compared with its counterparts in the West. There are far too many small operators who employ cheap labor and who flout regulations.

The Chinese government's decision to designate logistics as one of the country's 10 key industries earlier this year has to be welcomed.

The package of measures, including tax breaks and help with funding, will provide incentives for companies to modernize and will bring confidence to the market.

The more successful privately-owned enterprises will hail these government incentives as a godsend.

The government's previous measures to encourage university courses in logistics will be critical in elevating the industry over the longer term.

Increasing regulation of the industry by the government will leave little wiggle room for small players who currently operate in the "gray" areas.

What will ultimately drive moves toward greater efficiency will be the ever increasing sophistication of customers who will want not only attractive prices but also a more predictable and hassle-free service.

There is an increasing awareness of logistics as a competitive tool, and the industry will be forced to shape up accordingly.

Mui-Fong Goh is Asia logistics practice leader at management consultants A.T. Kearney.