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Qingdao Port to shift strategy

By WANG XIAOTIAN (China Daily)
Updated: 2010-03-04 10:09

BEIJING: Qingdao Port, the seventh-largest port in the world, is gearing up to tweak its business strategy to focus more on the import side, said Chang Dechuan, president of the port.

The State-owned port is likely to reduce the momentum on its more export-oriented container business and focus on more profitable iron ore and oil imports, Chang told China Daily. He is also a representative of the National People's Congress.

As the nation's largest iron ore and crude oil port, Qingdao has focused on the container sector in recent years, and is expected to surpass South Korea's Pusan Port to become the market leader in Northeast Asia this year.

Qingdao Port officials plan to focus more on their relationships with domestic import clients, mainly from the iron and steel industry.

"The economic situation in 2010 will be very complicated with fragile growth, especially in exports. Consumption in Europe and America remains weak, undermining the foundation of port development."

He said domestic ports might not gain enough support from still low levels of domestic consumption, which will continuously put pressure on sustainable growth.

"It is very natural for the ports to see a slowdown in their export-oriented business - especially the container sector - given the recession. Last year, imports of iron ore reached 628 million tons, and are likely to exceed 700 million tons this year.

Meanwhile, crude oil sector is showing the most promise with an annual increase of more than 10 percent," said Zhang Hui, an analyst at Donghai Securities.

According to Customs figures, China's exports rose 21 percent from a year earlier in January, compared with a 17.7 percent growth in December.

During the past two months, year-on-year growth of Chinese imports far outperformed exports. Imports in January skyrocketed 85.5 percent from a year earlier to $95.31 billion, buoyed by burgeoning demand on resource-related products. Analysts expect the growth of imports to be strong in the months ahead, when the outlook for exports remains grim.

Chang said although the port's export business increased a little in January and February, he is not optimistic about how long the growth will last.

"Generally, ports need three to five years to recover from a financial crisis. The 4 trillion yuan ($586 billion) stimulus package helped us secure 5.6 percent growth. But it is still far from the annual double-digit growth rate we saw before the crisis. Without strong support from exports, we expect an 8 percent increase in throughput this year," said Chang.

In 2009, the port finalized a total throughput of 315 million tons. The revenue was more than 10 billion yuan, and profit rose 6 percent year-on-year to 2.8 billion yuan.