China has approved the first foreign-funded comprehensive logistics company, indicating that the nation's logistics market is widening up.

The China Poly Group Corp and Japan's Sagawa Express Co will form a Shenzhen-based 50-50 joint venture capitalized at US$10.8 million.

The joint venture is scheduled to begin operations in September.

The comprehensive logistics company will engage in all aspects of logistics, from shipping, air-ferry logistics, domestic transport and warehousing.

The venture will also be the first foreign-funded company allowed to operate its own distribution network throughout China.

Before, foreign-funded companies could obtain licences in specific areas, such as customs or truck transportation, or else, they were limited to particular regions, such as Shanghai or Beijing.

As a result, many foreign firms had to set up a multitude of companies in different regions.

Lu Jiang, director of the China Logistics and Purchase Association, said the approval of the joint venture means China will further open its big logistics market.

The growing logistics market has lured many foreign logistics firms into China. Foreign giants such as APL, DHL, Exel and UPS, are competing in the Chinese market with large Chinese logistics firms, such as the China Ocean Shipping (Group) Co (COSCO) and the China National Foreign-Trade Transportation Group Corp (Sinotrans).

Professional logistics companies are expected to seize 60 per cent of the total logistics market in China by 2005 from the current level of just over 20 per cent, Lu said.

He Ping, general manager of the China Poly Group, said the new joint venture will have bright prospects as logistics will become an important sector and new engine of the Chinese economy.

The joint venture between Sagawa and the China Poly Group will operate a distribution network along the Chinese coast, he said.

It plans to set up "about 30" warehouses in Beijing, Shanghai and South China's Guangdong Province within three years and establish a truck shipment network.

The joint venture will aim to achieve annual sales of about 3 billion yen (US$25.3 million) by 2006.

(China Daily August 1, 2003)