Beijing Pharmaceutical Company, one of China's biggest Pharmaceutical enterprises integrated with manufacture, wholesale and retail, will receive the logistics system from Siemens Dematic, the world's leading automated logistics system supplier, for the distribution center.

The 30-million-yuan (3.6 million US dollar) project will allow the entire distribution process, from storage to delivery, to be completed automatically, accurately and highly efficiently.

The center, the first of its kind in China, should become operational in March next year, the company's general manager, Chen Jisheng said.

The material handling solutions provided by Siemens Dematic would help the company, which was operating 160 chain drugstores in Beijing, to lower operational costs, Chen said.

Average logistics expenses accounted for more than 40 percent of total manufacturing costs, so companies could dramatically improve performance through automation and a modern logistics system design, she said.

"But because most Chinese enterprises fail to adopt the system, backward technology and poor efficiency become the biggest bottleneck of China's pharmaceutical retailing sector," Chen said.

The pharmaceutical retailing market has grown rapidly in China since the government's health care reforms broke the monopoly of drug dispensing by hospital pharmacies, and people are spending more on health-promotion products.

But competition in the drug retailing business will become fiercer after foreign drug retailers are allowed to enter the domestic market next year, under China's commitments for entry into the World Trade Organization.

Chen said her company had set the goal of increasing competitive advantage through lowering costs and improving service performance.

The company, now with two billion yuan (240 million US dollars) of annual sales volume, also plans to be a nationwide drug retailer.

(Xinhua News Agency July 20, 2002)