Concerning the 13^th Five-Year Plan for Development of Business and Trade Logistics issued by the Ministry of Commerce and other four ministries and commissions, Sun Jiwen, spokesman of the Ministry of Commerce, said at the regular news conference held on February 16 that, the Plan, which tightly centers on the magnificent goal to build a moderately prosperous society and is based on the goals under the outline of the 13^th five-year plan for national economic and social development and the goals under the medium-term and long-term plans for the development of the logistics industry, proposes the development goals from the perspectives of network layout, modernization level, government administration and services, striving to basically build up a business and trade logistics system featuring high efficiency and intensiveness, collaboration and sharing, integration and opening-up and environmental protection during the 13^th Five-Year Plan period.

 

He Dengcai, vice president of China Federation of Logistics & Purchasing, said, “To accelerate the development of business and trade logistics industry is helpful for improving circulation efficiency, reduce logistics costs, guide production, expand consumption and promote higher-quality and higher-efficiency national economic upgrading. The Plan is an objective need for improving business and trade logistics services.”

 

Sun said that the Plan emphasizes quantified goals, proposing to realize obvious reduction of business and trade logistics costs by 2020 and reduce the logistics cost ratio of wholesale and retail enterprises to about 7%. This is mainly based on the consideration from three perspectives:

 

The first is the supply side structural reform. The reduction of logistics cost is a major task for “de-capacity, de-stocking, de-leveraging, cost reducing and weakness offsetting”. In recent years, the logistics cost of China has seen a reduction. The ratio of social total logistics cost to GDP in 2016 is expected to fall to around 15%. However, compared with developed countries, it is still on the high side. Following that the Chinese economy steps into the New Normal stage for shifting to a slower speed and restructuring, the restrictions of resources and environment have intensified and the labor cost and rents have a strong increase. Therefore, it is hard for the cost-driven growth mode that has been supporting the profit growth of enterprises to continue to work, and the profit margins of enterprises have been squeezed by the increasing operating cost and lukewarm market demands. Under such circumstance, the reduction of logistics cost to expand the profit margins becomes an important acting point for enterprises to take initiative to cope with the changes of the market environment and improve their profitability.

 

The second is the demand side. The reduction of logistics cost is helpful for exploring consumption potentials. The reduction of logistics cost of enterprises will promote the fall of product price to a reasonable range so that there will be more high-quality and inexpensive commodities and services available in the market. This will be helpful for further exploring potential market demands and promote the balance of supply and demand in the consumer market.

 

The third is the implementation of related plans. The goal to reduce the logistics cost ratio of wholesale and retail enterprises to about 7% is more realistic and feasible. The Plan specifies a number of tasks and measures, especially the development of seven major projects, such as the construction of the business and trade logistics network and the standardization project, which are helpful for promoting reduction of business and trade logistics cost and improvement of efficiency, guiding enterprises to focus on costs and efficiency to explore breakthroughs in transformation and upgrading and improving industrial competitiveness. The goal to reduce the logistics cost ratio of wholesale and retail enterprises to about 7% is based on other related plans and keeps in line with the goals under special actions for reduction of costs and improvement of efficiency, and also meets the needs for economic and industrial development of China.

 

It was learnt that, the Plan, which aims to serve national strategies, reflect the overall requirements of supply side structural reform and highlight the operability, specifies the main tasks during the 13^th Five-Year Plan period from nine aspects, including construction of business and trade logistics network, construction of infrastructure, standardization, informatization, intensification, specialization, internationalization, greening and construction of credit system. Specifically, it proposes seven major projects and five major guarantee measures.

 

Source: Translated from Invest Guangzhou, February 17, 2017