SPECIAL
FOCUS
32
AUG 2017
FOOD FOCUS THAILAND
Chinaaccounts for17percentofU.S.agricultureexports,making
it the largestagricultureexportmarket for theUnitedStates.Atnearly
$1.4 trillion,agriculturecomprisesmore than10percentof theChinese
economy, but the country’smassive sizeandpopulation, alongwith
a lagging infrastructure in some of its more remote areas, make it
difficult toexpand cold chain.
TheChinesecoldchainmarket hasgrownmore than20percent
over the past five years, according to research from London-based
global management consulting firm, L.E.K. Consulting. Themarket
hasgrown from80billionRenMinBi (RMB) or $11.73billion in2011
to 160 billion RMB ($23.5 billion) in 2015. L.E.K. forecasts that the
cold chain industry will be valued at 400 billionRMB ($58.6 billion)
by2020,with transportationmakingup40percentof themarket,cold
storageat30percent,and the remainderof themarketcoveringother
services.
Despite this remarkablegrowth, thedevelopment ofChina’scold
chain industry is still young, and truth be told, can be an intriguing
market for investors, third-party logistics providers (3PLs) andother
logistics firms. The market is extremely fragmented; the China
Federation of Logistics and Purchasing Cold Chain Logistics
Committeeestimates that revenue from the top100coldchain logistics
companies accounts for less than10 percent of theoverall market.
Although themarket is growing, theunreliability and “breakage”
of the cold chain remains a concern.As ownership of each stage of
the cold chain—warehousing, ground transportation, airfreight,
airports, distribution and other services—is fragmented, the lack of
anend-to-endprocesscontrol results inwidespreadmismanagement
of logistics.Additionally, theuseof temperature-monitoring technology,
information systems, and other forms of technical assistance is still
very immature.Asa result, the rateof cargodamage to freshproduct
within the cold chain is asmuch as 20 to 30 percent—much higher
than the average 5 to 10 percent in developed countries, L.E.K
research says.
The Chinese government has taken a number of steps, in
conjunction with industrial associations, to introduce a series of
standards and policies to regulate and help develop its cold chain
logisticsmarket,which include:TheGeneralAdministrationofQuality
Supervision, Inspection and Quarantine and Standardization
Administration of China issued the first OperationSpecifications for
drug cold chain logistics.
In 2014, the National Development and Reform Commission
introducedguidelines forcoldchain logisticsservices foraquaculture
As China continues its transition from a manufacturing-led to consumer-led economy, and its middle class grows larger and
stronger, the desire for fresh foods, pharmaceuticals and other perishables is growing alongwith it. Unfortunately, theChinese
suffer from a fragmented, inefficient cold chain that can’t keepup.
China’sColdChain IsGrowing
toMeetDemandDespite ItsManyBrokenLinks
products. Also in 2014, the International Air Transport Association
(IATA) introduceda formal certification, “CEIVPharma,” formedical
logistics projects in China. In February 2016, Shanghai Pudong
International Airport was the first and only airport to achieve this
certification.
The “No. 1ExecutiveOrder” of theCentral Government in2016
re-emphasized theplan toaccelerate thedevelopmentofcross-region
cold chain logistics industry through pilot projects.
TheChinaBusinessReview points out that to keep upwith the
rapid growth of air transportation in the cold chain, a number of
temperature-controlledwarehouseshavebeenbuilt aroundairports
and the surroundingAirport Economic Zone.
TopdomesticChineseairportswithcoldstoragecapacity include
PudongAirport (Shanghai),BaiyunAirport (Guangzhou)andKunming
Airport. Additionally, firms such as Xiamen Wanxiang Cold Chain
LogisticsCentre, Central ChinaHub of Frozen and FreshProduce,
andHangzhouPharmaceuticalLogisticsParkofStaterLogisticshave
invested heavily in cold storage infrastructure in the surrounding
Airport Economic Zone in recent years.
32
17
