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Canada can upgrade China’s cold-chain logistics

Editor: Tong Xinxin 丨CCTV.com

07-01-2016 15:10 BJT

By Christina Kitova, associate partner Hodges Media Communications, based in Markham, Ont. Canada

China’s rising population and economic growth rates have sparked a stronger need for food cold-chain logistics. Beijing is calling for food companies to build cold chain networks. Constructing necessary infrastructure outside of major cities - transportation and electricity - can pose as challenging, but the Chinese government has committed itself to address such needs.

A recent China Cold Chain Logistics Industry Report 2016-2020 disclosed that in 2005, the cold chain logistics industry accounted for RMB 41.7 billion revenues, but fast-forward to 2015 and the figures stood at RMB 158.3 billion, the CAGR (cumulative average growth rates) had increased 14.3%. 

Projections in the report say that by 2020, China’s cold chain logistics industry will be at RMB 347.9 billion, with a CAGR forecast - 17.1% for 2015-2020. Cold chain circulation reached 332.24 million tons with a 2020 projection to reach an approximate 597.8 million tons. The CAGR projection is estimated for 12.47% increase.

China is undergoing a rapid transition from a manufacturing and construction led economy to a consumer led economy, transforming into the fastest-growing market with investments from premium groups due to voluminous agricultural production of fruits and vegetables, large milk and meat production with low-cost labor. 

The leading entities in China’s cold chain logistics industry are Xianyi Holding, Swire Cold Chain Logistics and Zheng Ming Modern Logistics. The primary entity involved in transport refrigeration within the Chinese market is Foton JAC. The leading refrigeration unit equipment suppliers are Yantai Moon and Dalian Refrigeration. Yet, Chinese operators are struggling to acquire a skilled labor force. Canadian companies could offer Chinese companies with training programs.

Beijing seeks to upgrade its capabilities with cold storage distribution, along with its uneven saturation. China needs refrigerated warehouses, 3PL's and EDS will continue to expand at a rapid pace. It is expected to become the largest 3PL(third-party logistics)market in the world by the end of 2016, making it most beneficial for Canada to capture an increasing share of the cold chain logistics market. 

Over the course of the next decade, cold chain capacity could multiply by as much as 20 times its current level. China should develop its cold chain logistics infrastructure. Canadian companies can assist with that, creating opportunities to expand international trade between China and Canada.

By focusing on quality and product sensitivity, it is essential to avoid any changes in texture and taste due to shipment delays or temperature changes. Canadian companies have proven to maintain strict quality compliance to meet increasing market demand for higher-end products with shorter shelf-lives, requiring specific temperatures to sustain and transport them. 

Refrigerated warehouses holding food are required to maintain up to 5 different temperature zones. Health and safety regulations are on the rise in global markets, while Canadian companies offer the highest standards, helping Chinese companies to comply with network establishment.

The China market would likely drive demand for supply chain efficiency, and Canadian companies have adopted Lean principles that embrace efforts to develop a highly efficient cold chain logistics market. 

Canadian companies are interested in sustainability investments, as well to reduce resource consumption, which conform with Beijing’s regulations on cold chain companies. China is a leader in the technology sector with new graduates. 

Combining these developing skills with Canadian companies' appetite for technology upgrades and a strong interest for newer automation development can be a great opportunity for both countries as their businesses could develop further.

 

Christina Kitova

( The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )

 

 

Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

Panview offers an alternative angle on China and the rest of the world through the analyses and opinions of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

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