23 October 2018

China retailers facing high logistics costs, researcher says

Chinese retailers are suffering from high logistics costs as the related infrastructure in the country has failed to keep pace with demand, a researcher said.

“Although the logistics volume has been increasing, it is usually taken up by commodity products such as coal,” said Teresa Lam, vice president of Li & Fung Research Centre, an entity controlled by sourcing giant Li & Fung Group (00494.HK). 

Meanwhile, it might take at least five years for the overall basic problem to be resolved, she told a conference in Hong Kong Wednesday.

China’s total logistics market was worth 9.4 trillion yuan (US$1.54 trillion) in 2012, up 11.4 percent from a year earlier, she said. Logistics costs add up to 18 percent of the nation’s gross domestic product, compared with the world average of 12 percent and the United States’ figure of about 8 percent, the researcher noted.

Meanwhile, large retailers will increasingly shift focus to small-format stores such as small supermarkets and convenience stores as the latter become more popular among consumers, she said.

According to the China Chain Store and Franchise Association, large supermarkets recorded sales growth of 7.8 percent in the third quarter of 2013 compared to a year earlier. That marks weaker expansion compared to the revenue growth enjoyed by convenience stores and specialty stores.

–Contact HKEJ at [email protected]



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