The Yangtze River: Global link for inland-China?

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This month’s issue of Logistics Management has an oustanding article looking at the possible opportunities China’s Yangtze River offers to the development of China’s inland regions:

Economic activity, including trade and foreign direct investment, concentrates where connections to the global economy are strongest. China therefore built its remarkable export economy along the coast, a development that prompted the largest migration of labor in human history.

But fissures have begun to emerge in that strategy. More than 60 percent of China’s population lives in the interior, where the average per-capita income is just 40 percent of that in the coastal regions. China’s leaders are acutely aware that to ensure the country’s continued growth and stable development, income disparities between regions will have to be closed. Work will need to be brought to the workers—a change that will require a thorough reassessment of the issue of access in China.

To foreign investors, these internal strains are evident in rising land costs, erratic power availability, and—most remarkable of all—wage inflation and labor shortages in the highly developed regions along the coast. Some labor-intensive manufacturing, including Chinese-owned capacity, is already decamping to Southeast Asia and beyond.

But for companies that are willing to look westward, China’s competitive advantages remain undimmed. Manufacturing wages in interior provinces are much lower, and prime industrial real estate is both more readily available and a fraction of the cost of land in the crowded coastal zones. Some of China’s fastest-growing and most underserved consumer markets also beckon.

But the essential question for many companies still boils down to access: How can we reach those markets, and do so economically? The answer may lie along the banks of the Yangtze River. One-quarter of China’s population lives along the 1,500-mile river basin that stretches westward from Shanghai to Sichuan, and the seven provinces through which the river passes account for 40 percent of the country’s GDP.

This lengthy, but very informative article looks at the development of containerization and intermodal services on the Yangtze, the opening of the logistics sector to foreign investment, and those that would benefit from better access by utilizing the river.

Also included is a handy table with some quick facts on “What does it cost to go West?” and another table detailing the various mergers and acquisitions completed to date 2005-2006.

 

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