Government officials, experts and business leaders from China and the Association of Southeast Asian Nations (ASEAN) gathered Wednesday in Nanning, capital city of south China's Guangxi Zhuang Autonomous Region, to promote logistical cooperation to further trade facilitation within the China-ASEAN Free Trade Area (CAFAT).

Ding Junfa, chief advisor of China Federation of Logistics & Purchasing, addresses the China-ASEAN Trade & Logistics Cooperation Forum in Nanning, capital of south China's Guangxi Zhuang Autonomous Region, on October 20. [China.org.cn]

"High logistical costs have become a serious barrier for ASEAN countries to develop their economies and improve international competitiveness, especially after the establishment of the CAFAT in January," said Ding Junfa, chief advisor of China Federation of Logistics & Purchasing.

Since 2000, the ratio of logistical costs to GDP in China has been kept at around 18 percent. It didn't drop under 18 percent until the first half of 2010. As estimated, this ratio in ASEAN countries (except Singapore) is higher than 20 percent, which is twice the average level in developed countries.

According to a survey of key Chinese enterprises, the logistical cost rates (the ratio of logistical cost to sales) for manufacturing and the circulation industry are 9.9 percent and 8.3 percent respectively, which are similar to ASEAN rates but twice the rate of developed countries.

"Low cost of labor, land, and environmental protection are the key to the competitiveness of the manufacturing industry in ASEAN countries. The international competitive strength of China and ASEAN will be greatly enhanced if their logistical level could be improved," Ding pointed out.

Ding’s view is popular among the participants at the China-ASEAN Trade & Logistics Cooperation Forum, which is one of the series of events of the 7th China-ASEAN Business and Investment Summit that convened on October 19.

The forum proposed to establish the China-ASEAN Logistics Alliance, which is expected to work as an international platform for logistical service.

Ruth Banomyong, an associate professor of Thammasat University in Thailand, is interviewed by China.org.cn after the China-ASEAN Trade & Logistics Cooperation Forum in Nanning, capital of south China's Guangxi Zhuang Autonomous Region, on October 20. [China.org.cn]

Ruth Banomyong, an associate professor at Thammasat University in Thailand, spoke highly of the proposal. He is also the team leader for the project of GMS logistics sponsored by the Asian Development Bank.

"In the field of logistics, China has always been doing better than ASEAN countries, and hence accumulated more experience. Establishment of the Alliance will benefit ASEAN countries to a great extent; and more importantly, it will further boost development of CAFAT," he told China.org.cn.

Zhang Fuli, chairman and secretary of the Party Committee of Guangxi Materials Group Corporation, is interviewed by China.org.cn after the China-ASEAN Trade & Logistics Cooperation Forum in Nanning, capital of south China's Guangxi Zhuang Autonomous Region, on October 20. [China.org.cn]

It also means significant prospects for logistical enterprises, said Zhang Fuli, chairman and secretary of the Party Committee of Guangxi Materials Group Corporation.

"In accordance with its operation mechanism, which might be available in the near future, our company, for example, will have to mull formulating overall planning for further development. Also, it requires us to modernize our logistics management and incorporate more talents in this field."

To satisfy needs of the CAFAT, the company hopes to establish a large logistical base to cover storage, transport, delivery and processing. A new field will also be explored, that is, logistics of renewable resources, which includes waste, electrical appliances, electronic components and motor vehicles.