Commentators send mixed messages over China's sustainability

AS GROWTH from the Far East continues its
relentless upward spiral, industry commentators are
questioning its long-term sustainability.
Estimates of the growth outlook reported by
some of the major carriers on the trade range from
10% - 20% with any number of voices in between,
says Safcor Panalpina’s seafreight forwarding
development manager Trevor Christensen.
“There are so many conflicting indicators that will
influence this growth forecast,” Christensen told FTW
on his return from a week-long trip to China recently.
“The one side of the coin suggests that volumes
of traditional imports from China such as lower end
electronics, clothing, textiles and footwear are going
to be negatively impacted by the National Credit Act,
higher interest rates and the price of bunker fuel. This
particularly for those emerging credit card spendees
who may struggle to find new sources of credit, or
the resources to service the debt on existing credit.
“The flip side of the coin however sees massive
investment in machinery and building material for
amongst other things, 2010. However this is largely
heavy weight, low volume cargo. Yet another facet
sees the huge increase in the imports of Chinese fully
built up motor vehicles.”
He estimates that trade this year has grown at
12 to 15% over 2006 which has had an impact on
available capacity.
It’s a perennial problem of industry-wide concern,
but Christensen believes that with diligent forecasting
and capacity management many of these capacityrelated
problems can be eliminated.
“Our core carriers know and trust in our support
and so they tend to reciprocate by somehow
managing to accommodate whatever we send their
way.
“We have had minor rollover problems but those
are more technical than capacity issues. One cannot
blame capacity management when a ship faces
stability problems or needs to cut ports to maintain
schedule integrity.”
China remains the biggest segment for Safcor
Panalpina, representing about 47% of its Far East to
SA tradelane. “The indications are that the Chinese prosperity and influence on world markets is
unstoppable” says Christensen.
“They appear to have embraced capitalism
completely and thoroughly – evident in the number
of imported luxury cars on the roads, designer
stores and the like. But fundamentally it remains a
centrally controlled, communist country which puts
challenges in the way of doing business there.”
In spite of this, flights into and out of the
country are full, evidence of the number of people
aspiring to claim a share of the market.
Clearly automotive is one of its key focus areas.
“There are 117 auto manufacturers in China, with
a market value of US$1trillion. The Chinese are
working to the 11th Five Year Plan which includes
an aspiration to own 10% of the global car market
by 2015.
"The strategy is clever in that they are
getting the market penetration, and testing the
acceptability of their products through Latin
America, Africa, Middle East, Mexico and other
emerging markets. If we think back 40 years or so,
this strategy is not dissimilar to that which was
adopted by the Japanese manufacturers and in the
last 10 to 15 years, by the Koreans. Today Japanese
and Korean cars are eminently desirable anywhere
in the world and likewise, the Chinese cars will
probably be just as desirable in the next five years.”