Page 372 - 2021 White Paper
P. 372
1 White Paper on the Business Environment in China
online to buy goods. Online food delivery and Cold Chain
grocery services saw a 400% growth in sales in
February 2020 during the most acute stage of A demand for cold chain storage is growing
China’s lockdown. The surge in consumer demand alongside the accelerating urbanization in China.
pushed up companies’ need for warehouse space Chinese governments at all levels have beef
in locations that could help expedite deliveries. up investments in cold chain infrastructure,
The prominent role that delivery services played facilitating enlargement of cold chain logistics.
during the COVID-19 pandemic has highlighted In 2019, the Chinese cold chain logistics market
their value and convenience to consumers. was worth 276.37 billion RMB, growing an annual
Investors can expect this sector to grow, with compound rate of 10.5% between 2010 and 2019.
more warehouses required to house fresh food. As China's policy and standards for cold chain
Medical supplies and pharmaceuticals is another becomes clear, fresh food e-commerce is springing
fast-growing market that will impact warehouse up and financial innovations are further being
demand. China was already the world’s largest made, the cold chain logistics industry of China
e-commerce market. In 2019, it grew by US$415 will continue to grow by RMB512.25 billion in 2026,
billion, according to eMarketer. To put that in showing a CAGR of 9.4% from 2019 to 2026. Cold
perspective, the size of the entire US market in chain logistics is driven primarily by meat, aquatic
2019 was US$587 billion. Growth won’t be even. products, quick-frozen food, fruits & vegetables,
Greater economic activity is expected in urban and dairy products, among which the fruit and
clusters such as Yangtze River Delta, Greater vegetables. Cold chain is now the largest market
Bay Area, Beijing-Tianjin-Hebei, and Chengdu- segment in terms of cold chain circulation, and
Chongqing. These clusters are major markets for aquatic products have a fast-growing demand for
warehouses. With greater economic development, cold chain. What's more, medicines, particularly
you can expect more warehouses to pop up in vaccines, blood products and diagnostic reagents
small cities just outside major urban centers for will be a key growth driver for cold chain logistics.
quick access to the clusters’ biggest cities. Investors The majority of cold chain logistics operators
are well aware of the potential. A JLL survey of 35 are engaged in both cold storage and cold chain
logistics developers, investors and tenants across transportation that boast huge cold storage
Asia Pacific in late 2019 reveals that 94% of them capacity and strong transportation capability
planned to increase their investments in Grade A domestically. However, the Chinese cold storage
logistics in the next five to 10 years. And, despite market remains scattered and characterized by
investing heavily in land to develop their own low concentration and distinct regionality. The
warehouses, e-commerce giants such as Alibaba top ten cold storage operators had a total of cold
and JD.com are unlikely to fulfil their warehousing warehousing capacity up to 25.15 million cubic
needs in the interim period due to the sheer size meters in 2019, about 17.3% share of the national
of China’s sales and delivery volumes. Investors total (Cision, Cold).
should expect a period of gradual change in which
big e-commerce players retain and even add to Logistic and Manufacturing Integration
leased space while also building up their own
networks. This is especially true in the biggest city Chinese authorities have announced an action
clusters, where city and regional plans to climb the plan to drive the integration and innovation of the
value chain make it more difficult for the giants to logistics and manufacturing sectors and maintain
acquire their own industrial land parcels. Investors the stability of industrial and supply chains. Efforts
are specifically looking for Grade A warehouse are being made to promote a new development
assets whose location and specifications permit pattern in which domestic and foreign markets
efficient distribution to end consumers. In the boost each other, with the domestic market as
next 10 years. China’s Grade A warehouse market the mainstay, according to the action plan jointly
will be bigger, more complex, more mature, and released by the National Development and
even more essential than it is today (Huang). Reform Commission and 13 other government
departments. The action plan proposed to reduce
372
online to buy goods. Online food delivery and Cold Chain
grocery services saw a 400% growth in sales in
February 2020 during the most acute stage of A demand for cold chain storage is growing
China’s lockdown. The surge in consumer demand alongside the accelerating urbanization in China.
pushed up companies’ need for warehouse space Chinese governments at all levels have beef
in locations that could help expedite deliveries. up investments in cold chain infrastructure,
The prominent role that delivery services played facilitating enlargement of cold chain logistics.
during the COVID-19 pandemic has highlighted In 2019, the Chinese cold chain logistics market
their value and convenience to consumers. was worth 276.37 billion RMB, growing an annual
Investors can expect this sector to grow, with compound rate of 10.5% between 2010 and 2019.
more warehouses required to house fresh food. As China's policy and standards for cold chain
Medical supplies and pharmaceuticals is another becomes clear, fresh food e-commerce is springing
fast-growing market that will impact warehouse up and financial innovations are further being
demand. China was already the world’s largest made, the cold chain logistics industry of China
e-commerce market. In 2019, it grew by US$415 will continue to grow by RMB512.25 billion in 2026,
billion, according to eMarketer. To put that in showing a CAGR of 9.4% from 2019 to 2026. Cold
perspective, the size of the entire US market in chain logistics is driven primarily by meat, aquatic
2019 was US$587 billion. Growth won’t be even. products, quick-frozen food, fruits & vegetables,
Greater economic activity is expected in urban and dairy products, among which the fruit and
clusters such as Yangtze River Delta, Greater vegetables. Cold chain is now the largest market
Bay Area, Beijing-Tianjin-Hebei, and Chengdu- segment in terms of cold chain circulation, and
Chongqing. These clusters are major markets for aquatic products have a fast-growing demand for
warehouses. With greater economic development, cold chain. What's more, medicines, particularly
you can expect more warehouses to pop up in vaccines, blood products and diagnostic reagents
small cities just outside major urban centers for will be a key growth driver for cold chain logistics.
quick access to the clusters’ biggest cities. Investors The majority of cold chain logistics operators
are well aware of the potential. A JLL survey of 35 are engaged in both cold storage and cold chain
logistics developers, investors and tenants across transportation that boast huge cold storage
Asia Pacific in late 2019 reveals that 94% of them capacity and strong transportation capability
planned to increase their investments in Grade A domestically. However, the Chinese cold storage
logistics in the next five to 10 years. And, despite market remains scattered and characterized by
investing heavily in land to develop their own low concentration and distinct regionality. The
warehouses, e-commerce giants such as Alibaba top ten cold storage operators had a total of cold
and JD.com are unlikely to fulfil their warehousing warehousing capacity up to 25.15 million cubic
needs in the interim period due to the sheer size meters in 2019, about 17.3% share of the national
of China’s sales and delivery volumes. Investors total (Cision, Cold).
should expect a period of gradual change in which
big e-commerce players retain and even add to Logistic and Manufacturing Integration
leased space while also building up their own
networks. This is especially true in the biggest city Chinese authorities have announced an action
clusters, where city and regional plans to climb the plan to drive the integration and innovation of the
value chain make it more difficult for the giants to logistics and manufacturing sectors and maintain
acquire their own industrial land parcels. Investors the stability of industrial and supply chains. Efforts
are specifically looking for Grade A warehouse are being made to promote a new development
assets whose location and specifications permit pattern in which domestic and foreign markets
efficient distribution to end consumers. In the boost each other, with the domestic market as
next 10 years. China’s Grade A warehouse market the mainstay, according to the action plan jointly
will be bigger, more complex, more mature, and released by the National Development and
even more essential than it is today (Huang). Reform Commission and 13 other government
departments. The action plan proposed to reduce
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