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Suzhou's Virtualized Logistic Network Backs Up China's Manufacturing Industry

Drastic changes occur in the global lap-top computer market are no longer a surprise to people when you think about the failure in logistics operation. Statistics indicate that from raw materials to the finished products, the manufacturing process takes about 10% of the time, while the rest is spent on the various links of logistics.

Nonetheless, there is minimal possibility for such things to happen in SIP.

The absence of sea port and airport in Suzhou is an innate handicap to the development of logistics, yet it in no way stops Suzhou being an important international logistic hub. Despite the locations of ports and airports outside of Suzhou, Suzhou relies on the superiority of clustering of tens of thousands of manufacturing industries to weave out a web of logistic network linking up with all the sea ports and airports around, by which the 20 million lap-top computers, along with other products and raw materials, flow smoothly to the whole of Yangtze delta region and the rest of the world.

One of the measures to develop Suzhou's logistic industry is to build the "virtual sea ports". Years ago, all foreign-invested enterprises in Suzhou had to go through customs clearance at Shanghai port, which normally took an annoying week to complete the formalities. Suzhou put forward the proposal to extend the Shanghai customs to SIP in a virtual way, and let the import and export commodities be declared in Suzhou and spared with inspection at Shanghai port. The proposal was approved by central authorities. Suzhou thus had a virtual seaport and the logistic process was greatly shortened.

Another measure is to put forth the concept of "virtual airport". The faster and more efficient air freight is a major alternative for Suzhou's enterprises. In coordination with Hongqiao and Pudong Airports of Shanghai, A speedy customs-clearance mode, known as the "SZV", was instituted so that air cargo can be cleared within one day. An air expressway thus came into being.

The measure that followed is to build a "virtual Hong Kong". In May 2004, Suzhou Logistics Center became the first "bonded logistics center (Type B)" in China. Within the bonded logistics zone, enterprises of various links of the same industrial chain are permitted by policy to conduct transactions among themselves without paying VAT, so that the enterprises no longer need to ship their products to Hong Kong and then return to the hinterland at high cost to evade VAT levies. The bonded logistics center became a paramount of Suzhou's "Hong Kong".

In addition to the virtual ports, Suzhou implemented VMI and DC services, which are actually a third-party warehousing trusteeship provided by logistics companies. Since the logistics operators provide independent, professional and carefully classified warehousing and distribution, the customers are spared of the trouble to build their own warehouses and the need to invest, while achieving "zero inventory". The labor and cost thus saved can be put into their production and R&D.

The adoption of VMI and DC brought new growth points to Suzhou Logistics Center. In 2006, the total value of commodities under the Center's control amounted to US$ 19 billion, and the figure is expected to rise to US$ 30 billion.

Aug. 20, 2007

   
 
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