Problem: China More Expensive Than the US – Answer: Lingang
There is at least one area where it still costs more to do something in China than it does in the US.
Logistics costs in the automotive industry are more expensive in China than in the US.
According to www.cargonewsasia.com the logistics cost per part in the US is 3-4% while in Asia its 10-15%.
China has problems with its logistics system:
1. Infrastructure shortage
2. Skills gap
3. Problems with joint ventures
4. High transport costs.
5. IT problems
6. Low standards of service.
China is building highways like there is no tomorrow, but still, regulation barriers, lack of technology and a shortage of human resource impede the logistics flow.
The Shanghai government has proposed Lingang, a new city in the southeast of Shanghai as a partial answer.
The city is about 60 square miles big, is a free port and offers warehousing and transhipment, a logistics park and an inland river dock.
It also offers a relatively sophisticated infrastructure, enough land and manpower as well as somewhat efficient regulation.
In long…China has a problem…Shanghai and others are working on a solution.
My guess is, it may be years, but eventually, China will be showing the US how to get things done – right, and more cheaply.
What do you think?
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