¡¡¡¡Processing is the source of prosperity for Shenzhen in bonded logistics service, and ties the logistics development of Shenzhen with that of the world. With the adjustment in processing policy, Shenzhen is envisioning new opportunities for the development of bonded logistics.

¡¡¡¡Up until 2006, the total logistics expenditure of Shenzhen reached 86.888 billion Yuan. This accounted for 15.29% of its GDP, which was 3.01% lower than for the whole county. This indicates that the modern logistics service of Shenzhen is higher than the national average in ability and efficiency.
¡¡¡¡Bonded logistics forms the centerpiece of Shenzhen¡¯s modern logistics service. Statistics from the Logistics Dept. reveal that the value added of Shenzhen¡¯s bonded logistics service within the bonded zone was19.508 billion in 2006, and exceeded 220 billion when combined with services provided by suppliers operating outside of the bonded zone. The combined bonded logistics comprised nearly 40% of the total logistics value added of the whole city.

¡¡¡¡Bonded logistics improve the chain of production  

¡¡¡¡Due to the existence of bonded logistics, processing in the Pearl river delta features a relatively complete production chain, including most obviously the upper-down chain relationship among high-tech companies. Except for the most sophisticated parts, almost all middle-link products can now be fully assembled within the customs border of China.
¡¡¡¡Quality logistics resources in Shenzhen are mainly concentrated with the bonded logistics operators and in logistics centers, which claim about 35% of the nearly 7 million square meters of warehouses of various kinds. This is in addition to those that are currently under construction, such as ProLogis Park Yantian Port, Yantian Logistics Park, as well as the supervision storehouses and type-B logistics park (still waiting for approval) of China Merchants Maritime & Logistics Ltd.

¡¡¡¡Processing stimulates logistics growth

¡¡¡¡Thanks to the delta¡¯s export-oriented economy, characterized by both its industrial scale and the complete and efficient service it offers in finance, insurance, commerce and trade etc, bonded logistics has achieved fast and steady development in Shenzhen over the recent years. Processing generates a significant logistics demand and has itself also become one of the major sources of demand.
¡¡¡¡In the 2003-2006 period, each unit of production value generated by processing was equivalent to 5.2 units of logistics value on average. In 2006, however, despite continued increase in the gross volume of processing, its contribution to logistics failed to grow accordingly. It was, in fact, smaller, with each unit of processing value equaling only 4.36 units of logistics value. That number then rose to 4.8 units in 2007.

¡¡¡¡The competition ability of bonded logistics

¡¡¡¡Processing development reveals that each innovative and forward step of bonded logistics is closely related to the adjustment of processing policy. Now facing a new round of policy improvement, it is only reasonable that the competition ability of bonded logistics will be further enhanced in Shenzhen, preferably by adopting the following measures:
¡¡¡¡First, by quickening the interlinking of bonded logistics zone with port areas, setting up type-B logistics parks, and extending the value added chain of processing to stimulate the growth of logistics demand.
¡¡¡¡According to statistics, 70% of the processing companies in Guangdong are presently engaged in deepened operation. For example, over 80% of the parts of mobile phones, more than 90% of the parts of computers and all parts of color TV are capable of being fully assembled within the delta region. Furthermore, of the more than 14,000 processing firms registered in Shenzhen, nearly half have launched such operations, and the number is continues to grow.
¡¡¡¡Type-B logistics centers enjoy policy support and fundamental advantages for deepened processing, and consequently often attract transnationals, which move their global/regional service to be close to manufacturers in China and minimize logistics costs.
¡¡¡¡In the neighborhood of Shenzhen, Dongguan, Foshan and Zhuhai are actively following each other in the development of type-B logistics centers. Similar processes are occurring in hinterland cities such as Chongqing, Chengdu and Nancheng etc. Except for the general bonded zone set up in Suzhou, Yangshan of Shanghai (port), Yangpu of Hainan, Dongjiang of Tianjin (port), Dayaowan of Dalian (port) and Meishan of Ningbo (port) have also been approved to become bonded basins. The surging competition is threatening to render bonded goods from other areas a burden to Shenzhen, if not operated in bonded form within it.
¡¡¡¡Second, the competition ability of bonded logistics could be enhanced by supporting company development and increasing cargo sources. Business transformation and re-orientation for the processing companies has gradually become a necessary trend of industrial development. Preserving the ¡°root¡± of processing is an integral part of bonded logistics development. To facilitate this, the following measures are suggested: Encouraging logistics companies to get networked for greater expansion of cargo sources. Following said business transformation and re-orientation, cargo sources will also grow and increase. They will thus move further away from Shenzhen, extending from the present cover of the Pearl River delta, Hunan, Jiangxi, Hubei and Southwest China to Zhejiang, Fujian and Jiangsu etc.
¡¡¡¡However, in the wake of business transformation or closure, and following the establishment of new branch institutes in the Mainland, Shenzhen¡¯s share of transshipment goods has rapidly been decreasing. Important factors have been increased port efficiency in Nansha, the opening of more shipping routes, and the rise of bonded areas in Suzhou and in Waigaoqiao and Yangshan of Shanghai.
¡¡¡¡Thirdly,Strengthening cooperation with Hong Kong. Processing development in the Pearl river delta cannot occur without the support and help of Hong Kong. Cooperation with HK is important, because it offers effective guidance in the transformation and re-orientation of the processing service. It is suggested that, in accordance with the characteristics of the processing service, the government of Shenzhen and the government of Hong Kong should actively collaborate in the planning and establishment of logistics parks in the Mainland. This would both reduce the business burden of operators in land rents, logistics expenses and management costs and expand the cargo sources of Shenzhen to even further areas.