By Karen E. Thuermer, AJOTDespite the scrutiny some poorly and questionable Chinese made products are receiving today, China remains a powerhouse for manufactured goods. Just as quality must stand behind brand name, efficient distribution systems are imperative for the continued success of China’s economic growth and modernization. In order to meet increasing worldwide demand, its logistics industry must be able to meet capacity demands and offer efficient and cost effective services to manufacturers and retailers. Numerous investments have already been made, particularly after the central government in Beijing freed up the logistics sector in 2004 under the terms of its World Trade Organization (WTO) membership. Denver-based real estate investment trust (REIT) ProLogis, for one, has been investing in warehouses throughout China since 2003 and now has a presence in 18 cities across the country, developing and managing 39 logistics parks that encompass nearly 700,000 square meters of warehouse space. The company will soon will begin operations in five main inland distribution markets: Changsha, Chongqin, Chengdu, Wuhan and Nanjing. One of its major projects in Shanghai is the ProLogis Park Lingang, situated near the Yangshan Deep-Water Port complex. Similarly, Singapore-based Mapletree Logistics Trust Management Ltd. now owns more than 355,200 square feet of logistics facilities in China and has approximately 1.6 million square feet in development in and around Beijing, Tianjin, and Shanghai. In February 2007 the company announced it will develop a logistics center in Wuxi New District, Wuxi, China with a gross floor area of about 451,000 square feet on almost 17 acres. When completed, the development, which consists of three single-story warehouses with mezzanine offices, will have an investment value of about $13.2 million. “The logistics market in China is also growing rapidly; fueled by factors such as the liberalization of the logistics market in 2005, China’s 23.8% import/export growth rate in 2006, as well as a forecasted 23% rise in China’s container throughput last year,” states Hiew Yoon Khong, CEO of Mapletree. By comparison, approximately three billion square feet of warehouse space was built by the central government in the 1980s. Much of this space is antiquated, small, and poorly located. Consequently, ocean carriers and global third party logistics operators (3PLs) such as OOCL Logistics and APL Logistics have opened large facilities in China. In 2005, OOCL Logistics in China added approximately 150,700 square feet to its warehouses in Xiamen, Ningbo, Shanghai, Qingdao, Tianjin and Dalian, and invested in the construction of a new warehouse in the Tianjin Bonded Logistics Park. Although off to a slow start, China Business Services, an independent consultancy based in Beijing, reported that by 2005 nearly all brand-name global 3PLs had some presence in China. Nevertheless, development of new distribution and warehousing facilities is considered risky business by some analysts, particularly after the central government in Beijing decided in 2006 to reduce the amount of new land available for logistics operations. On top of that, observers contend that for many in China, “…logistics‰ still means truck transport services.” As of last year, some 800,000 such providers existed in China with the largest being COSCO. COSCO, however, only retains two percent of the market, another indication of how completely fragmented the market is. Infrastructure hampers growthChina’s logistics sector is projected to experience double-digit growth over the remainder of the decade, with some experts predicting growth at over 30% per year. A major catalyst for this growth will be the development and improvement of China’s infrastructure. While seaports, airports and road systems within China’s three major economic regions—the Yangtze River Delta (YRD), Pearl River Delta (PRD), and Bohai Bay region (Shanghai and Tianjin) are quickly modernizing, its system of ro