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Research Project Report

Research Project Report 상세보기
A Study on Measures to Enter the Chinese Cold Chain Market
Report No. 2013-02 Research Manager Lee Sung Woo
File


A Study on Measures to Enter the Chinese Cold Chain Market


1. Purpose
○ Along with detailed measures, this study suggests Korean logistics companies advance into the high value-added cold chain market of China, the market which is not monopolized by Chinese or global logistics companies yet.
-It proposes that Korean logistics companies should expand into high value-added logistics market by successfully entering the Chinese cold chain logistics market of their choice. It also suggests measures to strengthen foundation for added value creation.


2. Methodologies and Feature
1) Methodologies
Characteristics of each methodology
Feature Details Data collection Reasons to choose
Basic analysis - Investigation on actual Chinese refrigerated/frozen logistics market
- Analysis on major feature of Chinese refrigerated/frozen logistics market - Relevant literature
- Expert advice - There are needs to introduce the topic because few domestic studies are done on it.
Field investigation - Analyses on trends of foreign companies entering Chinese market
- Difficulties faced by these companies  - Interviews with companies
- Written counseling by experts in the field
- Field visit to China - The study tried to analyze trends of companies and their worries which entered the Chinese market.
Expert advice and joint research - Relevant laws and institutions regarding entrance into Chinese market
-Analyses on major areas and markets for advancement into China -Expert counseling and opinion
- Visit and discussion - The study resolved limitations of literature studies. 2) Feature
○ The scope of subjects are Chinese refrigerated/frozen logistics market, Chinese agricultural/fisheries food exports and imports, Chinese refrigerated/frozen logistics companies, relevant policies, laws and institutions and strategies to enter cold chain logistics market.
-The study examined the actual Chinese cold chain market and its characteristics by analyzing throughput trends and agricultural/fisheries food export and import. It also looked for attributes of Chinese cold chain companies and analyzed trends of foreign companies entering this Chinese market to draw possibilities for Korean companies. 
- The study also reviewed relevant policies, laws and institutions, such as Chinese policies for cold chain logistics market, laws and institutions regarding advancing into the Chinese market.


3. Results
1) Summary
○ In contrast to rising demand for cold chain logistics market within China, relevant infrastructure, such as refrigerated/frozen warehouses and transportation facilities, are insufficient. 
-Difficulties include: it is hard to secure supply despite high interest; demands are concentrated on specific season and large investments are required.
-However, when it comes to standardization, packaging technology and added value service, Korean companies have an edge over Chinese companies.
○ The routes for cold chain cargoes between Korea and China are focused on Shanghai, Quindao, Yuhai and Tianjin. Cargoes are transported from Quindao and other ports in Shandong province to consumption areas such as Beijing and Shanghai.
○ Korean logistics companies should have specific areas, strategic products and specialization strategies if they want to enter the high value-added cold chain market of China which is not mature yet.
-According to attributes of each Korean logistics company, it is necessary to secure local competitiveness through large initial investment or to absorb local networks as part of localization strategies.
-In case of securing logistics infrastructure through large initial investment, it is advised for Korean logistics companies to build cooperative system with public companies, logistics companies, cargo owners or distribution companies, rather than entering the Chinese market by itself.
-For its part, Korean government needs to resolve initial financing risks of the project through larger payment guarantee by using the Trade Insurance Corporation or trade credit insurance companies. It is also necessary to tap into various cooperative channels between governments to deal with ‘China risks.’
○ For maximum utilization of facilities, local networks can be secured in franchise or joint brand types after in-depth analyses.
- The above requires cooperative systems between Korean cargo owners, logistics companies and local distribution companies.
-Other difficulties generated from implementing these strategies, such as customs clearance risks and problems on routes, can be addressed or improved through inter-governmental cooperation.
-In order to address other business matters, such as lead time, problems of imbalance, understanding of cargo characteristics and imbalanced information, Korean logistics companies need to develop information sharing systems.
○ In this regard, governmental support should include the following;
-In finance, government should prepare supportive policies, such as governmental guarantee and enlisting of public companies. These are for the 1st stage advancement into the market and will help to secure the local joint logistics center at low costs.
-Government should prepare measures to improve capability of Korean logistics companies from the perspective of information and education.
-For cooperation among Korean companies, government needs to prepare cooperative platform for their joint entrance into the Chinese market. On top of it, obstacles in the way of entering the market can be cleared or addressed through governmental cooperation, particularly Korea-China-Japan Ministerial Conference on Transportation and Logistics.
○ Lastly, for smooth entrance into the Chinese cold chain logistics market, Korean logistics companies themselves need to improve their technologies and analyzed the local market in detail, minimizing possible risks and securing competitiveness by differentiating themselves from local competitors.
2) Policy contribution
○ The study presents direction for Korean logistics companies entering the Chinese cold chain logistics market.
3) Expected benefits
○ The study helps Korean companies to increase the logistics market share in China by entering the Chinese cold chain market.
○ It contributes to creating national wealth by improving competitiveness of Korean cold chain products in Chinese market.
○ It helps ‘Korea’s creative economy’ go global by creating convergence businesses between Korean cargo companies and logistics companies.

Research Project Report 상세보기
A Study on Measures to Enter the Chinese Cold Chain Market
Report No. 2013-02 Research Manager Lee Sung Woo
File


A Study on Measures to Enter the Chinese Cold Chain Market


1. Purpose
○ Along with detailed measures, this study suggests Korean logistics companies advance into the high value-added cold chain market of China, the market which is not monopolized by Chinese or global logistics companies yet.
-It proposes that Korean logistics companies should expand into high value-added logistics market by successfully entering the Chinese cold chain logistics market of their choice. It also suggests measures to strengthen foundation for added value creation.


2. Methodologies and Feature
1) Methodologies
Characteristics of each methodology
Feature Details Data collection Reasons to choose
Basic analysis - Investigation on actual Chinese refrigerated/frozen logistics market
- Analysis on major feature of Chinese refrigerated/frozen logistics market - Relevant literature
- Expert advice - There are needs to introduce the topic because few domestic studies are done on it.
Field investigation - Analyses on trends of foreign companies entering Chinese market
- Difficulties faced by these companies  - Interviews with companies
- Written counseling by experts in the field
- Field visit to China - The study tried to analyze trends of companies and their worries which entered the Chinese market.
Expert advice and joint research - Relevant laws and institutions regarding entrance into Chinese market
-Analyses on major areas and markets for advancement into China -Expert counseling and opinion
- Visit and discussion - The study resolved limitations of literature studies. 2) Feature
○ The scope of subjects are Chinese refrigerated/frozen logistics market, Chinese agricultural/fisheries food exports and imports, Chinese refrigerated/frozen logistics companies, relevant policies, laws and institutions and strategies to enter cold chain logistics market.
-The study examined the actual Chinese cold chain market and its characteristics by analyzing throughput trends and agricultural/fisheries food export and import. It also looked for attributes of Chinese cold chain companies and analyzed trends of foreign companies entering this Chinese market to draw possibilities for Korean companies. 
- The study also reviewed relevant policies, laws and institutions, such as Chinese policies for cold chain logistics market, laws and institutions regarding advancing into the Chinese market.


3. Results
1) Summary
○ In contrast to rising demand for cold chain logistics market within China, relevant infrastructure, such as refrigerated/frozen warehouses and transportation facilities, are insufficient. 
-Difficulties include: it is hard to secure supply despite high interest; demands are concentrated on specific season and large investments are required.
-However, when it comes to standardization, packaging technology and added value service, Korean companies have an edge over Chinese companies.
○ The routes for cold chain cargoes between Korea and China are focused on Shanghai, Quindao, Yuhai and Tianjin. Cargoes are transported from Quindao and other ports in Shandong province to consumption areas such as Beijing and Shanghai.
○ Korean logistics companies should have specific areas, strategic products and specialization strategies if they want to enter the high value-added cold chain market of China which is not mature yet.
-According to attributes of each Korean logistics company, it is necessary to secure local competitiveness through large initial investment or to absorb local networks as part of localization strategies.
-In case of securing logistics infrastructure through large initial investment, it is advised for Korean logistics companies to build cooperative system with public companies, logistics companies, cargo owners or distribution companies, rather than entering the Chinese market by itself.
-For its part, Korean government needs to resolve initial financing risks of the project through larger payment guarantee by using the Trade Insurance Corporation or trade credit insurance companies. It is also necessary to tap into various cooperative channels between governments to deal with ‘China risks.’
○ For maximum utilization of facilities, local networks can be secured in franchise or joint brand types after in-depth analyses.
- The above requires cooperative systems between Korean cargo owners, logistics companies and local distribution companies.
-Other difficulties generated from implementing these strategies, such as customs clearance risks and problems on routes, can be addressed or improved through inter-governmental cooperation.
-In order to address other business matters, such as lead time, problems of imbalance, understanding of cargo characteristics and imbalanced information, Korean logistics companies need to develop information sharing systems.
○ In this regard, governmental support should include the following;
-In finance, government should prepare supportive policies, such as governmental guarantee and enlisting of public companies. These are for the 1st stage advancement into the market and will help to secure the local joint logistics center at low costs.
-Government should prepare measures to improve capability of Korean logistics companies from the perspective of information and education.
-For cooperation among Korean companies, government needs to prepare cooperative platform for their joint entrance into the Chinese market. On top of it, obstacles in the way of entering the market can be cleared or addressed through governmental cooperation, particularly Korea-China-Japan Ministerial Conference on Transportation and Logistics.
○ Lastly, for smooth entrance into the Chinese cold chain logistics market, Korean logistics companies themselves need to improve their technologies and analyzed the local market in detail, minimizing possible risks and securing competitiveness by differentiating themselves from local competitors.
2) Policy contribution
○ The study presents direction for Korean logistics companies entering the Chinese cold chain logistics market.
3) Expected benefits
○ The study helps Korean companies to increase the logistics market share in China by entering the Chinese cold chain market.
○ It contributes to creating national wealth by improving competitiveness of Korean cold chain products in Chinese market.
○ It helps ‘Korea’s creative economy’ go global by creating convergence businesses between Korean cargo companies and logistics companies.

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