Chengdu China Special: Damco Says US Exports Improving

Chengdu's main export logistics company, Damco, has revealed that the level of exports by US companies based in Sichuan's capital are improving, while the volume from Europe and UK firms remain flat.

Speaking to IBTimes UK in Chengdu, Damco, the sea freight and airfreight export logistics group, said that clients such as DHL, Intel and IBM have all ramped up their exports this year in a sign that business was recovering.

"Although it is more on a case-by-case basis, the number of US clients exporting is showing signs of a recovery with improved volumes," said Kevin Yan, general manager for business process improvement and operation at Damco.

"However, with our European clients, we cannot see the same trend, although export volumes are still at a stable level. We would say they are experiencing a soft landing, although in some cases, such as Tesco, it is decreasing."

Damco is part of the Danish giant AP Moller Maersk group and its Chengdu base accounts for 77 percent of all export logistics for its China operations. Last year the group overall shipped more than 900,000 containers of electronics and half of those were shipped between Asia and Europe.

Damco manages more than 110,000 tonnes of airfreight annually and in 2009 it decided to move its China customer service centre to Chengdu's Tianfu Software Park (TSP).

"We moved here for a variety of reasons, but if we had to choose a single reason, it was because of the huge government support to nurture businesses that decide to set up a key base or headquarters in TSP," said Caroline Cui, deputy general manager at Damco.

"The national government and the Chengdu government clearly understand the needs for our business, as well as others. By having this support, we are able to set up and expand the business from a new base of operations," she added.

Damco services a number of huge Western clients from Chengdu, including Tesco, Adidas, Roche and HP.

It is one of the growing number of companies that are taking advantage of Chinese government's drive to develop Chengdu into the main gateway for Western companies seeking a foothold in China. As IBTimes UK reported, the government confirmed it has set up a number of preferential taxation and policy incentives to drive growth in the city.

While Beijing and Shanghai have previously been seen as the main cities for companies to reside in, the Chinese government has placed a number of incentives for firms to set up shop in the Sichuan capital and to create a mega city for all trade, technology, finance, transportation and communication in southwestern China.

In 2010, Forbe's dubbed Chengdu the world's fastest growing city of the next decade. With an annual GDP growth rate of 15.2 percent, it is not hard to see this continuing to happen.

The government is looking to develop Chengdu, which has a population of 14.04m, into the technological, finance and cultural centre for western China, by creating four main districts residing across a main axis in the city. Some districts alone will be larger than medium-sized British cities such as Liverpool.

Chengdu is developing so fast that while it has a huge airport, it is looking to build a second one within the next few years.

"Chengdu is the perfect place to be. For me as a Chengdu local, I returned after many years working in Europe and elsewhere, as it is one of the most dynamic cities to be in, personally and professionally," said Cui.

"For work, the air links to other hubs in China are all under three hours [away] and there are increasing flights to major international destinations. Government support has meant we can expand and make our business flourish."

For more Chengdu coverage and in-depth detail, check out IBTimes UK