Shanghai Free Trade Zone is China’s Latest Stab at an Open Economy

Oct. 23, 2013
This opening may be especially important to food producers.

China’s opening of the Shanghai Free Trade Zone (SHFTZ) represents one of its most significant steps in establishing a more open economy, according to James Tompkins, president and CEO of Tompkins International, supply chain consultants. It is actually the third of this country’s major efforts in this regard, the other two being China's entry into the World Trade Organization in 2001 and development of special economic zones in the 1980s. 

“While some analysts are skeptical that the government will implement the new policies that are being discussed with SHFTZ, it is clear that this zone represents significant benefits to multinationals operating in China,” Tompkins writes in an article posted on his site, “The New Shanghai Free Trade Zone: What Does It Mean for Logistics.” In this piece he makes five predictions about how logistics will be impacted by SHFTZ:

  • The establishment of certain logistics companies will become more attractive.
  • Transfer of cargo by shipping companies will now be allowed inside the SHFTZ.
  • Foreign ships will now be allowed to ship from the SHFTZ to other domestic ports.
  • Customs administration will be greatly simplified.
  • SHFTZ will now be more attractive as an international hub.

“Goods can be delivered directly to your warehouse in the free trade zone without waiting for clearance,” he concludes. “This is especially important for fresh food. The current wait of a couple weeks will be eliminated and the goods can go directly to a temperature controlled warehouse. The goods will still need to be cleared before being shipped outside of the SHFTZ, but it is expected that clearance time will be reduced to two to three days.”

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