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June 7, 2016

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Home » City specials » Hangzhou

Riding the rails of trade on the Silk Road

By Xu Wenwen | June 7, 2016, Tuesday | Print Edition

AFTER a 20-day rail trip from Europe, across Central Asia and the mountain ranges of the northwestern Chinese region of Xinjiang, 4,800 cans of German milk powder arrived in China, ready to be delivered to consumers using China’s major shopping websites.

The Yiwu-Madrid Railway that made it all possible is part of China’s “One Road, One Belt” policy, more commonly called the “new Silk Road.” The eastern railhead of the 10,000-kilometer train line is Yiwu in Zhejiang Province, a city known as the “world’s largest small-commodities wholesale market.” That has been a plus for cross-border e-commerce in Hangzhou, 140 kilometers to the north.

Six times every month, freight trains carry cargoes between Madrid and Yiwu, traversing Kazakhstan, Russia, Belarus, Poland, Germany and France.

Yiwu Tianmeng Industrial Investment Co, which operates the freight service from the Chinese end, said it takes 14 days to reach Warsaw from Yiwu and at least 16 days to arrive in the Spanish capital.

The 4,800 cans of milk powder, packed in one container, were imported by Hangzhou Youkeshu E-Commerce Co, a supplier to several major e-tail websites, including JD.com and Kaola.com.

Youkeshu owns warehouses in Germany and Holland. Next week, the company will be importing five containers of milk powder from Duisburg.

“We built a warehouse in Duisburg because the rail line passes through that city,” said Yang Wei, manager of the company.

His company has traditionally transported overseas milk powder by sea, air and rail. The two-year-old Yiwu-Madrid service has been a godsend, he said. It shaves 20 days off seaborne freight and costs half as much as airfreight.

“That makes each can of milk powder 3 yuan (46 US cents) cheaper than before, which really matters because competition in the marketplace is quite tough,” said Yang.

It costs about 2,000 euros (US$2,268) to deliver one container between Yiwu and Madrid by rail, compared with 1,300 euros by sea, but that price differential is reduced by government subsidies for businesses using the rail line.

Hangzhou Customs has simplified goods-declaration red tape involving commodities unloaded at Yiwu and sent on to the Zhejiang capital.

The Yiwu-Madrid line began operation in 2014. Zhejiang Kinston International Logistic Co was one of the first companies to send Chinese goods to Europe via the railway.

“It has helped us expand our market in Central Asia,” said Guo Lei, director of international combined transport for Kinston.

With no seaports and exorbitant air foreign costs, Central Asia has hitherto been a difficult market for small, cheaper Chinese commodities, he added.

In the past, most Chinese-European trade went by sea. The trip took a minimum 35 days.

“When we imported wine from Europe, we had to store the bottles in a warehouse for three months to eliminate any adverse effects of rough seas and ensure a smooth taste,” said Zhang Ruizhi, manager of Spanish Pavilion in Yiwu International Trade City.

Since the company has switched to rail transport to import more than 200 different commodities from Spain, the freight cost has decreased over 10 percent, he added.

Goods coming from Europe are mostly combustibles like wine, oil, sparkling water and milk.

“People trust European food quality,” said Jin Haijun, general manager of Zhejiang Mundiver Import & Export Corp, one of the largest wine importers in Yiwu.

The company wholesales its wines on Alibaba.com, where the cheapest bottle costs 37.50 yuan.

Local businesses took awhile to appreciate the benefits of the Yiwu-Madrid rail line, wary about anything new and unknown.

“I begged companies to give it a try,” said Lin Huihuan, general manager of Yiwu C. F. International Logistics Co, which offers foreign trading companies door-to-door container delivery services.

Nowadays, the popularity of the line ensures that all freight space is booked. Tianmeng has added cars for three containers to meet the growing demand.

At the start, Lin said, 80 percent of goods shipped along the rail line came from Yiwu, but that percentage has dropped to 20 percent as suppliers from Shanghai and Guangdong, Fujian and Jiangsu provinces have seen the advantages of the rail link.

Fashion clothing, computer hardware and electronic products made in China are now traveling west, carrying brands such as Zara and Huawei. More than 950 containers have been freighted between Madrid and Yiwu in the first three months of this year.

The railway is planning to increase the frequency of service, and a new distribution center will be built in Belarus. More stops will be added, including Berlin and Paris.

Hangzhou


 

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