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WORLD OF INDUSTRIES 07/2018

WORLD OF INDUSTRIES 07/2018

goods. This has resulted

goods. This has resulted in heavy demand for logistics equipment and infrastructure. The ‘One Belt and One Road’ initiative will create a huge market place ‘along the route’ which will reduce the barriers of international trade, improve domestic as well as overseas supply chain network, transport infrastructure, communication facilities and bring in a huge demand for logistics engineering equipment and services. In case of engineering equipments, even though the demand is already high, this is just the beginning as all the cities through which the silk route and maritime silk route passes, will participate in upgrading their logistics and supply chain facilities. Once the road is built, it will improve connectivity and reduce time and hassle to transport goods across the continents. This in turn will increase the international and inter-continental trade and bring a surge in flow of cargo, capital and people. Apart from developing transport infrastructure, a cross-border reliable electricity network is vital as well. China is also investing in building and running the electric projects utilizing the region’s best resources, for example the Sahiwal coal power plant in Pakistan, a 40 MW solar power plant in Kazakhstan, and a nuclear power plant in Poland etc. The successful construction of the cross-border electricity platform will be a win-win situation for all the participating countries as it will create important resources for the local end-user manufacturing industry and provide a huge boost to the electrical machinery and equipment sector, of which China is a global leader. This will not just increase the number of overseas orders, but also the level of technological competitiveness amongst China’s domestic enterprises as compared to global market players. Benefits for Europe For centuries, the long distance between Europe and China has been a natural obstacle to strengthening bilateral trade relations. As the Belt and Road project concentrates on enhancing connectivity and transport infrastructure, there is huge potential to enlarge and accelerate the movements of goods between China and Europe. This is witnessed by the existing Trans-Eurasia railroad that connects the city of Chongqing in southwestern China to the German city of Duisburg. This rail route takes only 16 days, making it much faster than the lengthier shipping routes. Since its opening in 2011, China has transported $ 2.5 billion worth of goods to Europe via this route. China, of course, is not the only beneficiary from this improved connectivity. It is estimated that using this rail line, the delivery of a European automobiles to China could be reduced to 25 days, compared to 2 months by sea, thus reducing the time cost of shipping. Similar trading benefits could also extend to the countries along the route. In addition to the potential benefits of the accelerated movement of goods, Europe could also benefit from participating in initiative itself. Although it is a Chinese initiative, China will require international contributions and cooperation. In this regard, EU countries have an important role to play as well as much to gain. Europe could cooperate with China by offering its advanced technology, capital, and management experience. While China with its huge capacity in manufacturing and infrastructure building backed by abundant foreign reserves, could assist Europe in reinforcing and upgrading its own infrastructure, something that would be conducive to its economic recovery and growth in the long run. A recent example is that during the China-Central and Eastern Europe summit in 2013, Chinese Premier Li Keqiang announced plans to jointly build a railway between Serbia and Hungary. Europe’s logistics network could expand eastwards to meet the OBOR’s westward reach, providing support to an emerging logistics corridor, stretching from the established north-south axis in Western Europe to Warsaw in Central and Eastern Europe. Logistics in Europe, which still accounts for a lion’s share of worldwide trade, generating revenue of nearly a trillion Euros and employing more than 7 million people. New trade routes and other initiatives within OBOR will further enhance the sector’s earning’s profile by offering opportunities for expanded transportation and warehousing in the face of potentially increasing trade restrictions and increasing geopolitical tension. OBOR related projects in Europe, which have seen significant investment over the past few years, often involve railways and container terminals. With robust growth in technology-driven retail consumption, Chinese e-commerce giant Alibaba announced its plans to target locations along the OBOR train route for its expansion in Europe. The city of Burgas, Bulgaria, is set to become Alibaba’s European distribution hub following an investment of more than € 100 million. Meanwhile, logistics giant China Shipping 10 WORLD OF INDUSTRIES 7/2018

Group Company (COSCO) and other Chinese port companies have also invested in seaports across Europe. In 2016, COSCO acquired a controlling share in the Greek Piraeus Port Authority for € 280.5 million. Furthermore, it expected that container seaports in Belgium, Netherlands, Italy, Portugal, Spain, Croatia, Slovenia, Latvia and Lithuania will be the key beneficiaries of the OBOR investment flows into container terminal projects, while cities and towns in Poland, Germany, the Netherlands, Belgium, France and Spain will more generally benefit from new rail services to China. In the short term, foreign investors who have already substantially invested in developing integrated supply chains in China, will be able to find new applications for their services. For example, Alstom, the French power equipment giant, that rebuilt a turbine factory near Beijing now plans to supply its Chinese hydropower partners as they bid for dam contracts in third countries. In the long term as well, there are substantial gains to be made through collaborations. Chinese companies have the capital but multinationals offer technology, experience and good local relationships. Partnerships with members of the host country can ease challenges such as different standards, cultures, financial and legal frameworks. This knowledge transfer is central to China’s plan to transition to a higher value-added economy. Leading pharmaceutical companies, for example, have committed to base their global R&D operations in Shanghai, despite concerns about IP protection in China. They will open up their R&D processes, and in return will gain access to the large domestic market which will expand as healthcare reform takes shape, as well as good tax incentives. Concerns from European side Earlier this year, most of the EU ambassadors to China expressed concerns about the OBOR initiative. This was a major setback, as Europe is the final frontier of the land and sea routes which are central to the project. Every day trains from the Chinese trading hubs of Yiwu and Chongqing, arrive at distribution hubs like Duisburg and Madrid. Even the 16+1 initiative between China and Eastern European countries is mainly focused around OBOR projects. But the success of OBOR is threatened by Europe’s increasing concerns with Chinese involvement in the region. One of the primary concerns is that, it contradicts to the EU agenda of transparency, liberalizing trade and pushes the balance of power in favor of subsidized Chinese companies. This criticism though is not new; there has also been concern for some time that the projects in OBOR are often discussed on a bilateral basis, while disregarding international trade and investment rules. Indeed, China might be using its financial muscle to force smaller countries to negotiate in this way. For example, the Belgrade-Budapest railway project, in the early discussions of the project, Chinese and their Hungarian partners tried to keep the bidding process non-transparent, in doing so surpassing EU regulations. The project was ultimately stalled by EU authorities until a more transparent bidding process was adopted. Despite concerns and criticism, the positive aspect for China is that the EU’s criticism is not an outright rejection of the OBOR. Indeed, it still leaves the doors open for European collaboration – but if and only if Europe’s concerns are addressed. z We are the technology leader in metal sawing machines and storage systems. As your experienced partner, we create additional value that can clearly be seen. More Space In metal distribution short access time and high output are key, but not easy to achieve with traditional methods. KASTO storage systems can safely add unparalleled speed and flexibility for a more efficient logistic operation. www.kasto.com Saws. Storage. And More. Metalex Vietnam | Ho-Chi-Minh-City | 11 th -13 th Okt. 2018, Booth H27 Metalex Thailand | Bangkok | 21 st - 24 th Nov. 2018, Hall AM17 Booth 99

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