China will strengthen its logistics system in a bid to become the world's largest procurement destination for international retailers, officials and experts said at the Second China (Shenzhen) Consumer Goods Procurement Fair.

The four-day fair opened on Saturday in Shenzhen, South China's Guangdong Province, and is the largest professional purchasing fair of its kind in China, providing a meeting place for manufacturers and retailers from both home and abroad.

The fair has attracted 97 foreign firms, including 22 of the world's 100 largest retailers, and 589 domestic purchasing companies. Around 50 trade and procurement groups from more than 20 countries and regions are also taking part in the fair to discuss deals.

Huang Hai, assistant to minister of commerce, said: "China will deepen its reform in the national logistics system. The government will intensify its efforts to cultivate large logistics enterprises with vast nationwide networks and strong international competitiveness.

China will abolish the quantitative, geographic and shareholding restrictions on foreign merchandisers' operations in the country by the end of 2004, as it pledged to do so when it joined the World Trade Organization in December 2001, Huang said.

The move will inevitably accelerate the growth of overseas retailers' business operations in China, Huang said.

This will consequently exert pressure on China's immature logistics sector, but will also stimulate the industry's future development both in terms of size and efficiency, Huang indicated.

"China is growing from a manufacturing powerhouse into the world's procurement centre. This process of transformation will provide an unprecedented opportunity for the country to build a fully modernized, internationally competitive logistics system," said Dai Dingyi, vice-chairman of the China Federation of Logistics and Purchasing.

The total value of multinational companies' procurement in China exceeded US$30 billion in 2002 and will reach US$50 billion in 2005, Dai said.

"The procurement and logistics markets in China will boom for the next 15 to 20 years, full of opportunities and challenges for both domestic and overseas enterprises," Dai said.

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