GUANGZHOU: A sound logistics industry is vital to a healthy economy and e-commerce, but Guangzhou's existing system is just not up to the task, experts said.

"Guangzhou has scarcely any time to lose if it really wants to be a pivotal city in South China, and if it really expects to benefit from this industry," Liang Haode, vice-chairmen of the Guangzhou Commercial Economy Association, told Business Weekly during a recent interview. He was joined in the interview by fellow Vice-Chairman Luo Chunhua.

Huang Rongxin, general manager of the Guangzhou Commercial Storage and Transportation Corp, defined logistical services as the provision of transport, warehousing, packaging, loading and unloading, distribution, flow processing and information processing services.

Proper logistical services emphasize the use of sound management and state-of-the-art equipment, Huang said.

Liang and Luo said modern commercial activities such as teleshopping and e-commerce require the support of a more effective and convenient logistics industry than is currently available in Guangzhou.

There, the demand for logistical services is already increasing, but it is expected to mushroom after China enters the World Trade Organization (WTO) when foreign enterprises are expected to enter the city's logistics market.

"We can expect two consequences if Guangzhou authorities hesitate on the issue," Liang said.

It is very likely that foreign investors will be less interested in continuing their investments or making new investments in Guangzhou; it is equally likely that existing logistics enterprises will soon find themselves in trouble after foreign logistics enterprises begin operating in the city, the vice-chairmen warned.

Beijing, Shanghai, Tianjin, Chongqing, Shenzhen and Ningbo are attempting to develop their logistics industries into pillar industriesd. Guangzhou has every reason to catch up with them and surpass them.

Flourishing industries, a boom in domestic and foreign trade, improved traffic and transportation systems, they said, create a demand and justification for a more efficient and convenient logistics industry.

Huang said the Guangzhou municipal government should carefully consider logistics industry development in its overall city planning to avoid the creation of too many logistics enterprises which could spur cut-throat competition.

The Guangzhou Commercial Storage and Transportation Corp became the country's first and only logistics firm to win an ISO9002 certificate in 1998. Higher quality is needed in other firms.

There are about 700 logistical enterprises of various sizes and concentration in Guangzhou, but 30 per cent of their warehousing space was unoccupied and 80 per cent of their handling capacity was unused in 1999.

Huang said Guangzhou authorities should consider investing more in logistical infrastructures, equipment and the world's best management technologies. He urged them to better consider logistical industry needs, such as the need for Internet infrastructures in their urban planning.