The Air Cargo Industry in China: Implications of Globalization and WTO Accession

This article provides an overview of China's air cargo industry. China's recent accession into the WTO establishes the country's commitment to the liberalization of distribution rights and to the relaxation of restrictions on services such as logistics, thereby creating opportunities for foreign investors. However, the industry has been fragmented and is operating with little market mechanism. It is highly protected and regulated, and is dominated by state‐owned enterprises, due to prevalent local protection and rigid functional demarcations. The manner in which this fragmented industry has coped with the growing need of modern logistics management, which requires integration, both physically and with information, to effectively manage supply chains, is examined. Furthermore, there are tremendous barriers to foreign participation in China's air cargo sector. These arise from a variety of sources, ranging from domestic regulations, guidelines, institutions, and administrative mechanisms to infrastructure and policy constraints. Relevant research issues that are pertinent to the understanding of this transitioning industry are raised.