On Air Now

Upcoming Shows

Program Schedule »

Tune in to Listen

1440 AM Green Bay, WI

Weather

Current Conditions(Green Bay,WI 54303)

More Weather »
50° Feels Like: 50°
Wind: ESE 5 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Today

Showers 64°

Tonight

Thundershowers 48°

Tomorrow

Scattered Thunderstorms 66°

Alerts

  • 0 Severe Weather Alerts
  • 0 Cancellations

Global Logistic Properties gains from China's online boom

By Charmian Kok

SINGAPORE (Reuters) - As consumer spending grows in China and more people turn to online shopping, warehouse operator Global Logistic Properties (GLP) is counting the benefits of the boom, even as exports in the world's second-largest economy slow.

"E-commerce drives a lot of our business. Any time a business shifts to e-commerce, what was previously in a retail location or a store needs to be in a warehouse now," Singapore-listed GLP's deputy chairman and co-founder Jeff Schwartz said.

China's e-commerce sales have been doubling every year and the country is set to emerge as the world's biggest e-commerce market in the next five years, overtaking the United States, Schwartz told Reuters in a telephone interview on Friday.

GLP, 50.6 percent-owned by sovereign wealth fund Government of Singapore Investment Corp., is Asia's largest provider of logistics faculties, with its operations spread across China and Japan.

The company, which owns 6.5 million square meters of completed floor space across 29 Chinese cities, saw its April-June net profit in China jump more than five-fold to $56.6 million.

That's just slightly more than a third of the company's total quarterly net profit of $153 million, as Japan still accounts for the majority of its earnings. But China's share is expected to grow further, driven by strong consumer spending.

"E-commerce is growing very fast and I don't see a reason why it won't continue to grow. The younger generation in China are buying everything online ... except for things that are experiential, like luxury goods," said Schwartz.

GLP's largest customer in China is online retailer Amazon, and e-commerce represents 16 percent of its leased area in the country. GLP also counts Chinese e-commerce companies such as 360Buy and Alibaba Group [ALIAB.UL} among its clients.

Other customers include global brands Wal-mart, Coca Cola and luxury goods company LVMH.

The boom in retail and consumption-related sectors stands in stark contrast to export-dependent industries, where Schwartz said the company was seeing some inventory build-up.

"There's no question the export sector slowed and because Europe is terrible and the U.S. isn't much better and that's reality," he said.

China's exports in August grew a weaker-than-expected 2.7 percent from a year earlier.

In particular, port and export-related businesses have been hit, but GLP says 81 percent of its space is used for domestic consumption and its new developments will also be concentrated on that area.

As part of its expansion plans in China, GLP aims to increase the amount of space it starts developing by 25 percent every year. It was on track to meet its target of 2 million square meters of development starts in the fiscal year ending March 2013, Schwartz said.

GLP shares have been among the best performers on the Singapore bourse so far this year, surging nearly 44 percent. Eight out of 13 brokers tracking GLP have a "buy" or "strong buy" rating on the stock.

In China, GLP competes against companies including Australia's Goodman Group Property Ltd and U.S. firm Prologis Inc in Japan, where GLP has 3.6 million square meters of completed gross floor area.

Growth in China does not come without challenges. Schwartz said it had become tougher to find suitable land in the country, especially with the central government's reduced quotas for real estate development.

(Editing by Anshuman Daga and Richard Pullin)

Comments