A brand new line in export opportunities

Rail link between China and the UK opens up a range of options for trade between two nations

In January, China's Yiwu Timex Investment Co made headlines by operating the first freight train from China to London.

With a journey taking half the time of sea freight and about 20 to 50 percent less expensive than air freight, it was hailed as a revolutionary approach to shaping trade links between countries along the Belt and Road map.

"What really made the freight train service amazing for us is that our first train arriving in the UK was watched by 2.7 million UK internet users. Soon after such high profile publicity we received inquiries from 10 to 20 media companies wanting to make documentaries," says Oscar Lin, who manages Yiwu Timex's UK subsidiary OneTwoThree Logistics.

Perhaps what made the UK-China freight train service special was its significance within the China-led Belt and Road Initiative. Proposed by President Xi Jinping in 2013, the initiative essentially looks to invest in infrastructure and connectivity between continents with the end objective of boosting trade and people-to-people exchange.

Investment in the initiative is already growing fast. At the Belt and Road forum in May, China committed an additional contribution of $14.6 billion (12.8 billion euros; ￡11.3 billion) to the Silk Road Fund, which invests in infrastructure along the routes, adding to its initial commitment of $40 billion in 2014.

Such potential large-scale movement of goods between Asia and Europe points to significant potential for the UK-China freight train.

Also to Yiwu Timex's credit is the fact that it is the only private company running a train service between China and Europe, as several other similar freight train services are operated by State-owned enterprises.

Yiwu Timex's good work is also recognized by the Chinese government. As a gesture of recognition, the company was appointed to run the 1,000th freight train service from China to Europe in May this year, which coincided with the Belt and Road forum in May.

But Lin admits that, despite the service's glorious image in the media, putting it together was a strenuous process in which Yiwu Timex learned many lessons the hard way,

For example, after choosing the hub in London for the incoming train to arrive, Lin's team realized it was not supervised by customs. So in order to have them cleared, the products on the incoming train had to be transported to a nearby customs clearance center, which caused a few days' delay before they could be sent to customers.

"We learned our lesson, so when the train was departing from London to China we shifted the hub to London Gateway, which has a large space, sufficient facilities and customs supervision, so that clearance could be completed there," Lin says.

The incoming train took 18 days to reach London, transporting goods worth ￡3.5 million ($4.45 million; 3.98 million euros). The return journey took 20 days to arrive in Yiwu, transporting products worth ￡2.5 million.

Most of the products being transported from China to the UK were manufacturing items. The return train carried mostly health products, foodstuffs and baby goods.

After the success of the initial trial, Lin's team is now preparing to make the service a regular one. He believes there will be sufficient demand to support such a regular service, especially given that similar freight trains run by Yiwu Timex runs between Yiwu and Madrid in Spain and Duisburg in Germany are now regular weekly services after a few years of hard work.

"We are very keen to make the London train service a regular one, because we believe in the existence of future market demand," Lin says.

Founded in Yiwu in 2012, Yiwu Timex is a company that has focused on domestic logistics and trade activities. In 2014, it saw an opportunity to operate a freight train service between China and Europe and started preparations.

In the process, the company focused on creating the best route, then put arrangements in place with local train operators to make sure the journey would be smooth and reliable.

Lin says that, compared with other China-Europe freight trains, one advantage held by Yiwu Timex is that of location.

"Yiwu is the largest small commodity wholesale market in the world, so exporters there can help to create significant demand for our products. Yiwu's proximity to other Chinese manufacturing export locations, including Hangzhou, Shanghai, Guangdong and Fujian, also increases our potential market," says Lin.

He adds that Yiwu Timex's flexible corporate culture, and the fact it has operated the freight train regularly between Yiwu and European cities for more than a year, also add to its competitive advantages.

"Having operated this train for over a year, we have also accumulated great experience and expertise. For example, we know how to make sure our trains comply with the customs clearing requirements of each of the countries along the train's route, so that the whole journey's efficiency can be controlled," Lin says.

One lesson his team is learning from successful journeys to Madrid and Duisburg is that the ways a freight train operator can influence market demand are not immediately apparent.

For instance, the train's main customers in Spain include Spanish exporters selling ham, wine and olive oil. This export market developed precisely because lower logistics costs and faster transport times of a freight train made such trade viable between Spain and China, so Lin says his team is looking to discover and help grow similar demand in the UK.

The UK government's increased emphasis on encouraging British small and medium-sized companies to look beyond Europe for new markets amid Brexit uncertainties provides a unique opportunity, Lin says.

"Recently, the UK's Department for International Trade approached us, discussing ideas for making British SMEs more competitive overseas, so we are very keen to work with them to promote British exports."

One project his team is preparing for is the launch of a new service that will help British companies exhibit their products at Yiwu's numerous trade fairs, so they can find new buyers in China. Such services are particularly valuable for SMEs that may not have the resources to attend such overseas fairs, but which for Yiwu Timex would be very easy.

"We are also setting up other add on services, such as creating overseas logistics centers and warehouses that can be used by our team to store items but also can be rented to clients, to help them create a more effective export logistics chain," Lin says. Currently the company has warehouses in Duisburg, Madrid, Ipswich and Paris.

cecily.liu@mail.chinadailyuk.com

(China Daily European Weekly 06/30/2017 page30)