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Realizing Port's Sound and Fast Development in the Context of Economic Globalization

by Mr. Chang Dechuan

Chairman & President of Qingdao Port (Group) Co., Ltd.

(Oct. 24, 2007 )

Ladies and gentlemen,

Good morning! I'm very happy to join with you at today's summit to discuss opportunities and challenges for ports in the economic globalization.

Following the integration of world markets, now come the stage for the globalization of production factors. Production activities and resources distribution are taking place globally more often than ever before. As a result, the growth of world trade will continue to outpace the development of world economy. As is well known, 90% of the cargos in international trade is transported over the sea. Therefore, further development of globalization on one hand poses higher requirements for world ports, and on the other hand it also brings about good opportunities for ports. With the continuing fast development of China 's economy, and the country's accession to WTO, China 's foreign trade volume has been on the rise. Annual increase of China foreign trade volume is around 24%, reaching $1.76 trillion in 2006 and maintaining the position of the world's 3rd largest country in foreign trade for years. The expansion of China 's foreign trade provides Chinese ports with unprecedented development opportunities. Meanwhile, China 's shipping market is more open after its accession to WTO. Foreign shipping companies and port operators have further participated in providing shipping service in China . With their experience in management and advanced technology, foreign competitors pose a great pressure for domestic port operators.

How should domestic port operators take advantage of the opportunity and cope with the competition and challenges so as realize success in the waves of economic globalization? From my point of view, ports should strengthen themselves in the following 3 aspects: the first one is technical innovation, which is the key factor; the second one is strengthening cooperation with business partners, which is the guarantee; and the third one is environment protection, which is the ports' responsibility.

First, technical innovation is the key factor. Science and technology constitute the primary productive force. The new technical revolution, represented by the information and Internet technology, has become the driving fore for economic globalization. As an important joint in world economy, ports must meet the higher requirements from both the carriers and the shippers, such as deeper and larger berths, higher handling efficiency, fast information transmission, etc. Without employing modern science and technology, and without using information technology to transform and improve conventional industries, ports could not realize greater development in the market competition. Technical innovation has become a key factor in the development of ports.

The 115 year-old Port of Qingdao is an extra large port of China . At the end of 1980s, most berths at Port of Qingdao could only accommodate vessels with capacity around 10,000 tons and the largest one was for 50,000 ton-capacity vessels. This could not meet the needs of larger vessels with deeper draft. Sticking to the strategy of “reviving the port with science and technology?and employing the latest technology of world ports, we transformed the 100 year-old port area and constructed 2 new port areas with world-class terminals, including container terminals for vessels of 12,000-15,000 TEU, and crude oil and iron ore terminals for 300,000 ton-capacity vessels. Port of Qingdao can accommodate the largest vessels in the world. Now, 24 hour all-weather berthing is realized for vessels with capacity ranging from 100,000 tons to 300,000 tons. The port's overall throughput has exceeded 20 million tons, 100 million tons and 200 million tons successively.

At the same time, we transformed the conventional port operation process with information technology, improved the port's capacity through technical transformation, constructed energy-saving port by using new machinery and equipment, and forged world-class port of high efficiency by practicing operation skills. We have established a state-level technology center, a postdoctoral research station, a modern port information center. Operation of major types of cargos, like container, coal, crude oil, iron ore and grain, is managed through central control, to “replace shovel with a computer mouse? The port's production has shifted from labor-intensive mode to technology-intensive mode. We launch the campaign of learning, practicing and contesting among the employees so as to improve the handling efficiency, which is counted by seconds at Port of Qingdao. “Zhenchao efficiency?for container handling and “Sunbo efficiency?for iron ore handling has broken world records for 6 times respectively. Port of Qingdao handled 7.1% of China's national throughput with 1.3% of the country total berth capacity. In 2006, the port handled 7.7 million TEU of containers with designed capacity of 2.25 million TEU, and realized total throughput of 224 million tons with 100 million tons of designed capacity, ranking No. 10 in the world. Expected container volume and total throughput for 2007 will be 9 million TEU and 260-270 million tons respectively. The port created the miracle of ?>2? which means that we achieved throughput twice of the designed port capacity and realized fast development without the opening of new terminals, thus initiating an intensive and resource-conserving mode of development. Meanwhile, the port has upgraded its service through large-scale technical innovation so as to satisfy the needs of carriers and shippers. Port of Qingdao was one of the first batch of enterprises to win the “National Quality Management Award?

Second, strengthening cooperation with business partners is the guarantee. Both cargos and shipping lines are indispensable for port's development. To survive and develop in the market of fierce competition, port needs to have sufficient cargo supplies and also shipping lines of high density. Economic globalization has provided us with unprecedented good opportunities to draw on resources and markets worldwide.


(October 24,2007)

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