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Growing in China - Integrated Logistics unveils RM97m expansion plan



INTEGRATED LOGISTICS BHD is undertaking a RM100 million expansion plan in China with the building of two new warehouses to meet the strong demand for space from global manufacturers.

The additional warehousein Shenzhen and Shanghai will almost double its space to 164,000 sq m by first quarter 2005 from the present 92,000 sq m. Currently, Integrated Logistics has two warehouses in Shenzhen and one in Shanghai.

Integrated Logistics will also expand its operations to Dalian, Tianjin, Suzhou and Guangzhou this year.

Its chief executive officer Tee Tuan Sem says the total investment cost of the two warehouses is about HK$200 million (RM97.74 million), and it will be funded by internal sources and borrowings.

He says the expansion is to meet the huge demand from multinational companies for quality warehousing facilities and services as a result of China's booming industries.

Last year, Integrated Logistics completed the expansion exercise for its Shenzhen and Shanghai facilities with a total investment of HK$150 million, resulting in 60,000 sq m of warehouse space. Both warehouses are reporting full occupancy.

"Multinational companies have already placed forward bookings for all the space available for a number of years even before the additional warehouses are built," Tee tells FinancialDaily in an interview.

Integrated Logistics' key customers include those involved in the oil and gas industry, electrical and electronics and consumer products.

Asked on the concerns over China's overheating economy, he says: "I do not totally agree that the Chinese economy is in for a hard landing. There may be some squeeze on credit card spending and the construction and property sectors in major cities but certainly not in manufacturing activities.

"China continues to attract foreign direct investments in the manufacturing sector for goods meant for the global market. Multinational companies such as Samsung and General Motors announced major expansion plans in China recently."

Tee says Integrated Logistics, a regional logistics player, is now one of the leading logistics and bonded warehouse operators in China in terms of facilities and operations.

"We have 30 years experience in handling multinational corporations and manufacturers in Malaysia and we have been in the Chinese market for the past 10 years. Integrated Logistics is now well positioned to ride the China boom.

"Our China operations will be contributing more to our bottom line from FY2004 from 50:50 last year on the back of faster cargo throughput, demand, better yields and more available warehousing space this year," Tee says.

He says Integrated Logistics' Malaysian operations will continue to remain big despite the growing importance of the company's China businesses. The company is one of the top three logistics operators in Malaysia and the largest bonded warehouse operator in the country.

Integrated Logistics operates 241,000 sq m of warehouse space in Malaysia another 12,000 sq. m in Philippines.