The Hindu Business Line : AFL setting up joint venture in China

AFL Private Ltd, the express cargo service operator, is floating a joint venture in China to take advantage of the growing bilateral trade between the two countries.

Mr Cyrus Guzder, Chairman and Managing Director, AFL, told Business Line that an MoU on the new venture would be signed shortly.

The joint venture would be part of a major global expansion plan being chalked out by the company.

"It is difficult for foreigners to get freight service licences in China. So we are entering into a strategic alliance with a local partner. Our global logistics manager is now tying up these arrangements," Mr Guzder said.

The Chinese operations would handle traffic between China and India as well as intra-Asia trade where there was an India linkage, he said.

The company recently set up an office in Singapore, and will soon follow this up with an office in Thailand, besides China.

The recent free trade agreement India signed with Thailand, as well as the growing trade between China and India, represented a huge opportunity for the company, he said.

"In the cargo division, we are heavily focused on the overseas business, particularly in the Asia region, because there are great opportunities arising in this segment, which will keep growing. Several companies are expected to locate their manufacturing units in Thailand to make use of the concessional duty structure under the FTA."

The same was true for trade within the SAARC region, where the Colombo-Chennai-Mumbai route was interesting.

But, the big surprise, he said, was the growth of Indo-Chinese trade over the past three years.

Having languished at $20-30 million for several years, trade picked up to $250 million in 2000. Today, trade between the two countries was at $4 billion, and was forecast to quadruple to $14 billion in 2014.

"This is a nearly a four-fold increase and importantly it is two-way trade. So we felt the need to set up our own office in China. If we look at trade links between China and India, there are not enough direct connections either by sea or air; a lot of cargo is trans-shipped through Singapore," he said.

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