Low temperatures and high
costs are making exporters reluctant to use the new rail route.
22
ENE 2015
Yixinou freight train containers waiting to return to China. / LUIS
SEVILLANO (EL PAÍS)
Conceived as a huge two-way trade highway between the
two countries, it brought all kinds of consumer items along what has been
dubbed the new silk road, and the idea is that it will return to China filled
with Spanish wine, olive oil, milk, and even cured ham for China’s burgeoning
middle classes. But plans for the train to begin its 21-day journey back in
time for the Chinese New Year on February 19 are on hold, and for the moment,
its 30 dark blue containers remain stacked up in the Abroñigal rail depot in
Madrid.
The sub-zero temperatures that the train will
encounter as it passes through Russia, Kazakhstan, and eastern China, along
with the high cost of moving goods aboard it, are the main reasons Spanish
exporters are reluctant to use the Yixinou train to ship their products for the
moment. An official delegation from Yiwu arrives in Madrid this week to try to
get a project moving that is very important to the Chinese authorities. A
second train bringing Chinese goods is due to arrive in Madrid at the beginning
of February.
“We’ve accepted that
our goods won’t get to China in time for the New Year celebrations there”.
Daniel Campos, Cobocalleja.info
The route that connects Madrid with Yiwu is part of a
much bigger project that Beijing hopes will open up the interior of China. At
the same time as fomenting trade with western Europe, the idea is to create new
branches from the silk road, connecting with markets in Russia, Mongolia,
Kazakhstan, and even Myanmar, Bangladesh, and India.
The difficulties in persuading Spanish businesses to
sign up in part illustrates Spain’s trade imbalance, which is heavily in favor
of China: the country’s trade deficit with China was €13.4 billion in 2013.
That said, exports are growing, and China is now Spain’s fourth-largest non-EU
market, after the United States, Morocco, and Turkey. A total of 12,878 Spanish
companies exported goods to China last year.
The Yixinou is faster and more reliable than shipping,
making it particularly attractive for exporters of perishable and electronic
goods. The problem is that it’s up to 30 percent more expensive than maritime
travel. Julia Zhang, the director of Orient Consulting, which aims to boost
trade ties between China and Spain, has been monitoring the Yixinou initiative
closely: “Until now, containers carried aboard ships took up to 45 days to
travel from China to Spain. The train is more expensive, but it could be the
solution for Spanish exporters that don’t want to have to take their goods
through ports.”
Yiwu, the train’s final destination in China, is a
vast manufacturing and trading hub located in the eastern coastal province of
Zhejiang, where around 70 percent of Chinese immigrants in Spain come from.
With its strong ties to their country of origin, the Yixinou has aroused
interest among Spain’s Chinese business community. Zhang says the original idea
was to export wine and oil aboard the train: “Chinese businesses in Spain are
selling a lot of wine and oil to China. A bottle costing €10 here can be sold
very easily there for €30. What’s more, the Chinese are drinking larger and
larger amounts of Spanish wine. People have more money and are becoming aware
of other wines than France’s.”
The wine bottles froze
and exploded en route. Maybe in the spring we could try”
César Jiménez of exporter Kerry Logistics
The popularity of olive oil has also soared in recent
years in China, where its health-giving properties are increasingly
appreciated. “Spanish olive oil has become fashionable in China. It has a good
image,” says Fernando Ortega, director of iloveaceite.com, which sells Spanish
olive oil around the world. But he believes that for the moment, sea transport
will continue to be the preferred option for olive oil exporters, based simply
on cost. “Exporters analyze costs down to the last cent. And until prices are
adjusted, I don’t think the train is an option in the short term,” he says by
phone shortly before leaving on one of his frequent trips to China in search of
new markets.
Tufan Khalaji, the director of InterRail Services
GmbH, the German transport and logistics company that is part of the Yixinou
operation, outlines some of the issues Spanish producers of wine and olive oil
face in exporting their goods to China. “The temperatures on the route can
reach 30ºC below zero, which will damage wine and oil unless they are kept in
special containers.” One solution is for goods to be transferred to conditioned
containers at some point in central or eastern Europe. Khalaji says he hopes
the Yixinou will head back to China before the end of the month, to coincide
with the visit of the Chinese trade delegation.
As well as oil and wine, other Spanish goods with a
market in China are milk powder, vitamin complexes made up of natural
ingredients, and royal jelly, says Daniel Campos, a partner at Cobocalleja.info,
which represents Chinese wholesalers operating in Spain. “Everything depends on
the final price and the incentives that the delegation from Yiwu can offer. But
we’ve accepted that our goods won’t get to China in time for the New Year
celebrations there,” he says.
The route is part of a
much bigger project that Beijing hopes will open up the interior of China
Adif, the state body responsible for Spain’s railway
infrastructure, says no departure date has been set for the Yixinou to return
to China or for the Spanish containers in Abroñigal to begin customs
procedures.
“We’re looking into which Spanish products would be
best suited to this route,” says Javier Serra, the Spanish embassy’s trade
attaché in Beijing. “Beijing wants to find a formula to make the Yixinou
economically viable. If it returns empty, the cost of Chinese exports will
soar,” he says by phone from the Chinese capital. Serra says it is only logical
that it will be more difficult to fill the train with goods on its return
journey: “It reflects the pattern of international trade.” That said, he says
that in recent years Spain’s exports to China have “virtually tripled, and this
is a positive trend.”
The cold and costs are not the only obstacles holding
back Spanish exporters: lengthy negotiations are still underway on health
protocols for Spanish goods. “We’re in talks over exporting fruit with stones
and pips, particularly peaches and grapes. We’d also like to see more pork
product companies allowed to sell their items in China,” says Serra.
But César Jiménez of Kerry Logistics, a wholesale
exporter of Spanish automotive parts, industrial products and clothing, says
the Yixinou is still too expensive for most Spanish companies: “We’re looking
at it, but we don’t see it as the solution for the moment. The costs are too
high.” He says he has tried shipping wine overland to China in the past: “The
bottles froze and exploded en route. Maybe in the spring we could try.” He adds
that unless Beijing is prepared to heavily subsidize the project, it’s going to
be out of most Spanish companies’ price range. “It’s different for the Germans,
because high-tech products can absorb higher transport costs.”
A second train bringing
Chinese goods is due to arrive in Madrid at the beginning of February
The Cobo Calleja industrial estate in the southern
suburbs of Madrid is where most of Spain’s Chinese wholesalers are based, along
with Zhong Yuan, the logistics company that handles the Yixinou’s containers.
Ruan Zhonghu is the firm’s representative in Spain. He’s optimistic that
Spanish companies will get on board the project, although he’s reluctant to
give any names. In his warehouse, hundreds of huge cardboard boxes are stacked
up that he says arrived aboard the Yixinou last month. The boxes are filled with
suitcases, packed inside each other, like so many Russian dolls, and all
waiting to be sold to the hundreds of Chinese shops throughout Spain.
Source: El Pais
