China’s logistics needs improvement, according to a Chinese Vice Minister of Commerce. “In order to expand domestic consumption, it is urgent for us to implement a modern logistics technology system to reduce distribution costs, especially in improving distribution for agricultural products,” Jiang Zengwei, Vice Minister of Commerce, said in March. “In addition, it is important for us to put more emphasis on logistics challenges in e-commerce, both in domestic and cross-border businesses,” said Jiang. High transportation costs and a lack of modern logistics facilities have been an outstanding problem in China’s supply chain for years. “There are many scattered logistics companies in China, but most of them are small because the threshold for entering the industry is low,” said Fu Yuning, Chairman of China Merchants Group. Among China Merchants Group’s 11 biggest sectors, which include shipping, commercial property and banking, Fu said the rate of return from the logistics business is the lowest, yielding about 5% in profit. Although trials to replace business tax with value-added tax have been conducted in the logistics industry, the program needs improvements because various fees and taxes are still high. “The fundamental way out for logistics is prompting standardization in transportation and technology, even at each transporting link,” said Fu. He also suggested to establish big players in the industry, the China Daily reports.