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Belt and Road Inner Mongolia: The Erenhot China-Mongolia Trade Hub

Photo: The Erenhot-Zamyn Uud border crossing.
The Erenhot-Zamyn Uud border crossing.
Photo: The Erenhot-Zamyn Uud border crossing.
The Erenhot-Zamyn Uud border crossing.

Mongolia lies between China and Russia and shares more than half of its border with China. Economic co-operation between China and Mongolia has played an important role in the construction of the China-Mongolia-Russia Economic Corridor.

The city of Erenhot, in China’s Inner Mongolia Autonomous Region, is just 9km from Zamyn Uud, in Dornogobi province in south-eastern Mongolia, where the Mongolian government is building a free trade zone. Erenhot is the largest centre of rail and road links between China and Mongolia, and as such is a vital strategic location in cross-border co-operation between the two countries. Erenhot was designated as a key pilot zone for development and opening up in 2014 and has become a crucial part of the China-Mongolia-Russia Economic Corridor.

Map: Location of Erenhot on the China-Mongolia-Russia Economic Corridor
Map: Location of Erenhot on the China-Mongolia-Russia Economic Corridor

 

Collaborative Development of Land Logistics

Erenhot is actively developing its import and export logistics business with Mongolia. The city has eight logistics parks with a total area of over 2.5m sq.m. Among them, the Huitong imports logistics park and Huanyu exports logistics park are examples of how land logistics for imports and exports have been developed collaboratively. They have improved the efficiency of cargo transit clearance and material flow and are set to boost further Erenhot’s trade.

1. Huitong imports logistics park

The Huitong imports logistics park is divided into four zones – health inspection and quarantine, customs inspection, specialised logistics storage and storage of mineral products, providing storage, logistics, customs clearance, transportation and other services. Goods imported into China over land via Erenhot must go through the Huitong imports logistics park.

Since Erenhot is on the border with Mongolia, the park mainly handles goods imported from Mongolia, which is traditionally a major livestock breeding country. Goods imported via the park are mainly animal husbandry products, including meat products and derivatives such as cashmere, wool and leather. Machinery and other goods also pass through the park.

 

Photo: Cold storage facilities in Huitong imports logistics park (1).
Cold storage facilities in Huitong imports logistics park (1).
Photo: Cold storage facilities in Huitong imports logistics park (1).
Cold storage facilities in Huitong imports logistics park (1).
Photo: Cold storage facilities in Huitong imports logistics park (2).
Cold storage facilities in Huitong imports logistics park (2).
Photo: Cold storage facilities in Huitong imports logistics park (2).
Cold storage facilities in Huitong imports logistics park (2).

 

Expand Business Opportunities by Improving Border Facilities

Mongolia has a thriving animal husbandry industry and produces many different kinds of meat products, including cooked beef and mutton and frozen horse meat, which are in great demand in China. Erenhot is China’s only designated gateway for the import of horse meat, and because its border facilities are limited, Mongolian horse meat can only be imported into China in winter. This means that the quantity imported always falls short of demand.

In order to develop the horse meat market, Erenhot has made efforts to improve its facilities and provide cold chain storage. In 2016, the Huitong logistics park built integrated cold chain inspection and storage facilities complete with video monitoring and electronic supervision systems in accordance with the requirements of the General Administration of Quality Supervision, Inspection and Quarantine. This has meant that it is now possible to import horse meat all year round and not just in the winter. Imports of horse meat from Erenhot increased from 1,000-2,000 tons a year in the past to over 20,000 tons in 2017. In the next stage of its development, the Huitong logistics park will actively invite investment for repackaging and other basic processing procedures.

 

2. Huanyu exports logistics park

Erenhot’s exports are handled by the Huanyu exports logistics park, which is divided into three zones – a customs supervision area, a centralised area for inspection and quarantine, and an export storage area, providing services such as forwarding, storage, transit, container consolidation and deconsolidation, and sorting.

Photo: Customs supervision zone in Huanyu exports logistics park.
Customs supervision zone in Huanyu exports logistics park.
Photo: Customs supervision zone in Huanyu exports logistics park.
Customs supervision zone in Huanyu exports logistics park.

Given Erenhot’s geographical location, the Huanyu exports logistics park mainly handles logistics business with Mongolia. Goods exported via the park mainly include daily necessities, building materials and other equipment. Exports passing through this park amount to about 5m tons a year.

The siting of the Huanyu exports logistics park next to the Huitong imports logistics park was intended to save transportation time, by allowing trucks carrying import goods from Mongolia to continue on to the Huanyu exports logistics park after offloading and reload with goods bound for Mongolia. Generally speaking, a truck has to wait one day in the logistics park for customs clearance, before proceeding to customs declaration for the import of goods into Mongolia. Containers are mostly used for transportation to facilitate loading and unloading.

The two logistics parks of Huitong and Huanyu are the main drivers of Erenhot’s import and export logistics businesses. The availability of hotels, office buildings and other facilities in the vicinity of these parks greatly increases the competitiveness of the city’s import and export logistics.

Tapping Border Advantages

In order to take full advantage of its border location, Erenhot is looking to boost the supply chain as a whole by developing import-export processing in addition to logistics. The Erenhot Cross-Border Economic Co-operation Zone consists of a dedicated processing zone and an export processing zone where business clusters are being formed for import-export trade, international logistics, timber processing, minerals processing, livestock processing, building materials processing and grain and oil processing. In total, 78 businesses had moved in by July 2018, including 67 processing enterprises and 11 firms in the storage and logistics business.

Photo: Far East Timber Trade Park in Erenhot Cross-Border Economic Co-operation Zone.
Far East Timber Trade Park in Erenhot Cross-Border Economic Co-operation Zone.
Photo: Far East Timber Trade Park in Erenhot Cross-Border Economic Co-operation Zone.
Far East Timber Trade Park in Erenhot Cross-Border Economic Co-operation Zone.

The Cross-Border Economic Co-operation Zone has parks for different industries. For example, since neighbouring Russia is rich in timber resources, Erenhot considers timber processing as a key industry for development and established the Far East Timber Trading Park within the zone in 2017.

Today, 11 timber processing enterprises are operating in this park, importing timber from Russia via Mongolia for processing in Erenhot’s import processing park. The finished timber products are either exported to western markets or sold to the western region of China.

The Cross-Border Economic Co-operation Zone is making use of Erenhot’s advantageous geographical location to actively develop its processing industry and supporting logistics and storage business. It is aiming at becoming a processing trade base on the border in preparation for the relocation of some industries from other parts of China.

China-Mongolia Cross-Border Zone in the Pipeline

China is Mongolia’s largest trading partner and the two countries are building the Erenhot-Zamyn Uud Cross-Border Economic Co-operation Zone together in an attempt to strengthen their economic ties. The zone has a planned area of 18 sq.km and stretches across the borders of both countries. The model of “one zone straddling two countries, within national borders but outside customs territory with closed operation” will be used in the development of international trade, e-commerce, tourism, entertainment and financial services. Economic co-operation between China and Mongolia is likely to upgrade to a higher level once this cross-border economic co-operation zone is completed.

Content provided by Picture: Doris Fung
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