Aerial photo taken on June 21, 2018 shows morning view of the Lujiazui area in Pudong of Shanghai, East China. File Photo:Xinhua

Shanghai recently launched the first 40 model enterprises of international trade distribution, as their total import and export volume reached nearly 300 billion yuan ($46.39 billion). The commercial activities from these companies accounted for almost 10 percent of Shanghai's total import and export of goods in 2020, according to media reports. 

The 40 enterprises spread across key zones on foreign trade in Shanghai, such as the Pudong New Area and the Lingang New Area, which include a variety of industries like integrated circuits, automobiles and spare parts, medical devices, bulk commodities and consumer goods, China's Jiefang Daily reported on Tuesday.

The international trade distribution center is a format that allows international trade enterprises to build or rent sites within or outside the areas under special supervision of customs and carry out activities related with trade logistics and services.

Bonded trade has several advantages over the traditional trade format which is made on a larger scale with stronger industrial support and service functions and a wider radiation range, according to the Jiefang Daily's report.

Enterprises providing international trade distribution services have a larger trade volume and can also use their logistics network and professional facilities to provide freight forwarding and logistics services to other foreign businesses in the same field.

Official data in 2019 shows that the average international trade volume of the top 100 enterprises on bonded logistics and trade services in Shanghai reached more than 1.6 billion yuan ($247 million).  

Moreover, bonded trade can offer stronger industrial support and services to some key industries such as integrate circuits, according to the report, adding that relevant businesses can take advantage of the special tariff policy of bonded areas. Additionally, their network of international and domestic logistics provide rapid supply distribution services to domestic and foreign manufacturers. 

It can act as a strong supply chain hub, relying on the global logistics network which usually covers more than five countries or regions, while also providing fast supply services to regions within China. 

Shanghai has passed implementation opinions to further develop and explore new trade formats, including international trade distribution, which will be soon revealed to the public.