Delivery International standard warehouses adaptable to local market
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Customer serviCe Good value and quality provided collaboratively and consistently
partnership A dedicated team to ensure best service and product
sustainability Best class sustainability, less cost on customers
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Publisher: Global Supply Chain Council Ltd. CHaINA Magazine is a FREE bi-monthly publication for the members of the Council. There is no charge for members and qualified readers to receive subscriptions in China. For your free subscription, extra copies or address changes, please email subs@supplychain.cn 出版商：Global Supply Chain Council Ltd. CHaINA杂志是为Council会员准备的免费杂志。我们协会会员 和业内专业读者都可以免费订阅。为了及时收到我们的杂 志，额外订阅或地址变更请发邮件至subs@supplychain.cn
Publisher Max Henry Chief Editor Kerry Allen
Photographer Jimmy Kim Translator Carmen Ren
Graphic Designers Susy Song Jane Jin Contributing Writers Berken Byrne, Yihua, Cindy Tse, Olga Mironova, Alexander Gladstone CHaINA Magazine is the only bilingual supply chain and logistics magazine with a strong focus on Greater China. In every issue, we write about the news, trends and best practices that will help manufacturers, retailers and distributors make better business decisions with their sourcing, production, logistics from, to, or within Asia. CHaINA是亚洲地区唯一一本专注于中国的供应链和物流行 业的双语杂志。在每一期，我们通过刊登新闻，行业动向 和实践经验来帮助制造企业、零售商和发行商进行亚洲内 外的采购、生产和物流形式的选择。
Distribution: 10,000 copies on print (6 times a year) CHaINA Magazine is offered FREE of charge by direct post mail to qualified readers in Greater China who are involved in all aspects of supply chain management. It is also distributed through selected locations in major Chinese cities, including hotels, restaurants, service offices/apartments, business centers, airport lounges and other key locations. 发行量：一年六期，每期一万本 CHaINA杂志通过直接向中国各供应链管理的专业读者发送 邮件来提供免费的阅读机会。同样也分发到中国的主要城 市并在酒店、服务楼，商务中心，机场大厅或其他中心地 带免费赠阅。
Target Readers Our target readers are R&D, sourcing, procurement, manufacturing, logistics, warehousing, transportation, retail, distribution and operations managers, directors, vice presidents and decision makers. A majority of our readers are end-users, shippers, and foreign-invested / local manufacturers and retailers. 目标读者 我们的目标读者有来自采购、制造、物流、仓储、运输、 零售和分销的各级管理人士。大部分读者是物流的需求 者，外资或国内的制造企业和零售商。
Magazine available outside China via subscriptions in both iPad and digital editions (price: US$15.99 per year) Go to www.chainamag.com and iTunes to subscribe. Stories Ideas, Comments & Feedback If you have an idea for a story, interview or case study, please contact the editor. We welcome feedback and comments about our content or any issues relating to your operations. Please send your email to editor@supplychain.cn 反馈和意见 如果您有任何新闻故事、采访或实践案 例，请与我们主编联系。如果您就杂志 内容或亚洲供应链管理有任何的意见、 建议或新鲜资讯，请发邮件至 editor@ supplychain.cn与我们取得联系。
Published in Hong Kong 香港出版
2011 was truly a memorable year. The royal wedding, the death of 2 notorious dictators (Gaddafi and Kim Jong Il), and natural disasters affecting Japan and Thailand, just to name a few headlines shocking and gripping the world. With so much going on shaking economies on a global scale, the supply chain has never been a more precarious industry to be Kerry Allen involved in. The recent Thai floods, continued Chief Editor complexities of doing retail business in India, CHaINA Magazine and growing concerns for the decline of China’s manufacturing industry, have been additional complications for doing business in such a volatile trade, meaning that we’re all just a little bit apprehensive about what 2012 will bring. This January/February edition of CHaINA magazine sheds some light on some of the hottest new trends in supply chain innovation for the coming year. We highlight some of the most promising startup companies for 2012, as well as opportunities in procurement and air freight, as well as those created across all trades by the new pilot indirect tax reform program in Shanghai. But that’s not to say we’re doing away with the spice. Retail scams targeting outlet stores, scandals in poor food hygiene, legal troubles in logistics for the likes of GCL, SC Johnson and UPS, and blackmarket borrowing on the dark streets of Wenzhou, are just some of the stories we’ve got in store. Add to the mix exclusive interviews from executives at Johnson Controls, Gazeley and Tesco, as well as a little story about how pigs really might fly, and this will be an issue of CHaINA magazine you’ll be struggling to put down! 2011是值得记住的一年。英国皇家大婚、两位著名独裁者的去世（卡扎菲和金正日） 还有影响日本和泰国的自然灾害，这只是今年震撼世界的头条新闻中的一部分。 在全球经济震动的格局下，卷入其中的供应链行业面临前所未有的不稳定局面。最 近的泰国洪灾、在印度开展零售业务的持续复杂性以及对于中国制造业萎缩的更多担 忧，已经给在这个本身就多变的贸易行业发展业务造成了附加的困难，这意味着我们 都对2012年会给我们带来什么忧心忡忡。 这期一/二月号的CHaINA杂志涉及到来年供应链行业创新的最热点趋势。我们重点 突出了一些2012年最有前景的新公司，还有采购业和航空货运行业的机遇，以及由在 上海的新飞行员间接税改革引发的跨越各个贸易领域的商机。 然而这并不代表我们没有关注负面问题。目标直指打折商店的零售业骗局，糟糕的 食品卫生丑闻，GCL、庄臣和UPS等公司的物流法律问题，还有温州街道暗处的黑市， 这些都是我们本期杂志焦聚的热点。 再加上对约翰逊控制公司、盖世理和乐购高层的独家采访，以及关于小猪是如何飞 上天的小故事，这些都会使你对本期的CHaINA杂志爱不释手!
DISCLAIMER Editorial and advertising are independent and do not necessarily reflect the views of the Council, the board, its members or the staff. While every efforts has been made to ensure accuracy, the publisher is not responsible for any errors. Views expressed by writers or contributors in this magazine are not necessarily those of the publisher. The publisher is not responsible for product claims and representations. © Copyright Global Supply Chain Council Ltd. (Hong Kong). All rights reserved The contents of the magazine may not be reprinted in whole or in part without the permission of the publisher. No part of this publication may be reproduced without written consent of the copyright holder. CHaINA is a registered trademark of the Global Supply Chain Council. 1 january/ FEBRUARY
C ONTENTS frontlines 6 8 9 10 12 14 15
Big Photo Movers & Shakers Take a Break Quotes Invest-O-Mania Asia News M&A
6 大事件
Procurement 16 18
Procurement News Interview: Kenith Poon, Purchasing and Supply Chain Manager
january / february 2012
MANUFACTuRING 22 24 26
Manufacturing News Cleaning Clean-Tech Wenzhou: A City in Crisis
22 制造短讯 24 清洁能源技术真的清洁吗？
20
A Vision of Procurement
26 温州：十面埋伏
16 采购短讯
8 斗转星移
18 江森自控的访谈
9 轻松一刻
20 采购业放眼未来
10 从业者说 12 建设一览 14 亚洲新闻 15 企业并购资讯
Logistics 28 30 32 34 36
Logistics News Interview: Pat McGillycuddy, CEO Will C919 Work? Piggy Logistics Pharma-Freight
28 物流短讯 30 盖世理的访谈 32 C919行不行？ 34 猪猪物流
DISTRIBUTION 38 40
42
The LINKS
Distribution News Interview: Jurrien Heynen, Distribution Manager
55
Dinnertime Dangers
65
58 59 60
Best Practices in SCM And the Award Goes to... Indirect Tax Reform - Pilot Program in Shanghai Freight Felony Linkedin Question
38 零售短讯
55 供应链管理的最佳实践
40 乐购的访谈
58 供应链颁奖典礼
42 危险的晚餐
59 上 海 增值税试点 60 货运重罪
36 医药运输
65 采购人士的报告
2 january/ FEBRUARY
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FEATUREs
44
Rewriting The Rules 10 Supply Chain Firms Whose Innovative Ideas Will Shape 2012
48
Troubles in Thailand
51
The Brand Scam
Natural Disasters Prompt Japanese Companies to Rethink Their Strategies
Uncovering the Made-For-Outlet Apparel Supply Chain
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january/ FEBRUARY
Dotcom It’s Official: China Now Makes BMW for Export Want to read more stories like this? Global Supply Chain Council brings you Supplychain.asia, your number 1 resource for the latest news in r&d, procurement, manufacturing, logistics and retail/ distribution across Asia. Go online today and find out more! www.Supplychain.asia
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FRONTLINES
Movers & Shakers with
Recently changed jobs? Send us an email to publicise it here! editor@supplychain.cn
Eugene BUCKLEY VP and GM (APAC)
Lawrence KOLE COO (China)
Peter GRIMVALL Director Supply Chain (China)
PrimeRevenue
MindsInSync Inc.
DeLaval
Buckley is responsible for managing all aspects of APAC operations following his move to PrimeRevenue, a leading SaaS Platform for Supply Chain finance.
Frank SUTHERLAND MD (APAC) Shelter Asset Management LLC
Before joining Shelter Asset Management, Sutherland worked at Steelcase for the last 10 years as the Director of Asia Supply Chains.
Kole left his position as Head of Operations for Pacific Brands to oversee MindsInSync Inc, Hong Kong based exporter and manufacturer.
Yin XIE Purchasing Manager (China)
Tom GLASER VP, Supply Chain President (Europe & Asia)
Johnson & Johnson
VF Corporation
Glaser replaced Boyd Rogers - who retired in the fourth quarter after four decades with VF - to oversee all manufacturing and sourcing operations.
Stephen LI Director (China)
Amadou DIALLO CEO Freight (Global)
CVC Capital Partners
DHL
Li was the Principal at Booz & Company from 2009-2011 before becoming Director at CVC Capital Partners in October. He previously worked for Henkel, Deloitte and GM.
Grimvall was involved in setting up and developing a regional supply chain organization in Asia as GM for Swedwood Shanghai (IKEA) over the last 4 years.
Xie was a buyer for Johnson & Johnson from 2001-2006 before working at Michelin for 5 years. She now works at Johnson & Johnson again under a new position.
Emmanuel PETREQUIN
Regional Manager, Healthcare (Singapore) SDV
Diallo was previously CEO of DHL Global Forwarding for Africa and South Asia Pacific. He is now responsible for the company’s global road and freight forwarding operations.
Petrequin is now responsible for the Asia Pacific region’s healthcare and life science sector. Prior to this, he was a logistics specialist in the healthcare industry.
Shengqing JIANG VP Logistics (China)
Youqiang ZHANG Chairman (Global)
Martin THAYSEN MD (China)
Mecox Lane
MyCargo Airlines
CEVA
Jiang was previously VP for warehousing at B2C Dangdang.com, and prior to that GM for logistics at Shanghai Xinhua Media Co.
Zhang was promoted following Bravia Capital’s and HNA’s acquisition of ACT Airlines and corporate rebranding as ‘MyCargo’.
Daniel L. SMYTKA President (APAC)
Xavier PERELLO PAIRADA
Goodyear
SSI Schaefer
Smytka joined Goodyear in 2008 and was promoted following his role relocating and opening of several factories in China.
Thaysen will be MD for CEVA Logistics’ China operations effective from 1 February 2012. He is currently CCO for Damco.
Philipp SCHWARZL Regional Manager, Pharmaceutical & Healthcare (APAC)
Regional GM (Asia)
Geodis Wilson
Perello Pairada has been promoted to Regional GM covering all of SSI Schaefer’s Asia operations. He has been working at SSI Schaefer since 2000.
Schwarzl worked at Panalpina for the last 4 years, most recently assuming the position as VP Chemicals covering Greater China.
Supply Chain
8 january/ FEBRUARY
Procurement
Logistics www.chainamag.com
FRONTLINES
Take a break, have a
The Buyer
A manufacturer is showing his machine factory to a potential buyer. At noon, when the lunch whistle blows, two thousand men and women immediately stop work at the same time and leave the building. “Your workers, they’re all leaving!” cries the visitor. “Don’t worry, they’ll be back,” says the manufacturer. And indeed, at exactly one o’clock the whistle blows again, and all the workers return from their break. When the tour is over, the manufacturer turns to his guest and says, “Well now, how many of these machines would you like to order?” “Forget the machines,” says the visitor. “How much do you want for that whistle?”
Job Security
L a u g h
After being laid off from five different jobs in four months, Arnold was hired by a warehouse. One day he lost control of a forklift and drove it off the loading dock. Surveying the damage, the owner shook his head and said he’d have to withhold 10% of Arnold’s wages to pay for the repairs. “How much will it cost?” asked Arnold. “About $4,500,” said the owner. “What a relief!” exclaimed Arnold. I’ve finally got job security!”
Competition
A shopkeeper was dismayed when a brand new business much like his own opened up next door and erected a huge sign which read BEST DEALS. He was horrified when another competitor opened up on his right, and announced its arrival with an even larger sign, reading LOWEST PRICES. The shopkeeper panicked, until he had an idea. He put the biggest sign of them all above his own shop. It read MAIN ENTRANCE.
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FRONTLINES
US$13bn Total cost of Hong Kong – Zhuhai – Macau 30km bridge which has finally been approved and begun construction after 2 decades of delays.
Quotes ‘You’ve got these Gulf airlines coming in and ordering ludicrous … numbers of long-haul aircraft. It’s almost a penis competition.’ RyanAir CEO Michael O’Leary in Shanghai to meet with COMAC, discussing the current competition for aircraft and the new C919
‘It won’t be any harder for a Chinese company to retain the brand’s Swedish-ness than for an American or anyone else.’ Bertil Moldén , CEO of National Automotive Association BIL Sweden
101,000m2
on the potential acquisition of Saab by Pang Da and Youngman
The size of a new HKNW (Hong Kong New World) Department Store to open in Yantai, Shandong. An estimated US$250mn has been invested in the project, and with last year’s revenue increasing 46.8%, it looks like they’re onto something big.
‘If Wal-Mart tries to open its mall anywhere, I will burn it myself.’ Former state chief minister Uma Bharti , in response to the 51% FDI Multi-retail sector agreement in India
‘Some are skeptical that what they are planning isn’t really to build robots, but rather automation machinery’ Frank Tobe, Owner of the Robot Report in response to Foxconn’s decision to build robots which will be used in their Taiwan factory
US$28.5mn Total figure for orders in 10 hours on Taobao, on Singles’ Day, compared with the average 8mn a day.
‘I have made another decision out of frustration: to build a large trucking fleet’
Liu Qiangdong , 360Buy’s chief executive, on solving long-distance transport problems. He adds “I expect it to have about 300 trucks, [...] We worked with more than 60 [logistics] partners, and not one could satisfy our demands with regard to speed, timeliness, cost and service quality.”
10 minutes Time in which iPhone 4S pre-orders sold out in Hong Kong
1,100 Rough number of employees out of 1,300 at Fuzhou PepsiCo who did not turn up to work on 15th November due to fury over Pepsi/Tingyi alliance 10 january/ FEBRUARY
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january/ FEBRUARY
a i n a M O t s e Inv
.
ction and investment in China
constru A glimpse at the never-ending
L’Oreal’s Production Facility
Airbus’ Logistics Hub
Yichang - US$31.5mn
Tianjin – 10,000m2
L’Oreal has announced development of its second factory in China, a 70,000m2 production base that will create 250 million units of cosmetics annually.
The new logistics facility provides storage and transport capabilities and will optimise logistics activities in supply chain management, including reduced costs of up to 30%.
Bosch’s Factory Chengdu - US$150mn The 13,500m2 facility will include sectors in pharma, food and confectionary, with 7,200m2 of production area floor space.
Dangdang’s Logistics Center Chengdu - 100,000m2 E-commerce business DangDang plans to build its fourth logistics centre in order to spur initiatives to increase sales for second-hand and digital books.
Silverplow’s Cold Chain Logistics Center Chengdu - US$189mn Construction has begun on the largest cold-chain logistic centre in Western China. The facility will have total capacity of 300,000 tons, a 160,000m2 distribution centre, and a 100,000m2 warehouse.
Guangxi Land Port Liuzhou - US$5bn The total 5 billion yuan development will include the construction of Liuzhou Fengqing Port, an inland port, and logistic distribution centres.
R&D
Manufacturing
january/ FEBRUARY
Logistics
Keppel T&T’s Distribution Centre Foshan - 100,000m2 KLF’s distribution centre will include 35,000m2 of warehousing space and feature a 12m-high aisle racking and warehouse management system. www.chainamag.com
Hebei Iron Ore Production Facility
Railway Logistics Facility
Hebei - US$79mn
Zhaoyuan - US$28.2mn
The local government is involved in six construction projects in Tangshan, Qinhuangdao and Chengde, building facilities for a capacity of 700mn metric tons of iron ore.
GWM’s Technology Centre
Shenyang Railway Bureau has invested CNY180 million (US$28.2 million) in a grain facility. It will cover an area of 200,000m2 and be divided into areas including transshipping, trading, processing and distributing.
Harman’s Manufacturing Facility
Baoding - US$787mn
Dandong - US$100mn
Great Wall Motors has so far invested 315mn in a R&D center which will include laboratories to assess safety and sound quality.
Audio and infotainment manufacturer Harman’s fourth China facility, a 460,000m2 development will be used to develop electric and audio components.
Zhaoyuan
Shandong’s Marine EDZ Weifang – 600,000m2
Chengde Tianjin
Qinhuangdao
Dandong
Tangshan
Coveme’s Production Facility
Baoding Weifang
Zhangjiagang
Yichang
Chengdu
Xiantao
The city aims to invest US$15bn in the next three years to build a port logistics park, green energy park and chemical industry base.
Zhangjiagang - US$40mn Polyester film producer Coveme will open a 10,000m2 factory with workshops, laboratories and offices and to expand dyMat PYE backsheet manufacturing.
Iteq’s CCL Plant Xiantao - US$33mn Iteq is building its third production base in China, a facility for products used to make HDI boards.
Liuzhou Foshan
Tripod Technology’s Factory Xiantao - US$30mn Tripod’s new factory, slated for production in the fourth quarter of 2012, will mainly produce applications for hard drives, notebooks and LCD panels.
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january/ FEBRUARY
FRONTLINES
Headlines for Asia Vietnam
INDIA Government U-turn Halts Permission for FDI. In late November the Indian government finally announcing their agreement to 51% foreign-owned multi-brand retail stores to enter the market, only then to once again revoke their decision. A government source stated that it was just a temporary delay, not a refusal. “This is a pause. Do not see it as a rollback, as if the government is giving up on it.” However, now the investment opportunities of WalMart, Carrefour, Tesco, IKEA and others on the Indian market, evaluated at US$470 billion, are once again unclear. Riots and protests broke out after announcement of the initial plan for FDI (Foreign Direct Investment). The leading opposition party organised massive protests against reform, which practically paralysed the working session of both chambers of Parliament. This was backed by SMEs protesting on the streets, claiming that the entry of MNCs would create uneven competitive conditions, force millions of small domestic enterprises out of the market, and leave up to 600 farmers without a source of income.
Vietnam Still A Top Choice For Nike Footwear A recent visit by Nick Athanasakos, VP of Sourcing & Manufacturing, confirmed that Vietnam was still the number 1 destination for sourcing Nike footwear. Athanasakos stated that when Nike first entered Vietnam, it had to import 98% of raw materials to produce a pair of shoes, but now the figure has dropped to 56%, and domestic raw materials will completely replace imported ones in the future. Approximately 50% of the 158 million pairs of shoes exported from Vietnam are products of Nike, generating upwards of US$2 billion in annual revenue and creating 300,000 jobs for Vietnamese workers.
philippines Philippines Infrastructure Hit by a Tropical Storm A tropical storm followed by massive floods has caused devastation to southern cities of Cagayan de Oro and Iligan. More than 1,000 people were killed, and half a million have been injured or affected. Crawford & Co stated multiple cases of infrastructure, residential and commercial property damages, including several small-hydro power plants, cement plants and mines. UN humanitarian coordinator Soe Nyunt-U reported: “Debris from houses, buildings and other structures that had been destroyed by the storm was all swept out to the sea, leaving huge areas devoid of all traces of habitation,” and appealed for international communities to render assistance in order to avoid possible disease outbreaks. 14 january/ FEBRUARY
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FRONTLINES
North KOREA The Death of a Leader Breaking news came from Pyongyang on December 19th, causing increased tension across the global political arena: Kim Jongil, the perpetuating leader of North Korea, died of a heart attack on December 17th. The appointed heir is his younger 27-year-old son Kim Jong un, hailed by state media as a “lighthouse of hope”. Since Kim Jong-il’s death, North Korea has significantly tightened internal security and put troops on alert. Even the border with China, one of the few countries having partnership relations with North Korea, was closed. Yu Lu, 1 of the Dangdong border traders from China said: “We can’t go in now, because of the death of Kim Jongil.” It’s all closed off, and basically all the North Koreans are heading back. It’s very tightly closed today.”
MERGERS & ACQUISITIONS US$7.2bn 10 9 US$1bn
US$886mn 8 7 US$571mn
US$566mn 6 5 US$312.4mn
US$75mn 4 3 US$55mn
US$40mn 2 1 US$14mn
1 Vikram Logistic and Maritime Services, a subsidiary of Infrastructure India has purchased ETA Engineering for US$14mn.
INDONESIA New Law Boosts Logistics Growth Indonesia’s parliament recently approved a law allowing the government to acquire civilian land for such uses as airports, railways, dams and oil facilities, compensating landowners with cash. Under the new law, the whole process must be finished in less than 18 months, as today buying land for infrastructure projects can take 5 years or more. This scheme is geared towards enabling Indonesia to compete against fast-growth countries like China and Brazil.
2 Automobile interior trim supplier Ningbo Huaxiang Electronics has paid US$40mn to acquire German components maker Sellner Group. 3 Indian Vivimed Labs has acquired pharma and intermediates manufacturer Uquifa for US$55mn. 4 Brightoil Petroleum has acquired Win Business Petroleum Group for US$75mn to develop and produce natural gas at the Xinjiang Tarim Basin Dina 1 Gas Field. 5 South Korean company GS Engineering & Construction has bought OHL Group’s environmental unit Inima for US$312.4mn
6 Yum! Brands, owner of KFC and Pizza Hut, has acquired Mongolian hotpot company Little Sheep for US$566mn. 7 China Shipbuilding Industry has acquired Wuchang Shipping Industry, Henan Diesel Engine Industry, Shanxi Pingyang Industry Machinery, Zhongnan Equipment, Jiangshan Ship Machinery and Chongqing Hengshan Machinery for US$571mn. 8 Caterpillar Inc. has acquired ERA Mining Machinery for US$886mn. 9 Winsway Coking Coal and Merubeni Corp. have made a joint investment of US$1bn to acquire metallurgical coal producer Grand Cache Coal. 10 KKR & Co. made one of the biggest private-equity acquisitions of 2011 by purchasing oil and gas group Samson Investment Co for US$7.2bn. 15
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january/ FEBRUARY
Content ►Procurement News /16 ►Interview: Johnson Controls /18 ►A Vision of Procurement /20 采购短讯 /16
江森自控的访谈 /18
采购业放眼未来 /20
PROCUREMENT
Cotton Inventory Pressures Mount High in Urumqi
Xinjiang’s cotton industry suffered delays for 2/3 of its 732,000 tonnes of cargo trains being transported out of the region in late October, owing to insufficient local processing capacity, sluggish demand from textile enterprises and poor railway transportation. This raises concern for the year ahead, with government agencies and private firms purchasing 1.23 million tonnes in cotton for the coming year, a 240% increase from the previous year. About 1/3 of China’s cotton comes from Xinjiang.
Alibaba Reaches 50 Million Registered Users B2B site Alibaba has reached a massive 50 million registered
users for its China site, with registered users included from Hong Kong, Macau and Taiwan, but predominately China, with notable expansion from central and western regions.
Nokia and VW to Source More from India
Nokia is to increase sourcing from India by finding local suppliers for its display screens and batteries. Currently, Nokia sources 20-30% of plastic and rubber components, however has asked its key vendors to tie up with Indian firms in an effort to increase profit and lower input costs. “7080% of the components are imported,
so there is a lot of room to go after. We’re talking with our suppliers in China, Japan and South Korea to form joint ventures with domestic firms,” said Prakash Katama, Operations Director at India’s Chennai Factory. VW likewise aims to triple its component sourcing out of India to US$400 million over the next 3-5 years. The automobile company plans to increase localised production to over 90% to compete against Suzuki and Hyundai. “We are […] seeing India as a very competitive sourcing base [because] there’s a cost advantage of at least 10% to 15% over Western Europe,” said Mahesh Kodumudi, Director for Components Purchasing, India.
Suzuki to Buy Fiat Engines
Maruti Suzuki India has finalised a
16 january/ FEBRUARY
www.chainamag.com
For more on Thailand story see Feature Story on p.48
deal to source diesel engines from local Fiat dealers, a strategy geared towards reducing lead times and increasing the number of exports. “We’ll gradually get about 100,000 engines a year from Fiat,” said Marati Chairman R.C. Bhargava. Marati currently has global annual capacity of 1.5 million cars a year, and this venture aims to aid increased capacity to 1.75 million in 2012.
Honda Resumes Sourcing in Thailand
Honda’s India operations are set to resume sourcing spares from Thailand for its Brio, Jazz and City models, meaning that factories can resume production. “The [flood] waters have receded in Thailand,”
explained Jnaneswar Sen, VP for HSCI (Honda Siel Cars India). The automotive company’s sourcing operations from Thailand are expected to resume at full capacity by February 2012.
Infosys BPO Buys Australia’s Portland Group for US$37 Million The outsourcing subsidiary of Infosys, BPO, has signed an agreement to acquire Australiabased Portland Group, a provider of sourcing and category management services, for approx. US$37 million as part of a strategy for expansion.
Hospitals in UK Wasting Millions in Imported Chinese Food The British National Health Service (NHS) has recently come under criticism in a report by
‘The Soil Association’ because it was reported they waste millions in importing food every year, including 95% of fish and processed potatoes. It was found that a significant portion of that sourcing came from China and Thailand, and travelled a staggering 19,300 miles.
ZTE to Source More From Turkey
As part of a strategy to expand their global operations, Chinese telecom equipment provider ZTE has signed a contract with Turkish Turkcell to build a procurement centre geared towards meeting the Western market. ZTE currently has 6 delivery centres outside of China and this latest move is expected to explode business in high-end market countries in Europe and the US.
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17 www.chainamag.com
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PROCUREMENT
Managing
Your Suppliers Johnson Controls’ Purchasing & Supply Chain Manager Kenith Poon talks strategies for China, 2012 Please give a brief introduction of your position in Johnson Controls and how you manage supply chains in Asia. I look after the purchasing and supply chain functions for the Building Efficiency (BE) business unit in Asia. BE is one of the 3 business units in Johnson Controls: it provides heating, ventilation and air conditioning (HVAC) products, building management and energy solutions, and facility management services. It is a US$15 billion BU out of the total US$40 billion revenue for Johnson Controls. In Asia, we operate in 12 countries and run 3 manufacturing hubs. We have over 200 people in the supply chain community, in areas of manufacturing, field procurement, indirect purchases and logistics.
Johnson Controls interiors
Tell me about your presence in China. In China we have 2 manufacturing bases and over 40 branches, and our spends in China are significant. We recognise the importance of China as a country for growth. Currently, we buy commodities like copper, steel, motors, compressors, and electronic parts for our
factories. We also buy refrigerants, valves, sensors and other materials for our branches. What are your sourcing challenges for China? In the last few years particularly, inflation, material shortage, labour force redistribution, and quality have created challenges on our supply chain stability in China. There is also a misperception about China sourcing: China-made products are cost-competitive in their home markets compared to the imported ones, however if they were made for export, one cannot expect that those prices would be the same when they were sold in the China, because there are added requirements on international certifications (UL and CE for example), and environmental and specification variations, etc. that increase costs. The quality of China products has been improving, however, now the focus should be on less visible and soft elements such as customer support and services, consistency of service quality, and the delivery of commitments. Do you think Chinese manufacturers can stay competitive despite inflation? China has already established a strong supply chain network that can’t be easily replaced. Despite the challenges of inflation, rising labour costs, etc., the scale, breadth and depth of China’s sourcing is second to none in the world, and factories cannot easily be moved across borders, so this will still be important in the foreseeable future. Going forward, Chinese manufacturers cannot compete merely on cost any more. For them to survive and be more competitive, they will have to be more innovative and more brand focused.
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PROCUREMENT How do you go about maintaining compliance? We have a comprehensive compliance program where supply chain is one Johnson Controls automotive of the main work streams. electronics We conduct regular training on integrity and ethics issues, and we also have established stringent internal controls to ensure good compliance. Compliance violation is a serious offence within the company. Our suppliers are required to agree to our ethics policy, respond to our due diligence and facilitate our on-site assessments. How do you work with suppliers in Vietnam and India? We source directly from Vietnam for some commodities. India is a growth area for our company. We have a local supply chain team and a plant in India. We do want to develop additional India-based suppliers for our regional and global projects.
供应商管理 江森自控采购供应链经理潘建明 谈 2012 年中国市场前景 请简单介绍下您在江森自控公司的职位以及您是如何管理在 亚洲的供应链的。 我负责在亚洲业务中建筑设施效益（BE）部分的采购以及供应链 功能。BE是江森自控三大业务中的一个：提供供热、通风和空调 （HVAC）产品，建筑管理和能源解决方案、以及设施管理服务。对 于总收益400亿美元的就江森自控公司来说，这是一项150亿美元的 业务单位。在亚洲，我们覆盖12个国家经营着3个制造中心。我们在 供应链行业的从业者超过200人，分布在制造业、采购、间接采购和 物流。 谈谈你们在中国的现状。 在中国我们有两个制造基地和超过40个分支。采购是我们在亚洲支 出的主要方面，所以我们认可中国作为一个有发展潜力国家的重要 性。目前，我们为工厂购买像铜、钢铁、电动机、压缩机和电子部件 这样的商品，我们还为我们的分支购买冷冻剂、阀门和感应器。 你们在中国采购面临什么挑战？ 特别在最近几年，通货膨胀、物资短缺、劳动力再分配和国际上质 量标准的变化给我们在中国供应链的稳定和安全带来了很多挑战。 我们在亚洲有太多的供应商，我们正努力合并他们。两年前我们有 超过五万的供应商，直到去年年底我们已将他们的数量减半，但是 我们还需要进一步减少其数量。
Automotive heating system manufactured by Johnson Controls
What are your focuses or targets for 2012? Talent development, building an even more effective and connected SCM function, supporting the sustainable and profitable growth of our businesses, driving further quality improvement and supplier innovation, and achieving operational excellence are the key focus areas. Our overall objective as an SCM organisation is to be seen as a core business partner that is a key driver for our company’s success.
$
US$40.8bn
Global Revenue for Johnson Controls
5000
China Employees (BE unit)
2
Manufacturing Facilities in China
40
Branch Offices in China
面对通货膨胀，您认为中国的制造商能保持竞争力吗？ 中国已经建立起不可轻易取代的强大供应链网络。尽管有通货膨 胀、上升的劳动成本等挑战，中国采购业的规模，广度和深度在世界 上还是首屈一指的，况且工厂不易跨境转移，所以在可见的未来中 国采购业还是稳定的。放眼未来，中国的制造商不能仅靠成本来竞 争了；要想在市场生存并更有竞争力，他们必须更有创新性并专注于 品牌打造。 你们是如何保持符合性的？ 我们有一套详尽的符合性程序，供应链是其中的主要部分。我们在 整体性和道德问题上开展定期培训，我们还建立起严格的内部控 制来确保良好的符合性。在公司里违反符合性是一件严重的违规 行为。我们的供应商被要求签署我们的道德政策协议回应我们付出 的努力并帮助我们更好的进行实地评估。 你们与越南和印度的供应商是如何合作的？ 有些商品我们是直接从越南采购。印度是我们想发展的大目标市 场，我们在印度有一个当地的供应链管理小组和厂房。我们的确想 在区域性和全球性的工程上发展印度的供应商，但是目前我们购买 的从印度出口的商品有限。我们现在从印度采购的主要只是用于国 内消费。 今年你们关注的重点或目标是什么？ 人才开发、建设一个有效的和相连的供应链管理系统、支持业务的 可持续及有效益的增长、促进质量提升和供应商创新还有取得经营 业绩是我们的主要目标。我们的商业模式很复杂，我们的解决方案 和组织也是。把供应链管理系统转变得更有效率而成为一个核心业 务伙伴需要大量耐心和努力，但是我们能够做到。
19 www.chainamag.com
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PROCUREMENT
A Vision of Procurement
Procurement Challenges and Strategies from CHaINA’11 Live
Berken Byrne
Keith Miears, Dell
I
t’s a tumultuous time to be a part of the sourcing industry in China and thus CHaINA’11 Live was the perfect venue to discuss how to best handle the industry’s various challenges and implement counter-measures for the coming year. Keynote speakers Michael Huang, General Manager of International Procurement at LG, and Keith Miears, Director of Worldwide Procurement at Dell, raised an extensive list of difficulties. Among them were rising labor and material costs, increasing inflation, volatile consumer demand and unforeseen crises that have thrown entire supply chains out of sync. “There are quite a number of issues affecting production efficiency and cost this year and everyone in this room is under high pressure,” said Huang. “So the question is what actions and measures we can take to mitigate those and improve at the same time.” Indeed, those in attendance know that the speakers and subsequent Q&A offered an even longer list of challenges
Michael Huang, LG and counter-strategies to best succeed in the industry’s current state. What follows is a selection of some of the major themes from those discussions:
There are quite a number of issues affecting production efficiency and cost this year and everyone [...] is under high pressure. - Michael Huang, LG
Moving Beyond Eastern China
The exodus begins in China’s own backyard. While labour costs in Shanghai are still relatively low at 1280 yuan per month (US$202), factories have been slowly moving to even cheaper Western China. It’s not hard to see why, with labour costs in Hefei about 25% lower than Shanghai, and Wuhan and Sichuan nearly 35%. Yet Huang was careful to point out the downside of moving West - the business climate is still nowhere near as conducive to efficient business as that of coastal China. “The concepts of quality and doing business in those areas just aren’t mature yet,” he explained. Other speakers supported this. Lilian Luca, consultant at Beijing Axis Procurement, emphasised that in industries that rely little on labour, Eastern China will remain the dominant procurement destination for a variety
20 january/ FEBRUARY
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PROCUREMENT of reasons. “In our company’s field: heavy industrial equipment, none of the other destinations compare,” he said. Luca explained that the cheap land, capital, and raw materials around Shanghai more than make up for the slightly higher cost of labour, and emphasised the better overall quality of working in Eastern China as well. The notion of setting up operations in a destination to capture quickly expanding domestic markets was also raised, especially in relation to Brazil and India. Miears for one, stressed the importance of the Indian market for Dell’s long-term strategy, leading the firm to invest substantially in local manufacturing. Huang likewise distinguished India as highly efficient in labour rate and supply, as well as English fluency. Southeast Asia was middle across the board, but rated low in infrastructure and labour skill. China, notably, featured no poor ratings, but rated lower than the aforementioned in labour rate and labour supply.
Advanced Sourcing Tools
Given how thin the line can be between a profitable and unprofitable modern logistics firm, it’s of crucial importance that companies carefully determine prices and spending budgets. Fortunately, most modern sourcing departments are in a position to use advanced sourcing tools to do exactly that. The key area that speakers noted the potential of is in price negotiations with suppliers. While previously price negotiations were more driven by competition and less tangible metrics, modern tools can shed light on the concrete value of a supplier’s offerings. Some companies, like Dell, have gone so far as to measure the relationship of each cost driver - materials, direct and indirect labour, equipment, and even the warranty - involved in the production of the product to the product’s total cost. Miears used an example to exhibit how valuable this information can be in a negotiation. “When a supplier comes to me and says, ‘the labor rate’s gone up 20%, I need a big cost increase to cover that because my supply base is going underwater’, I can see that about 3% of the [product’s] cost is labour-associated and do the math to figure out what the cost impact should be.
2011 Sourcing Issues in China Labor cost increase
22-27% in 2010 & continue increase significantly in 2011
Labor shortage Coastal Areas
High Inflation
Over 6% as officially published Price for electric power increased signifcantly (industrial use)
RMB Appreciation
Over 6.5% appreciation since June, 2010
Country Policy on Energy Saving & Emission Reduction Risk of Finance Capital Chain Raw Materials Cost Increase vs Value Add PPT slide from Michael Huang’s presentation at CHaINA’11 Live
“We also might see other categories - for example, electrical components - where the cost is declining,” he continued. “So after we factor that in, the price might actually end up going down.”
Building Supplier Relationships
There are a lot of wasted opportunities in typical procurement organisations’ supplier relationships, starting with the high number of them. “The number of suppliers a company has is more than they need,” said Huang, emphasising the need for companies to decide on an optimal number of suppliers and then rank them, with the least value-effective being cut out of the equation. With the most effective, he recommended considering a partnership that would allow the procurer to slowly assist the supplier in increasing quality and efficiency. However as a few speakers pointed out, there are downsides to such a relationship with suppliers - most notably the high financial investment required and the risk that suppliers someday will provide products for a rival procurement organisation. Luca acknowledged these negatives and yet still wholly endorsed the strategy. “Knowledge […] will be used for working with other companies, but that’s OK because the level of competitiveness increases as a whole.” He went on to explain that, while his firm’s work with suppliers increases the end price to consumers 2-3%, the reduced risk of working with superior suppliers easily justifies the tradeoff. Unsurprisingly, while a thorough understanding of best practices may be enough to spur a significant leap in productivity for certain suppliers, advanced technological tools are what will really help a supplier shine. Miears again offered such an example: “We can tell if there should be 156 operators on a certain line, for instance. So if they’re running at 170, we know we need to work with them on it.” 21
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Content
►
Manufacturing News /22 ► Cleaning Clean-Tech /24 ► Wenzhou: A City in Crisis /26
制造短讯 /22
清洁能源技术真的清洁吗？/24
温州：十面埋伏 /26
MANUFACTURING
BMW Begins Exporting ‘Made in China’ Cars
BMW will become the first foreign carmaker in China to export cars manufactured within the mainland, when it begins shipping 5-series Sedans at the beginning of this year. BMW has been incredibly successful in the last two years enjoying a 45% increase in sales, and is building a 100,000 unit capacity production plant in Shenyang in anticipation of surpassing sales of 200,000 units in 2012. The plant will produce the new X1 SUV and 3 Series models, as well as assemble Twin-Power Turbo fourcylinder engines.
Audi to Expand in China with New Foshan Plant
The luxury automotive brand plans to open a production facility in Foshan, Guangzhou which will manufacture 200,000 cars a year,
taking annual capacity to over 700,000. Audi’s decision to open a 2nd plant comes in anticipation of orders for more than 300,000 units for the coming year. “We want to strengthen our position significantly in China and further strengthen our strategic partnership,” said Audi CEO Rupert Stadler. “The new plant is an important milestone in our long-term growth strategy in China.”
Aluminium Production in China to Increase 60%
Production of aluminium is expected to increase 60% globally over the next few years, reaching 75 million tonnes by 2020, according to the China Non-ferrous Metals Association. In 2012, 4 million
tons of new capacity is set to begin production, predominately in Xinjiang where cheap solar and wind energy supplies are available. “There is a strong demand for primary aluminium from China […] as construction, electrification and manufacturing sectors are growing at a healthy rate,” said Chris Bayliss, director of Global Projects, IAI. China is currently the number 1 producer of aluminium in the world.
1000 Apple and HP Workers Strike
In early December, more than 1000 workers went on strike at Hi-P Electronics factory in Shanghai, after sudden announcement that the factory was moving. Workers at the factory, which is a manufacturing
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MANUFACTURING facility for HP and Apple products, told China Enterprise News that they weren’t forewarned or offered fair compensation on the matter. One worker said at the time, “I was forced to sign a letter of resignation. The human resource company said I have to sign either the agreement to move, or resign. If I don’t sign either, he would call our supervisor immediately to terminate my position.”
Mengniu have expanded market shares to 17% and 15% respectively whilst Nestlé has remained stuck at 3%. Hervé Cathelin, CEO of Nestlé, stated that the closure would provoke changes in the business model - particularly sourcing. “We might focus on a few particular brands and products because we don’t have to support local production in Shanghai,” he said.
Struggles for Nestlé in China
Shanghai Factory Explosion Leaves 61 Injured
In the last 2 months, Nestlé has closed 1 of its 3 ice cream factories in China, owing to a failure in meeting local expectations and not expanding. In the last 5 years, its biggest competitors Yili and
An explosion at a Pegatron factory in Songjiang, Shanghai left 61 injured with 23 people hospitalised with burns. Pegatron, which supplies back panels for Apple products, mentioned that the explosion has affected the production of the iPad 2 by as much as 30%. “Our hearts go out
to the people who were hurt in Songjiang. We are working closely with Pegatron to understand the cause of this accident,” stated Apple in a press release.
Willy Wonka Chocolate Factory Opens in Shanghai China’s first chocolate-themed gallery opened on December 16th in Shanghai’s Himalayas Center and will be running until the end of February. The exhibition, modeled on the famous Willy Wonka Chocolate Factory, features carefully handcrafted chocolate replicas of the terracotta warriors, rickshaws, gramophones, bronze wares, earthen wares as well as blue and white porcelain bowls and vases.
23 www.chainamag.com
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MANUFACTURING
Cleaning Clean-Tech:
Towards More Sustainable Solar Power Yihua
Yihua.asia
I
n October, seven solar companies filed a petition to the US challenging China’s solar companies’ subsidies, protesting anti-dumping duties on low-cost Chinese products. This, along with recently publicised pollution incidents, has put the spotlight on Chinese solar manufacturers, who produce more than half the world’s solar panels. At first glance, solar panels appear to be the epitome of sustainability, generating energy directly from the sun without any waste products or greenhouse gases. What’s often overlooked, however, is the entire lifespan of the product – the solar panel. What is it made of? How was it made? What will happen to it when we throw it away in 20, 30 years? These questions must be considered at every node along the supply chain when evaluating sustainability in solar power production.
Challenges created from corrosive byproduct: STC
For solar panels, this starts with the raw material for the wafers that absorb sunlight and turn it into electricity – most commonly, polysilicon. China occupies 30% of the global polysilicon market, and every ton of polysilicon produced results in up to 15 - 20 tons of a highly toxic and corrosive byproduct, silicon tetrachloride (STC). In countries with more advanced technologies (e.g. America, Japan, and Germany), STC is recycled to produce the raw material for polysilicon again, forming a closed-loop process. However, most Chinese polysilicon plants do not have STC recycling technologies in place yet. Many producers either sell the STC waste as raw material for other industries, or simply outsource the problem to third-party waste disposal companies. If the company is unqualified for treating STC, they may
dispose of it illegally, contaminating the environment and affecting public health and livelihood. Perhaps the most famous pollution case, covered by the Washington Post in 2008, involved months of illegal STC dumping onto nearby farmland by the polysilicon producer Luoyang Zhonggui, in Henan Province. “The land where you dump or bury it will be infertile. No grass or trees will grow in the place…It is like dynamite - it is poisonous, it is polluting. Human Source: Wellhome beings can never touch it,” commented a Hebei Industrial University professor on the incident.
Eliminating STC waste
Local government officials often protect polysilicon and solar companies because of their contribution to local GDP growth and tax revenues. The Chinese Central government is however, moving fast and pushing towards more stable and sustainable development of the industry. The Polysilicon Industry Access Standards, issued in January 2011, mandates polysilicon manufacturers recycle 98.5% of all STC produced.
24 january/ FEBRUARY
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MANUFACTURING The most desirable option though, is for producers to eliminate the STC waste stream completely by recycling STC. Companies such as GCL Solar, Daqo New Energy, and LDK Solar, have begun adopting foreign STC recycling technologies over the last couple of years. But these technologies are still few in number, and, being patented, generally very expensive for Chinese companies to obtain. Moreover, foreign companies are often reluctant to export technology to China. Since existing STC recycling processes are very heat and energy intensive, many companies are also concerned with the financial impact. Reusing Silicon Kerf Another significant waste stream that can be eliminated through recycling is known as ‘kerf’. To make the ultrathin solar wafers, multi-wire saws cut polysilicon blocks into thousands of wafers using an abrasive slurry. During this slicing process, approximately 40 – 50% of highpurity silicon is lost as dust, or kerf, which gets mixed into the slurry waste. While it is common for plants to partially recycle the slurry waste and reuse the abrasives and the cutting fluid, the nano-scale silicon kerf particles cannot be separated easily and are often wasted. Recently developed technologies, however, are capable of extracting silicon kerf from the slurry waste so that it can be melted into polysilicon blocks and reused for wafer production. Adopting this kerf recycling technology will drastically reduce the use of raw polysilicon material and the amount of slurry waste generated. This translates to significant savings for wafer production, currently 65% the cost of a solar cell. The future of sustainable power in China Though 98% of Chinese solar panels are currently exported to Western countries, this trend is shifting as China’s own installed solar capacity is projected to increase from 1 GW to 10 GW by 2015 and to 50 GW by 2040. China needs to be prepared to handle increasing amounts of used/defective solar modules, and consequently, solar manufacturers should invest now in recycling infrastructure and processes, including silicon recycling and handling of hazardous chemicals. Product design should assume that producers, not consumers, will be responsible for their products at the end of their
30%
Solar Panel Wafers Produced in China
15-20 Tons Toxic produced Per Ton of Polysilicon 98%
Chinese Solar Panels Exported
10%
Expected GW Increase by 2015
Source: Bloomberg New Energy Finance
lifecycle. This Extended Producer Responsibility (EPR) approach is already being implemented in Germany through the voluntary take-back program, “PV cycle”. China has begun taking steps to address its growing e-waste problem. In September, an e-waste recycling exhibition was held in Beijing to promote technology exchange between China and Taiwan. To deal with the impending wave of solar e-waste, international cooperation and exchange between solar manufacturers should begin now so as not to repeat the mistakes of the electronics industry, which according to a UN report in 2007, still exports 70% of the world’s refuse to China, taking advantage of lagging environmental regulations and practices, and creating e-waste villages such as Guiyu. As solar power becomes ever more affordable, it is critical for producers to ensure that the social and environmental costs of solar panels are not merely being passed on to other nations or future generations. Existing production flows should be examined to identify opportunities for efficiency improvements and waste minimisation using available technologies such as STC and kerf recycling. Producers should develop processes now to handle the growing solar e-waste that will be generated in the future. These efforts, together with continued research and faster technology exchanges, will speed up the process of harnessing solar power in a truly sustainable way with many beautiful sunrises ahead. 25
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MANUFACTURING
Wenzhou:
A City in Crisis One of many abandoned factories in Wenzhou
I
Kerry Allen
n Wenzhou, Zhejiang Province, the BMWs lining the street give an air of wealth that cannot be compared to any other city in China. As a hub for small and medium enterprises (SMEs) making shoes, buttons, eyeglasses, and 70% of the world’s cigarette lighters, Wenzhou has secured a long-standing reputation as a city of aggressive businessmen, who despite the challenges of living in a city surrounded by mountains, and with very little arable land, have retained being successful in securing a substantial amount of foreign trade. However look closer and you’ll see an evident shift is taking place. The cracks are starting to show in Wenzhou’s manufacturing industry, and all is not as it seems. The city, previously host to over 4,000 SMEs for cigarette lighters, now has only 100, and according to one local businessman “only 50 are operating normally.” Wenzhou is a city falling into crisis. The manufacturing industry is slipping into decline, with the HSBC PMI (Purchasing Managers Index) survey for November 2011 indicating a 2% slump in factory production within China, a figure mirroring the worst of the economic crisis in 2008. Some have settled for bankruptcy, others have disappeared without a trace. However characteristic of a community not known for going down without a fight, for most the response has been to delve into the world of black-market loaning in order to sustain their businesses in the short term.
particularly Europe with the depreciation of the Euro. The consequence of which has been many of Wenzhou‘s 140,000 SMEs falling heavily into debt, upwards of 60% reaching out using some form of private lending. SMEs not having access to large state bank loans, as a necessity have had to resort to these measures, loan-sharking often being the most sufficient option available. “Private lending and private enterprises are a natural couple,” says Hu Zhenhua, Economics professor at Wenzhou University. “One cannot exist without the other.” And where loan-sharking won’t suffice, businessmen and women in the region are appealing in desperation to their family, friends and neighbors. A disturbing 90% of households in Wenzhou have participated in some form of private lending in order to support these struggling businesses.
Deep in Debt
In recent months, Wenzhou has seen a scaling back on production due to falling demand from foreign markets,
Zhong Maojin, Blue Sky Pharmacy
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MANUFACTURING Zhong Maojin, chairman of Blue Sky Pharmacy is one of many who has felt the pinch in his business. Reduced demand has meant rapid depletion of stock in Blue Sky Pharmacy warehouses, as well as huge debts for Zhong. He borrowed a total of US$4.7mn from over 100 lenders, most of which were elderly neighbours who remortgaged their houses to help his suffering business. When confronted by aggressive loan-sharks about the debts that he owed, he offered to cut off one of his fingers. “I am under huge pressure,” he said. “We don’t have enough money.” Likewise a woman named Zheng Zhuju used extensive networks of private finances to build a chain of home appliance stores, before the credit collapse caught up with her, meaning she was unable to pay off her US$16mn debts. Zheng refused to answer phone calls and went into hiding before finally being arrested in late 2011. Zhou Dewen, head of Wenzhou’s SME Promotion Association predicts that owing to the reduction in foreign demand, 40% of facilities may have to halt production by January. Ye Lebing, MD of an electronics factory in Wenzhou notes that Chinese New Year is a particularly dangerous time for SMEs because this is when they must pay their staff wages, and pay back the money their business loans. “But this year companies are going under before New Year” he adds worryingly.
sharking in the region, and that owing to the state of the wider economic climate, Wenzhou is in danger of slipping into a huge recession. “The size of the market is impossible to estimate,” said Xie. “If the slowdown in bank-deposit growth partly reflects this phenomenon, it could be several trillion yuan in size. When it bursts, it may lead to significant social instability.” And this situation is not limited to Wenzhou. “This local crisis could evolve into a national problem,” said Ren Xianfang, a Beijing-based analyst for IHS Global Insight, accounting the fact that 40% of all businesses in China are SMEs.
The future of Wenzhou
360,000 US$ 783 mn
$
24.4%
Growing gloom
1/5 of the city’s SMEs no longer operating (because of debts) Private-lending disputes in Wenzhou 2011 (up 71% from 2010) Interest rates in Wenzhou private lending market Wenzhou
As Chinese New Year approaches, SMEs are increasingly looking for drastic solutions to their problems. Businesses are not learning from the mistake made by Zhejiang Center Group’s Hu Fulin who in 2008, faced with slim profits in his eyewear production lines, took out large loans to invest in what was seen as the vogue product at the time – solar panels. Faced with US$314mn in debt following the failure of his new business model, Fulin is now one of many who have fled the country to avoid violence from loan sharks. At present, at least 90 business owners from Wenzhou have fled, and 2 have committed suicide, others struggling on, taking out further debts and blindly investing in the manufacture of new products in the slim hope of success. Economist Andy Xie, visiting Wenzhou, remarked on the continued common practice of loan-
So what is the future for Wenzhou? The local government has offered US$140mn into helping suffering businesses such as Mr Zhong’s and Mr Hu’s, however it seems that the damage has been done, and as Ren Xianfang warns, could be much further reaching. National Development and Reform Commission of China’s Zhang Yansheng offers that “China should change its economic development model and reduce its dependence on foreign trade.” This is a bleak message for Wenzhou’s manufacturing industry, however might help avoid a long-term recession much as we have seen in Europe.
27 www.chainamag.com
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CONTENT ► Logistics News /28 ► Interview: Gazeley /30 ► Will C919 Work? /32 ► Piggy Logistics /34 ► Freight Felony /36 ► Pharma-Freight /38 物流短讯 /28
盖世理的访谈 /30 C919行不行？/32
LOGISTICS
猪猪物流 /34
货运重罪 /36
医药运输 /38
First Stage of Construction: CHEC Steel Cylinders Shipped to Hong Kong from Shanghai
CHEC Wins Hong Kong – Zhuhai – Macau Bridge Contract
After 20 years of delays, the Hong Kong government has approved the development of a 30km bridge joining the islands of Hong Kong and Macau, with China Harbor Engineering Company (CHEC) winning the contract for construction. The bridge is expected to be complete in 2016, bringing benefits to both countries’ logistics industries in the areas of passenger and freight land transportation. The project will include construction of a 6,140m long seawall, comprising a 134 steel sheet pile cellular structure with diameters of 27m-31m.
Airbus Opens First Asian Logistics Center Airbus has opened its first Asia-
based logistics facility in Tianjin. The center will play a vital role in optimising Airbus’ supply chain, by monitoring transport and logistics activities throughout China and surrounding Asia in order to increase efficiency and reduce logistics costs. Speaking on the project, Airbus China President Laurence Barron said, “The Airbus logistics centre in Tianjin is another step forward in our cooperation with Tianjin, where we already have the A320 Family Final Assembly Line and Delivery Centre.” He went on to state that the facility would also “support the production of the A350 XWB, of which five per cent of the airframe will be manufactured in China.”
OceanMetrics Performance Measurement Platform Creates Opportunities for Containerised Shipping
INTTRA, a provider of e-commerce solutions to the ocean freight industry, has launched OceanMetrics, the first neutral platform to enable shippers and carriers to share their delivery performance measurements, including on-time performance, response time and amendments/ cancellations. INTTRA CEO Ken
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LOGISTICS Bloom stated, “We believe this innovative milestone can help shippers and carriers work together to optimise supply chains and improve service delivery.” Currently, more than 2 billion container orders are initiated on INTTRA every month.
Gazeley Celebrates 5th Year in China
Warehousing and distribution park provider Gazeley recently celebrated their 5th year in China. Gazeley, who have created warehousing space for Wal-Mart, DHL and Geodis, plans to develop over 325,000m2 worth of space in the next 2 years in Guangzhou, Beijing and Chengdu.
TAPA Fights Organised Crime
The Transported Asset Protection Association (TAPA) has launched a global security standard which
ensures a reduction on organised crime for its 700+ global members. The updated Trucking Security Requirements includes mandatory certification, ensuring that truck drivers are given sufficient security training and that they are working with a secured truck. The cost of global cargo theft is estimated at several billion per annum (US$3-5bn in the US alone) with 85% of major cargo thefts occuring on land transportation.
Pudong Airport to Build 2 New Runways The local Shanghai government has approved a US$1.1 million project to build 2 more runways
at Shanghai International Airport, enabling the world’s 3rd biggest airport by passenger volume to handle 650,000 flights a year by 2020.
CargoSmart Launches First Interactive Schedule Application
Shipping and Logistics provider CargoSmart announced the launch of their Schedule Reliability interactive platform – an optimisation tool which helps to manage contracts with carriers online, reduce shipment delays and thus lower transportation costs. The new solution provides data covering over 14,000 vessels and 800 ports, enabling customers to select the best carriers, routes, and measure overall performance based on punctuality. The schedule is available online and via iPhone application.
不符合现今职业安全和卫生法规要 低效率的仓储规划 不合时宜的仓库储存系统 劳动集约化经营 无法达到KPI要求
无限的物流 解决方案
缺乏本地仓储物流公司的支持 无法恰当且有效的利用现有空间 拣货时出现多项的物品拣选错误 不符合FEM的安全标准
Schaefer 能够为您提供物流成功的公式 Schaefer 拥 有 完 善 的 公 式 , 能 够 成 功 的 解 决 您 所 有 的 物 流 困 境 。 我 们 的 综 合 存 储 解 决 方 案 就 是 您 的 答 案 。 它 高 性 能 的 订 单 拣 选 ， 更 准 确 又 快速的拣选流程和许多其他可定制的方式,能够有效的改善您的仓库业务运作，并能为您带来更多的成本节省。 欲了解更多详情，请登入
www.ssi-schaefer.cn 胜斐迩仓储系统（昆山）有限公司上海分公司 中国上海市广中西路777弄多媒体科技园 55号启迪大厦609室 200072 电话 +86/ 21/ 5308 3678 传真 +86/ 21/ 3606 0295 电邮 shanghai@ssi-schaefer.cn
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LOGISTICS
Bringing Carbon Positive Logistics to China Gazeley’s CEO, Pat McGillycuddy Discusses Sustainable Logistics in the Mainland Could you tell me a bit of background about your company? Gazeley is part of EZW (Economic Zones World), we were bought by EZW in 2008 to expand our platform across the world and they’re supporting us with growing our business. We have an established business unit in Dubai, in the Jebel Ali free zone which is the biggest free zone in the world. We have 6,400 customers there, a lot of whom want to have status outside of Dubai, so part of the logic is to help them to find accommodation wherever they’re needed. Tell me about your operations in China, how long have you been here? We’ve been here 5 years now, it’s true that we haven’t made as much progress as we’d wanted to, and definitely the global downturn did affect us. However, Nick [Cook, SVP Development and Commercial] at border level is taking responsibility for supporting Sally [Lin, Country Director] and her team, in serving our customers in China. The build-to-suit model that we’ve pursued, where our total profits provide exactly what customers need, is one of our major strengths and we have done that successfully for customers in many areas. What examples of sustainability do you implement in your business model? In the UK we have a 35,500m2 G.Park Blue Planet in Chatterley Valley, and we’re putting a biomass plant in there providing heat and electricity, which is one of the features helping us achieve the target to have a carbonpositive development. We use the UK as our test bed because it’s our most mature market, but certainly we would envisage in due course having a biomass plant coming to China, to run off municipal waste so our philosophy is fulfilled. When we look at our buildings, that as much as possible is recyclable and has another life is important, the more that we can use and reuse, the better. We don’t ask people
to reduce their consumption; industry and commerce has to grow. How we grow it more effectively, that’s what our mission is, in the context of delivering cost-effective warehouses, it has to make sense. Through sustainability you can make your warehouses cheaper to run, and we have good examples where major customers save 10% of their running costs through co-investing with us to install sustainable features in their warehouses, such as with John Lewis in the UK. How effective is sustainability for a market such as China? The view we take is that there’s no point in Gazeley being sustainable in its development if others aren’t. To have a
Walmart Regional Distribution Centre - 43,000m2 (Tianjin, China) 30 january/ FEBRUARY
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LOGISTICS successful business model, you need to have a successful environment, and the only way you’ll have a successful environment is if we are all on the journey. We believe we are getting growing evidence that the China market is here to stay, and we expect China to be our biggest business unit in 5 years, not only because of the logistics industry but because of our capability to connect with the industry and customers and provide them with what they want, where they want it.
6.4mn m2 Warehouse space
developed worldwide
9
Logistic centres in China
43,000 m2 Size of China-based Wal-Mart project
What are your plans for expanding within China? Our next plan is to open an office somewhere yet to be announced, but we’re certainly in the course of next year opening a second regional office and we will open the appropriate number of offices to serve our business and our customers. If we focus on giving cost-effective solutions and serving the customers, then overall I believe we’ve got a successful industry. Are you also viewing potential for India? In 2007, Goodman, Prologis, AMB and ourselves entered India, and in 2008 again we all left it. It was difficult then, there were a number of things happening in India. The multi-retail format which means that FDI is allowed and foreign entities can invest directly on multi-format retails, was a significant flaw. However, the infrastructure’s improving, and it is a growing market, so there is no question that India will be a significant market in the future, not only primarily in the domestic market but also export market. So we intend to in the first half of this year, reinvest in India.
将低碳环保物流 带入中国 盖世理CEO, Pat McGillycuddy先 生探讨中国大陆的可持续物流 您能大致介绍一下贵公司的背景吗？ 盖世理是EZW（经济区世界）的一部分，2008年我们由EZW 引入支持，在全世界扩大我们的商业平台。我们在迪拜的世 界最大免税区杰贝阿里免税区已经开展了业务。我们在那里 有6400位客户，其中很多客户在寻求迪拜以外的业务，所以 无论何时何地他们有需要，我们也会提供协助。 请谈谈你们在中国的业务，你们来到中国多久了？ 我们在这里已经五年了，的确我们还没有取得预期的进展， 而全球经济衰退也确实影响了我们。然而，我们发展及商业 部的高级副总裁Nick Cook在负责支持中国区总监Sally Lin和 她的团队，以更好的服务于中国客户。我们所追求的量身定 做商业模式，即我们的总收益用来提供客户所需，这是我们 的一个主要优势，我们在很多地区已经取得了实践的成功。 在你们的商业模式中采用了什么样的可持续性策略？ 在英国的查泰莱谷我们有一个面积为35500平方米的蓝色星 球园区，我们还正在那里建设提供热能和电能的生物质能源 厂，这是帮助我们达到低碳环保发展目标的特色运作模式之 一。我们用英国作为我们的试验基地因为那是我们最成熟的 市场，当然我们也会设想在适当的时候在中国建设生物质能 源厂来利用城市垃圾，以实现我们的经营哲学。看看我们的 建设工程，保证尽可能多的回收是非常重要的，我们能利用 和再利用的越多就越好。我们不会要人们减少他们的消费 量，工业和商业需要发展。如何更有效的发展是我们的任 务，在建设符合成本效益的仓库时，这必须是有意义的。通 过可持续性发展，你可以更经济的经营你的仓库，我们还有 很多好的案例比如大客户们通过和我们共同投资在他们的仓 库里安装可持续性设备而节省10%的运营成本，比如英国的 约翰刘易斯公司。 可持续性对于像中国这样的市场能多有效？ 我们认为如果其他人没有做同样的事，盖世理在发展中也没 有可持续性的必要。要有一个成功的商业模式，你需要有一 个成功的大环境，而拥有成功大环境的唯一办法是我们都必 须在这条路上走。我们对中国市场有信心，我们期待在五年 之内，中国能成为我们最大的业务区，不仅仅是因为物流业 还因为我们有能力和各行业和客户联络，无论何地为他们供 其所需。 你们在中国有什么发展计划吗？ 我们的下一个计划是成立一个办公点，具体地点还没有确 定，但是我们已经在筹划明年建立第二个区域办公室，我们 会建立数量适当的办公点来服务我们的业务和客户。如果我 们专注于提供符合成本效益的解决方案和服务客户，那么总 的来说我相信我们已经取得了成功。 你们有往印度发展的意向吗？ 2007年，嘉民、普洛斯、AMB和我们进入了印度，2008年我 们又都离开了。当时很困难，在印度发生了很多事。复合零 售模式意味着外国直接投资是被允许的，外国企业可以直接 在复合模式的零售投资，这是一个主要问题。然而，基础设 施正在改善，印度也是一个在发展的市场，所以无疑未来它 会成为一个重要市场，不只是在国内市场还有出口市场。所 以今年上半年我们计划再次投资印度。
Gazeley’s first ECO project – 43,000 m² (UK) 31 www.chainamag.com
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will C919 WORK?
Questioning the future success of COMAC's latest model Kerry Allen
I
n late November, the Council hosted its Aviation Supply Chain Luncheon with guest speaker Bradley Perrett, Asia-Pacific Bureau Chief for Aviation Week. The focus of this luncheon was to discuss the joint venture between Commercial Aircraft Corporation of China (COMAC) with Bombardier in March of this year, a partnership strategically geared towards competing with internationally successful Boeing and Airbus, by constructing the C919, the largest commercial airliner to be designed and built in China. Whilst there has been a lot of optimism surrounding this merger, Perrett’s presentation offered interesting background into the C919 project, and claims the new COMAC model will not rank higher than any other airliner on the market, owing to lack of mature experience in the industry which will result in production delays. The COMAC C919 COMAC’s C919 is a 158seat domestic airliner that will use at least 25% of its parts from China. These will include aluminium from Chinese factories to manufacture the plane’s overall aero structure, i.e. the wing boxes and ailerons (built in Xi’an), as well as the fuselage systems which (built in Hongdu). The interiors, such as hydraulics from Parker Aerospace and the engine, designed by General Electric, will be fully imported from western countries. The final assembly for all other parts will be
done in Shanghai, which Perrett explains is part of a government requirement for the authorisation of the project; that western suppliers wishing to develop with Chinese partners provide opportunities to the Chinese aerospace industry and cooperate with local suppliers. COMAC will have full responsibility in designing the aircraft and be in overall charge of its development in China, however Perrett stresses that the company’s lack of experience in implemented a successful business model in the past will result in their only being able to offer something as good as Boeing or Airbus. Lack of experience “There was an opportunity”, Perrett mentioned, for suppliers to integrate their experience in the last few years, and taking advantage of Airbus’ outdated models, implement the new technologies that were available. But with COMAC he asserts, “It wasn’t an opportunity that was good enough for a company that doesn’t know what it’s doing.” He discussed the benefits of COMAC having Chinese suppliers with greater experience than Boeing and Airbus, and similarly competent engineers and manufacturers. Their knowledge from building previous airliners, into what to provide COMAC with, such as increased seating and advanced technologies, will mean that the C919 has the potential of being a successful commodity. However in reality, Perrett argues, the C919 will have “no prospect of being a commercially profitable business opportunity,” again due to lack of success in the past.
Bradley Perrett, Aviation Week
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LOGISTICS Poor Branding Against the success of Boeing and Airbus, Perrett addressed the fact that despite such apparent success in the domestic market, there have been few firm orders for the C919. When it was officially launched in 2008, there were many “launch orders” which have since become “offers”. The companies that have actually placed fixed orders for the finished model have either been Chinese state-owned companies, such as the Industrial Bank of China and Sichuan Airlines, or closely related to General Electric, which Perrett warns “almost inevitably will lead to a WTO dispute.” RyanAir have recently viewed potential for purchasing the model, CEO Michael O’Leary stating in a press conference that “clearly with the development of the C919 there’s a credible low-cost alternative to the 737 and the Airbus A320,” which Perrett hazards at being less than US$100mn. However he notes this is only after withdrawing from an agreement with Airbus on unspecified terms, and that the C919 is the only viable alternative option available. Delayed production Perrett was keen to draw on the previous challenges COMAC faced with its ongoing, nearly decade old project – the ARJ21 regional jet. Begun in 2002,
Source: theasiandefence. blogspot.com
and fraught with a slow FAA (Federal Aviation Administration) certification process, the ARJ21 will finally launch in 2012 with outdated technology. If the ARJ21 is any indication of the C919’s future, Perrett’s doubts about the aircraft meeting the 2014 deadline, as well as meeting expectations of its quality and competitiveness are well founded.
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LOGISTICS Cindy Tse
Piggy Logistics
Balancing Cost-Efficiency and Animal Ethics
I
n November 2011, Dutch-based genetics supplier TOPIGS successfully transported a whopping 1,003 breeding pigs to China from its farms in Canada, an impressive feat for those involved in its air and road transport. But this was no ordinary mission – backed by a roomy Boeing 747 Jumbo jet – these special pigs were flying first class, more luxuriously than your average animal being transported into China. From pen to plane to pen again, transporting live animals can be a logistical nightmare, and there is much to consider in what is not a simple straightforward procedure. Difficulties in Pig Logistics Losses in transit are perhaps the most significant issue when it comes to transporting livestock, with estimates placing global losses at somewhere between 2-3 million animals per year. Another 11 million arrive at their destinations diseased or injured – worth significantly less than they would otherwise. A number of factors contribute to these losses, though stress-related factors are significant. “For most livestock transport, loading with associated handling and driving, is the most stressful part. The disturbing parts may be fear, pain caused by humans, forced exercise especially on steep ramps, and the stress caused by the unfamiliar loading procedure, vehicle conditions and social contact,” describes the EU’s Scientific Committee on Animal Health and Welfare. Typical operating procedures in animal logistics tend to overlook these ethical considerations, as a small percentage of animals found dead on arrival is usually considered to be an acceptable cost. Legal constraints A large contributor to these losses every year in China is the current out-dated system in place. The existing Animal Husbandry Law (2005) in China – which only
stipulates that livestock in transport be provided with necessary space and water - is noticeably vague with no actual limits on hours of transport or density in a vehicle. This is a far cry from the US government’s 28-hour law that requires drivers unload animals after 28 hours in transit for a minimum 5 hour rest. Along those same lines, the Australian government has gone as far as to ban the export of a certain heat-stroke prone breed of cattle between May and October, when animals would be moving from Australia’s winter conditions to extremely hot destinations, such as the Middle East.
Top 5 Countries by Pig Population (Millions) China U.S Brazil Vietnam Germany
446.4 65.9 40.0 26.7 26.7
China’s almost half a billion pigs dwarf the pig population in other countries. In fact, China has more pigs than the next 43 pork producing countries combined. Source:United Nations Food and Agriculture Organisation
Damages and Cost-Efficient Solutions Small and cost-efficient ways can ensure more stable transportation of livestock, even with if there are limitations in place. In the transportation of livestock, unnecessary force – specifically the use of electric prods - should be minimized, to avoid the animal becoming “non-ambulatory”. This can be done so by coaxing with a plastic paddle, rather than shocking and agitating with an electric prod during the already unsettling act of loading. Even loading and unloading too many animals at once can cause unnecessary injury, as animals fall and jam on narrow aisles leading to vehicles. An often neglected consideration is the social organisation of animals. Though not a
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LOGISTICS problem in itself, when unfamiliar with one another, a group of cattle, sheep, or pigs can be restless and may even engage in physical conflict. Grouping the animals together 2 or 3 days before transport will go a long way in reducing any violent or restless behaviour when loading. Once the animals are loaded, complications can still arise. A significant amount of research has gone into finding what the ideal amount of floor space should be for animal transportation, as both overloading and underloading a vehicle is harmful to live animals. Where the former leads to agitation and illness, the latter can cause bruising and severe injury with a vehicle’s sudden movements. The Animal Transportation Association recommends a density 55-58 lbs/ft2 for pigs, based on a large-scale commercial study that found this rule of thumb can keep losses to a minimum. When animals are on the move there is still much to consider. In a country like China where summer temperatures in many regions can reach intolerable levels, it is important to ensure that livestock are kept as cool as possible. Studies have shown that waiting times at loading and unloading bays have led to an increase in transport losses, heat stroke a common cause of death for animals cooped up on both short and
long haul journeys. It is therefore advisable to keep the vehicle moving, ensuring that delays at destinations are minimised to prevent the idle truck from getting significantly hotter. An easy and cheap way to ensure a smoother ride is to hose the animals down with cool water during highly stressful points in the journey. Taking to the skies Taking into consideration all these factors, it can be seen why the TOPIGS mission was such a success despite these complications. Making the journey both humane and cost-efficient is the way forward, and by applying these simple cost-friendly solutions, it is not such a great feat, and for the future, more pigs may fly yet!
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LOGISTICS
Pharma-Freight
The Perfect Cure For Suffering Airlines
R
eflecting on 2011, Association of Asia Pacific Airlines (AAPA) Director General Andrew Herdman stated dismally, “Asian exports have been negatively impacted by the pattern of slower economic growth seen in Europe and North America.” And he couldn’t have been more right. Asia-Pacific carriers make up 40% of the international air cargo market, but since May, demand for air freight has only decreased, with many airliners seeing a significant slump in their third and fourth quarter. With the manufacturing industry in China additionally slipping into decline, these factors have led to a substantial dip in the US$ 66billion that was once generated globally for air freight traffic in 2010.
Troubling Times The gravest time was October 2011, when many companies across Asia saw an all-time low in the number of deliveries coming through. The International Air Transport Association (IATA) Director Tony Tyler stated in a press conference in October, “Cargo is the story of the month. Since mid-year the market has shrunk by almost 5% and this is far greater than the 1% fall in world trade.” This came in response to IATA’s released October 2011 Traffic Expected Growth Results, which show a slide of 7.7% of Pharmaceutical total international and domestic (China) Logistics in 2012 freight traffic in October (figure 1). Taiwanese carrier EVA airlines likewise saw difficulties over the course of 2011. “This year has been the worst year since I entered the trade,” stated
CEO Chang Kuo-Wei, adding: “Previously, demand from the US and Europe continued more or less until New Year’s Eve, even with a slowing global economy, but I have not seen any [demand] this year.”
This year has been the worst year since I entered the trade - CEO Chang Kuo-Wei
Cathay Pacific’s October statistics give credence to his remarks. The Hong Kong airline reported a 17.5%, year-over-year, drop in freight volumes last month, transporting only 135,998 tonnes of freight and mail in October. And the list of affected airlines goes on, and extends to airports as well. Hong Kong International Airport, which has long been known as the largest airport for air cargo volumes (figure 2.) reported an 8.2% decline in freight traffic for the same month. Figure 1
Growth in traffic in the months of October and November 2011
12%
Source: CAPA (Centre for Aviation)
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LOGISTICS Moving Forward Even with a temporary traffic boost during the busy Christmas period, there is pessimism for the coming year, with many anticipating a further decline, the situation in Europe no rosier. There is however, a light at the end of the tunnel in the form of the pharmaceutical logistics sector, which is expected to grow by 12% in 2012. With more and more pharmaceutical drugs being made in Asia, “Just about every airline is looking at this space with interest right now,” stated Dan Gagnon, UPS’s European health-care logistics director. This is set to outstrip the current leading sector of electronics, traditionally the strongest sector for demand. Figure 2
1 2 3 4 5
Cargo volume year-on-year changes in Oct-2011 for world’s 15 largest airports（2010 data) Oct-2011 air cargo Oct-2011 yearAirport volumes（tonnes) on-year change Hong Kong 342,000 -8.3% Memphis 334,530 -1.5% Shanghai Pudong 258,900 -9.4% Seoul Incheon 217,921 -7.8% Anchorage 227,800 -5.9%
Source:CAPA - Centre for Aviation, airport reports & Bloomberg
Lufthansa AG has so far been one of, if not the leading airline investing in this market, most recently installing a logistics facilities in India to store pharmaceutical products. “The value carried in one container can easily reach more than US$30 million,” stated Andreas Otto, head of sales for Lufthansa. And with total revenue for this sector expected to surpass US$63bn a year, it looks like airlines will need to invest in this sector, to compete against quickly fluctuating Emirates and Lufthansa, if they’re not to risk getting a taste of the wrong medicine.
SUPPLY CHAIN FORECASTING & PLANNING CONFERENCE
ASIA shenzhen, china 29,30 march 2012
MEDIA PARTNER:
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Content
►
Distribution News /38 ►Interview: Tesco /40
零售短讯 /38
乐购的访问 /40
► Dinnertime Dangers /42
危险的晚餐 /42
Distribution
Singles Day Causes Crisis for Couriers
Online B2C companies struggled to deal with orders during Singles Day, with couriers for Taobao in particular suffering. 10% of the US$28 million worth of orders made online were not delivered on time between Nov 11-17, and over 40 complaints a day were received. Yi Shenghua, a lawyer at Yingke Law Firm, blamed online retailers for accepting orders beyond their capabilities. “The online shop owners have to be responsible for the delays and refunds of items ordered by the customers to ensure that the buyers receive well-packed high quality items in the promised period.”
Starbucks Enters 5 New Cities
Despite the minus conditions, long queues formed outside the first ever
Starbucks store opened in Harbin, Heilongjiang on December 1st. Harbin is one of 5 new Chinese cities that Starbucks has entered into in the past 2 months (the others being Langfang, Zhengzhou, Harbin, Xiangtan and Zhoushan). John Culver, President of Starbucks China and APAC said, “Starbucks has never been better positioned for sustained profitable growth than we are today and we aim to accelerate this momentum in 2012. We look forward to opening more stores.” Starbucks today operates more than 500 stores, across 44 Chinese cities.
based on the Taobao platform. The store will reach the demand for growing popularity in China and operate until January 2012. Jonathan Seliger, President and Chief Executive Officer, Coach China said that the new store will “potentially pave the way for the development and launch of a permanent online Coach store in China.”
Vancl’s Financial Information Disclosed on Anonymous Blog
Coach Launches Trial Online Store in China
Coach recently announced the opening of an online store in China
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DISTRIBUTION An unknown blogger recently posted detailed information about Vancl’s performance stating that the No.1 internet apparel brand in China has suffered a loss equal to 2 million RMB (US$312 million) in the past 4 years. Rumours claim that such poor results are caused by excessive overstock of products, loss of a highlevel executive, quality complaints from customers and postponed IPO (Initial public offering).
360Buy Launches 360Top
B2C e-commerce site 360Buy has launched a luxury brand platform selling cosmetics, handbags, and clothing to compete against its biggest competitor Taobao. The new site, 360Top.com will support a monthly online magazine and will support brand names such as Chanel, Hermes and Miu Miu.
Foxconn E-Commerce Platform Struggling
Foxconn’s efeihu.com is on the verge of shutdown after 2 years implementation, because of a failure to boost sales and profits. The online platform, which was established in 2009 and sells mainly home electronics and gadgets, generates a steady 6,000-8,000 sales a day across China. Sina Tech reported that 30% of the sites customers live in very
rural areas, and that the site is losing revenue on delivery fees.
Shanghai Public Oppose New Da Vinci Store
Despite negative publicity, furniture retailer Da Vinci recently opened a new 12,000m2 store in Shanghai. The company is still under investigation in China for allegedly selling furniture mis-labelled of Italian origin. Da Vinci generated US£100mn in revenue annually before the scandal in July last year.
Mango to Open 800 China Stores
Spanish clothing retailer Mango plans to open 800 stores in China by 2013 as part of a global expansion. Currently, Mango has approximately 200 stores in China and aims to expand its China operations, generating 10% of its total global revenue from China by 2013.
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DISTRIBUTION
Supermarket Sustainability Jurrien Heynen, Distribution Manager for Tesco China, discusses strategies and going green Tell me about Tesco’s presence in China and your position? I’m the distribution director here, so I look after the distribution centres and the physical supply chain covering all of China. Tesco has been in China since 2004, we started out as a joint venture with a Taiwanese company called Ting Hsin, but now we have purchased the remaining share of our joint venture partner and are in full control of operations in China. The business has got 2 parts to it: the retail trading business, and a property development company, which gives us the advantage of being able to develop retail space in China. How many locations do you have? Up to now (November 2011), we’ve got 99 hypermarkets and 14 express stores covering 11 provinces in the north, east and south regions of China and we will open more stores in the years ahead. The majority of our stores are in Shanghai and the 3 provinces around Shanghai (Zhejiang, Jiangsu and Anhui). What strategies are you implementing to expand your presence in China? We are working to develop centralised distribution, which is not something that is greatly utilised currently in the China retail market. Centralising our supply chain to feed stock through DCs drives better availability for our customers, makes operations much simpler for our stores, and allows us to do more direct sourcing, as well as giving us very clear visibility about what is happening in our supply chain. Clearly for our suppliers it makes their operations much simpler, and the logistics of moving the stock through to the stores sits with Tesco. It also allows us to make decisions on stock allocation much later; we can respond to sales later if we’ve got the stock ourselves or we’ve got visibility of the stock coming through. The logistics industry in China is very fragmented in general in comparison to the more mature markets that we work in. That does mean that centralisation is more of a challenge but equally even more of an opportunity. Is the Green Logistics Centre that you’ve set up part of your strategy? Yes, opening the Jiashan Distribution Centre is part of that centralisation strategy and is the first DC that Tesco has built in China to our blueprint design. We’re very committed as we grow our business to do whatever we can to reduce
the impact we’re having on the environment, and we’ve made some tangible commitments on this – namely to half our CO2 emissions per case delivered by 2020 against our baseline measured in 2006 and to be a zero carbon business by 2050. When we develop new DCs, we’re always trying to reduce the carbon emissions for every case that we deliver, and opening Jiashan with the initiatives we have included is part of meeting that commitment. We were very pleased to win the award at CHaINA’11 Live because it means that people can see what we’re doing and for companies like Tesco, I think that we have a responsibility in the communities that we’re in to take the lead on sustainability and demonstrate what is possible. What else are you doing to be green? We’re also doing a lot of work to make our vehicles more efficient. We’ve undertaken a number of programs with our transport partners about the way that vehicles are being driven to reduce our fuel consumption. We are working hard to ensure that our trucks are as full as possible every time they go on the road, as well as working to reduce empty running with initiatives such as supplier collections. We have also been developing energy-saving stores in China since 2008. Each energy-saving store that we open saves 25% energy annually compared with the stores that we opened in 2006 (our baseline year). Moreover, we have built an Energy Management Centre located in Shanghai to oversee and monitor energy consumption of all of our stores in China. What else is Tesco going to bring us for 2012? We’ve invested in the cold chain in China; in all the regions that we’re operating depots, we’ve got temperature controlled distribution - moving products to our stores at the right temperature to maintain product quality - which has also allowed us to introduce quality inspections of products, so all the fresh products that go through our DCs meet the quality and safety standards that we have specified. Being able to do these things is very important to us because it’s important to our customers, with the issue of food safety and food quality being a growing issue in China. Next year we will continue to grow and improve the infrastructure that we’ve invested in which allows us to do this, because ensuring that we are selling food that our customers can trust is going to continue to be very important.
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DISTRIBUTION
11 Provinces Tesco is based in
115 Hypermarkets and Express Stores in China
35%
Saving of carbon emissions at Jiashan Logistics Center
25% Energy saved in stores opened after 2008
超市的可持续发展
乐购中国分销经理，Jurrien Heynen 先生畅谈战略及绿色环保
谈谈乐购在中国的现状？ 做为分销总监，我负责监督分销中心和覆盖整个中国的供应 链。自2004年以来乐购已经在中国开展业务，我们一开始是 和台湾顶新集团的合资企业，但现在我们已经买下了合资伙 伴的股份，可以全权掌握在中国的运营。我们的业务有两部 分，一个是零售贸易业务，还有一个是地产发展公司，为我 们在中国发展零售空间提供契机。 你们在多少地方开展了业务？ 到目前为止（2011年11月），我们已经有99个大型超级市场 和14个便利商店，遍及中国北部、东部和南部的11个省市， 我们预计在接下来的几年开设更多商店。我们的商店主要分 布在上海和上海周边的三个省（浙江、江苏和安徽）。 你们采取什么战略在中国发展？ 我们在计划建设集中型分销，这种模式在现阶段的中国零售 市场并不常见。通过分销中心把供应链集中化能为我们的顾 客提高商品的可得性，使我们的商店运营更加简化，也让我 们能做更多的直接采购，让我们更清楚的了解我们的供应链 情况。显然对于我们的供应商来说，这也使他们的运营更简 单了，把货物运送到商店的物流工作交给了乐购。这也给与 我们充分的时间决定货物的分配，如果我们的货物在自己手 上或者我们能直接了解货物运输进程，我们就不用急着回复 销售人员。总体来说，相比之下我们开展业务有一个更成熟 的市场，中国的物流业很分散化。这意味着集中化是一个挑 战同时更是一个机遇。
你们建立的绿色物流中心也是你们战略的一部分吗？ 是的，成立嘉善分销中心是集中化战略的一部分，这也是乐 购根据设计蓝图在中国建的第一个分销中心。随着我们业务 的发展，我们一直坚持尽可能降低对环境的影响。我们已经 做出了明确的承诺 – 相比2006年的测量底线，在2020年底 每一次运送过程中二氧化碳排放量减半，2050年底成为零碳 行业。当我们开发新的分销中心时，我们总是尽量减少碳排 量，成立嘉善中心也是我们履行承诺的一部分。我们很荣幸 在2011年ChaINA Live上得奖，因为这意味着人们可以看到我 们正在努力做的事，对于像乐购这样的公司，我认为我们在 社区里是要承担责任的，需要引领可持续性和展示什么是可 能的。 为了绿色环保你们还在做什么？ 我们还在努力使我们的汽车更有效率。我们已经和我们的运 输伙伴针对如何驾驶汽车减少耗油量开展了一系列项目。我 们尽量保证我们的卡车每次上路时满载并且我们还在通过供 应商收集减少空跑的次数。自2008年以来我们还致力于在中 国发展节能商店。和我们在2006年建立的商店相比，每个节 能商店每年能节省25%的能源。此外，我们在上海成立了一 个能源管理中心用于监督全中国所有商店的能源消耗情况。 乐购2012年还会为我们带来什么？ 我们已经投资中国的冷链物流；在我们经营的所有地区我们 已经有了温度控制分销，在恰当的温度把产品运送到我们的 商店以保证产品质量，这也使我们能引入产品检查，这样通 过我们分销中心的所有新鲜产品都进行了质检以确保它们符 合我们的质量和安全标准。能做到这些事情对于我们来说很 重要，因为这对我们的顾客很重要，这些年食品安全和质量 问题的事件成为了中国的一个热点话题。明年我们会继续发 展和改进我们已经投资的基础设施，因为保证我们提供顾客 能信任的食品仍然是非常重要的。 41
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DISTRIBUTION
Food scandals
in China shift on MNCs
F
Olga Mironova
ood safety continues to be a grave concern in China, with the most well-known example being of course the melanine milk scandal of 2008, when 6 children died and 300,000 fell ill from drinking tainted milk. This was an incident which shocked the nation and urged consumer watchdogs to stamp down on companies not implementing the correct health and safety procedures before food products reach the supermarket shelves. But in the last few months, Unilever, Walmart, McDonalds and KFC have been shown to contain hazardous substances inside their products or have misled consumers by mislabeling products, raising more and more the question of what is going into what we eat, and whether enough is being done. Under the grill In October of this year, 13 Walmart stores in Chongqing were closed by the government because of products being mislabeled as organic. Investigators determined that 80% of pork products were found to be ordinary pork products, and not organic as they were listed. Walmart was charging its consumers approximately a 43% inflated price. “They sold more than 600,000 yuan (US$95,240) worth of false organic pork,” said Zhao Jia, suggestions TO REDUCE FOOD SAFETY VIOLATIONS According to a China Youth Daily survery Support officials being graded on their food protection efforts
89.5%
Would like definitions of responsibility of various departments
76%
Want regular checks in the marker
71.5%
Call for more safety codes and laws Want more attention paid to experience from previous events
65.6% 32.7%
Source: China Youth Daily
spokesman for the Administration for Industry and Commerce (AIC). ”That’s consumer fraud.” Unilever, which moves consumer goods likewise recently failed to pass examination on its oolong Lipton Tea products in November, where excessive levels of toxic rare earths were found, and thus had to be recalled from supermarket shelves. Lipton’s samples contained 3.4 milligrams of rare earths, a considerable amount more than the national standard of 2mg, and therefore the products were dubbed not healthy for human consumption. Wang Chenshuang, a resident of Chongqing commented on the incident, “I think the Chinese quality watchdog should also be held responsible. Foreign brands can show integrity in other countries, but keep collapsing, leading to scandals in China.” McDonalds additionally was involved in several food scandals this year. In August one customer at a Beijing branch drew attention to the improper storage conditions of the fastfood giant’s hamburger bread rolls, which were for many hours exposed to the sunlight in damaged plastic wrappings at the entrance of the store. This provoked China Agricultural University professor Ji Baoping to respond immediately, stating that intense sun exposure for over 48 hours of plastic wrapped bread, can critically speed up the development of bacteria microbes inside the product and make it harmful for consumption. And in Changsha, Hunan province, a 9-year old boy dining in a McDonalds store, found maggots crawling out of the bones of the chicken wings that he ordered. “Help Express” TV show representatives were called by the parents to handle the issue, provoking officials from Hunan Food and Drug Administration and Health Inspection to investigate the matter. Curiously, no official results were ever announced.
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DISTRIBUTION What is to be done? Experts believe that in order to improve the situation internally, the Government has to allow the existence of independent consumer protection groups, in order to target these incidences for big MNCs, as well as local companies and restaurants. This may now be something we will see in 2012 following the recently raised issue of rice quality, the staple food in China. Research released in November surprised the nation by showing that around 10% of rice sold throughout China contains heavy metals, with rice in the southern regions, particularly
Jiangxi, Hunan and Guangdong, having up to 60% of contaminated rice samples. Consequently, the EU was put on alert seeing as a lot of rice is exported. For this reason, a push towards a clear system of product registration and control is necessary, especially as China becomes more desirable as a sourcing destination. “Manufacturers and suppliers in China require independent system registration and product certification in order to access international markets,� said Lori Bestervelt, International Senior VP and CTO at NSF (Global non-profit public health and product safety organisation), which recently opened a testing lab in Shanghai. China Food Safety Forum also reported that in 2012 the Ministry of Health is planning to deploy 318 cleanups to monitor food standards across China, including inspections for storage and packaging. The exact parameters of the project are so far under discussion, however the proposals from parties involved are highly welcomed and will hopefully provide greater clarity of what is going into our grub.
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R FEATURE
ewriting
TH E Rules 10 Supply Chain Firms Whose Innovative Ideas Will Shape 2012
N
Berken Byrne
o matter what your business, we can all agree 2011 was a challenging year for supply chain management. Natural disasters, drops in consumer demand, fluctuating commodity prices... they all pointed to an undeniable truth – the supply chain of tomorrow needs to change. Not only does it need responsiveness and security, above all else, it needs innovation: integrated, real-time solutions to what clients need, before they even know they need them. In China more than anywhere else, innovation is all the more crucial to a profitable business. Here, we take a look at 10 entrepreneurially-minded business people, each involved in some of the hottest young companies currently engaging in business in China. The key to success in each case has been thinking out of the box. These are all companies where innovation is more than just a buzzword; it’s a company-wide mandate and the company’s raison d’être. Participants in the supply chain industry would do well to keep an eye on all of these companies and ideas; not only are they game-changers that will shape the future of our industry, but who knows? They could even be the inspiration for the next big idea. OrderWithMe.com Since its inception, OrderWithMe (www.orderwithme.com) has gained no shortage of accolades for providing a group buying platform for small American retailers to aggregate product orders, thereby obtaining high-volume discounts - often over 30% - that are otherwise only enjoyed by much larger competitors. It does so by providing a daily selection of deals offered by Chinese producers, and tracks retailers’ orders to see which meet a high enough volume to warrant purchase; with orders for all other products eventually cancelled. “Some of these small retailers are buying wholesale for prices as high as you buy retail at some big brand stores,” explained Alex Duncan, a creative consultant at OrderWithMe, as well as the founder of another promising startup, MadeToFitMe. “There’s a lot of room for improvement.”
Yet while high-volume discounts for small-volume buyers have thus far been OrderWithMe’s single claim to fame, that may be about to change. “What’s coming next is actually going to be even more innovative,” said Duncan. OrderWithMe wants to level the playing field between small and large retailers across the board, not just in terms of order volume. The company plans to take its business model to the next level through 3 initiatives. First, it will begin to record extensive data - not only on its own sales to retailers, but also on those retailers’ sales to the end customer. Second, it will provide retailers with the ability to comment on products before deals are even negotiated, allowing OrderWithMe to better adapt its selection to retailers’ needs. “Our sourcing experts will visit markets and factories with their iPad and take photos that they can upload to our website literally within seconds for small retailers to like, dislike, and comment on,” explained Duncan. “That makes our effort more efficient, while retailers get more of what they want.” Finally, perhaps the most important aspect of OrderWithMe’s new endeavor is the social layer it plans on integrating, with forums to share experience and insight and to better coordinate purchasing. “There’s no social network for small business owners,” said Duncan.
Jonathan and Danielle Jenkins, Founders of OrderWithMe
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FEATURE Fr.MyFab.com
MadeToFitMe.co.uk Online clothing vendor MadeToFitMe’s (www.madetofitme.co.uk) credentials as an innovative start-up were illuminated when aforementioned OrderWithMe took interest in its founder to join their team. And with good reason - though the online vendor’s Chinese-made product selection is currently limited, its streamlined and customer-friendly web interface makes customizing products both immersive and simple. Users can click on different parts of MadeToFitMe’s many dresses to select unique colors and patterns for each, allowing the end result to be immediately visible. The website then lets users enter their physical Alex Duncan, Founder of MadeToFitMe measurements to create a perfectly tailored outfit – and, in an impressive example of customer service, mails the end-user a free tape measurer and provides a how-to video demonstrating proper measurement techniques.
Like OrderWithME, French furniture retailer MyFab (http:// fr.myfab.com/) is an online B2C enterprise with a twist - customers play an active role in determining product selection. Every month MyFab introduces at least 20 potential product designs on its website and allows customers to vote on their favourites, which can reach as much as 20,000 votes within 2 weeks. The most popular designs then go on to become parts of the firm’s online catalogue. From a marketing perspective, the appeal is clear: customers are drawn to the website by curiosity and then develop a personal investment in the products they select. This in turn allows MyFab to create sales estimates well before products are even available. “We have a very high-conversion rate between the number of votes and ultimate sales,” said Logistics Manager Luca Le Marc. Voting provides yet another logistical benefit - because the product selection is kept small and focused on only the top vote-receiving designs, greater volume per product creates both manufacturing and shipping economies of scale. Knowledge of which products will be most popular in turn allows MyFab to order raw materials and fabric accordingly. “We place an advanced order for black leather or start to build the wood frames, for example, if a black sofa get a lot of votes,” said Le Marc. MyFab.com Founder Stéphane Setbon
Tradesparq.com Tradesparq (www.tradesparq.com) is Craigslist for the B2B crowd - a social network for businesses that allows suppliers to post their products, and buyers to find the perfect fit. Users can discuss various subjects in forums, like and comment on products, and receive automatic, real-time updates on other users. There is also an optimised search function, which emphasises businesses and products that have links to your already existing network and are thus most likely to be legitimate. Michael Kleist, Founder of Tradesparq.com
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FEATURE MindsInSync.com MindsInSync (www.mindsinsync.com) represents an entirely different kind of innovation – that of the products themselves, which are often solutions to holes in the marketplace. Yet as with so many firms already offering innovative products, MindsInSync, which sources products such as its best-selling absorbent microfiber fabric out of China, depends on supply chain mastery to keep prices low and quality high. As such, the company spends time selecting factories capable of producing the right volume and quality, at the right price. The company also ensures quality by controlling the entire value chain itself, from sourcing to logistics. Iain Scorgie, Founder of MindsInSync
Honeycomblt.com There’s nothing particularly novel about an IT logistics platform that allows shippers and carriers to access and share information about the movement of an order. What sets the transportation software of Honeycomb Logistics Technologies (www.honeycomblt.com) apart however, is how its designers have taken best practices gleaned from such platforms and applied them specifically to the rigors of transporting goods in China. “Within the industry here in China there’s just a general lack of visibility, as it’s still very fragmented,” said founder Teoh. “Knowledge and skill levels of many operators are also still somewhat lacking. We want to change that.” As such, Honeywell’s software offers a means for parties involved in the transportation of goods to communicate along the supply chain, and with the best practices knowledge to do it well. “It’s important to show [the customers] how else they can use the system apart from just visibility purposes,” said Teoh. “We help them analyse their transportation data, trends in their customer base, which regions they’re serving better, and the delivery pattern for each customer.”
4plmarket.com Developed by International Logistics Development, a Ningbo-based company, the currently all-Chinese 4plmarket.com is streamlining China’s supply chain industry by compiling information on various fourth-party logistics providers - that is, logistics consultant companies that run operations themselves but can provide essential knowledge in a diverse array of areas. The website is divided into ocean shipping, ground shipping and financial services, with over 60 fourth-party logistics operators in total. ARJChina.com When a firm with largescale logistics decides to operate its own fleet of trucks, they immediately face an additional decision – to buy or lease. The former requires a significant upfront investment in both the trucks themselves and the manpower to maintain them. The latter, on the other hand, while cheaper, limits the amount of control the firm has over the trucks. Often neither solution is truly optimal. ARJ Commercial Leasing (www.arjchina.com) is pioneering a third option: splitting the ground between the other 2. ARJ provides customers online leasing options and takes responsibility for future maintenance of trucks. Then, control of the vehicle is placed entirely in the client’s hands, with their only responsibility being to return the vehicle to ARJ at the end of the contract. ARJ Commercial Leasing “What we’re providing is the best Founder, Richard Ang of both worlds,” said ARJ founder Richard Ang. “They get the benefits of outsourcing, and yet they still have complete control over the trucks.” The service is targeted exclusively at foreign companies coming into China - which often like to adopt an asset light policy - in order to both keep return on investment high and reduce property tax, and yet also have sizable transportation needs and their own logistics procedures and systems that a typical leased vehicle without full control would be difficult to fit into. It also doesn’t hurt that foreign companies are much more reliable in following through on contracts. The end result of the service is that client firms avoids unpredictable maintenance fees, property tax, and large individual cash expenditures, while gaining peace of mind through full long-term control. “The truck will be with them 24 hours a day for the next 5, 10 years at an attractive rate,” said Ang.
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FEATURE Ebuilder.com Cloud computing is a big focus in a lot of industries these days and with good reason - by making standard business processes as automatic and transparent as possible. Among its many cloud-computing peers, eBuilder (www.ebuilder. com) stands out for its focus on logistical software – with many features including a Procurement program that can reduce administration costs by 75%, and an Order Fulfillment program that allows users to analyze bottlenecks, follow trends, and manage global KPIs.
“You can manage profiles, […] allow the employee to keep track of expenses, and, afterwards, make sure all invoices are being paid and sent to the accounting program,” said Ulf Persson, Senior Vice President of eBuilder Asia Pacific Operations. He cited Volvo as one company using eBuilder for such a process, noting that the software makes particular sense for the firm given its large supplier base. Nowhere is the value of a real-time, instantly accessible shared program more apparent than when things go wrong - an inevitability in logistics worldwide, but especially in China. While traditionally only those in the immediate environment and utilising the same ERP would be immediately aware of the issue, cloud-based implementation let all relevant parties - from suppliers to customers - know instantly. “If I’m a retailer I would immediately be notified that the supplier has problems,” said Persson.
CPOConnect.com CPO Connect (www.cpoconnect.com) offers webbased software that provides sourcing pros with tools to increase efficiency. One feature, for example, allows users to browse a public database of suppliers for an optimal trade partner. Another is a product bidding function that provides real-time costssaved analysis after every additional bid and a visual timeline of the bidding process from start to finish.
Conclusion In the end, while it is the specifics of each company’s unique business model that make them notable, it’s not hard to see that each of these firms understand exactly who their clients are, what they need, and what business model is best equipped to satisfy those needs. They offer clients solutions that were unthinkable just a few years ago, demonstrating that innovation in the supply chain is possible when you’ve got your thumb on the pulse of your client base.
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FEATURE
Troubles in Thailand
Natural Disasters Force Japanese Companies to Rethink Strategy
O
Alexander Gladstone
ut of the frying pan, into the fire. The Japanese have leapt from one national disaster, right into another. The devastating impact of the earthquake that rocked Japan on March 11th 2011 prompted many Japanese companies to shift their production base to Thailand, an important global manufacturing hub for the automotive and electronic sectors that had already housed thousands of Japanese companies. However, in late July, less than half a year after the earthquake, Thailand was hit by a prolonged monsoon period that lasted nearly 4 months and caused widespread flooding throughout the country, resulting in almost 900 factory shut-downs and disruption across the global supply chain. Danielle Saville, the Legal Director in Reinsurance and Corporate Insurance at RPC, commented that, “It is very unusual for two large manufacturing centres to be hit separately by such large natural disasters in such a short space of time,” raising the question: why didn’t companies such as Honda, Toyota, Sony and Nikon learn their lesson and implement the correct safety measures? While the earthquake should have been a wake-up call for these Japanese companies to avoid concentrating key production centres in one area, it seems that many have made the same mistake again in Thailand, the effects of which while severely affected the manufacturing industry in particular, have had impacts much more farreaching. Sourcing Sorrows In October, Ricoh (RMT) announced that its parts Thai Floods Spread to 21 Provinces; Death Toll Rises to 20
August
8th
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er Septemb
sourced from Thailand for monochrome laser printers had been affected, the consequence of which was a halt in production. Sharp, another Japanese electronics maker, while not suffering any direct damage to its Thai facilities, likewise had problems securing integral components, such as refrigerator parts and hard-disk drives, from suppliers. Sharp Executive VP Toshio Adachi remarked at a press conference that these disturbances would likely result in tens of billions of dollars in lost revenue. These problems highlight the need for companies to source from multiple locations. Chris Hermenitt, the Asia/Pacific Regional Quality Director at Flextronics, an electronics company which suffered damage during the floods, emphasised that multi-sourcing is crucial to minimising risk. “The key is to mitigate the risk of special materials and sole suppliers in the supply chain. When a company decides to use a special material or sole supplier there is a huge risk of failure. Even if there are multiple sites for a material, there may not be a plan in place to quickly
Sectoral Production Share By Flooded Areas
Textiles Industrial Supplies Wearing Apparels Pulp & Paper Consumer Goods
Thai Flood Death Toll Rises to 132; 25 Provinces Inundated
73 23
61 76 66 77
7 15
12 17 17 18 21 POSTgraphics
Severely Flooded
Ongoing Threat
No Flood
Source: Ministry Of Industry, Ministry Of Agriculture & Cooperatives, And TMB Analytics
October 20th
15
Western Digital Says Thai Flooding To Cut Sales, Result in Quarterly Loss 6th
19th
Thai Flood Death Toll Rises as Waters Threaten Honda, Sony20
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FEATURE move production to an alternate site.” Consolidation Causes Manufacturing Mess Hundreds of factories were left completely waterlogged, with many major Japanese auto producers such as Honda, Toyota and Nissan, having to close factories, only resuming production in early to mid November. Honda suffered a 56% reduction to its July-September quarterly profit, while factory stoppages cost Toyota a total of 69,000 vehicles in lost production, and Nissan roughly 40,000 vehicles. Nikon, the Japanese camera manufacturer, was forced to close several factories, most of which will not re-open until January 2012, and will only resume full production in March. This is expected to cost the company a total of 25 billion yen (US$320 million). A factor which exacerbated the problem was lack of diversification in production, with Western Digital a case in point. The hard-drive manufacturer had to close 2 of its facilities that produced 1/4 of the world’s “sliders,” an integral hard-drive component. This resulted in reduced product shipments from about 58 million units to 22-26 million units for the last quarter of 2011. John Monroe, from technology research firm Gartner Inc. is right in his view that “surely one of the inevitable impacts of this is that never again will so much be concentrated in so few places.” The floods’ impact on manufacturing hit home the point that not only should companies invest more into building safer, more secure factories, but they should also protect themselves by expanding the concentration of their production facilities. International Impact Thailand’s Commerce Ministry estimated that national exports would be down 13% for 2012. Due to inadequate cargo quantity, a number of major Japanese shipping companies had to cancel ships, and demand for air cargo was also severely reduced. Since Thailand produces many of the integral parts and components that are made into finished products elsewhere, these disruptions had a world-wide effect, with Honda being forced to run its North American and Japanese plants at half capacity for several weeks in November, while Toyota suspended overtime and Saturday output at its American and Canadian plants, and
reduced production in its facilities in South Africa, Indonesia, the Philippines, Vietnam, Pakistan and Malaysia. Supply chain disruption also cost Nissan’s and Toyota’s Japan-based facilities 20,000 and 22,000 vehicles in lost production respectively. In the electronics sector, the sudden reduction in harddrive supply caused world-wide ripples, with some online retailers of hard-drives jacking their prices up by as much as 100% soon after the floods began. This in turn affected the global PC market, with Acer as an example announcing in October a huge increase in laptop prices to account for costs imposed by the Thai floods. Layla Wright, the Director of Purchasing for Smith and Associates, stated that the effects of the Thai floods are “global, deep, and costly,” pointing out that the price hikes associated with loss of critical Thai-produced components, “have extended to other sectors, such [as] automotive, optics (including digital cameras and fiber optics), Canon Cuts Full-Year Profit Forecast to 230 Billion Yen on Thai Floods 7th
2nd 24th
Bangkok River Swells to Record as Floods Reach Thai Capital www.chainamag.com
27th
Sharp Says Thai Floods to Hurt Sales as Toyota, Ford Cut Output
Sony Forecasts ber Full-Year Loss on Novem Yen, Sales
Bangkok Broadens Evacuation Orders as Floods Encircle Thailand’s Capital
49 january/ FEBRUARY
FEATURE LED’s, packaging, and test and assembly equipment for the semiconductor and electronics industry.” The extensive global reverberations underscore the overdependence many companies had for Thai-produced components. Risk Management and Resilience The Thai floods highlighted the need for companies to assess how they can effectively protect their supply chains. Trevor Miles, Vice President of Thought Leadership at Kinaxis, raised the questions, “How quickly can we determine the effect of this mismatch on the rest of the supply chain, and therefore its relative importance?” Niklas Meintrup, the Asia-Pacific Director at Dow, a multinational chemical company, believes that the answer to this question is to analyse “supply chain resilience,” a holistic approach that takes into account the entire supply chain, “from raw materials to cash.” Applying this approach as a functional model, Dow Company collaborated with the Ohio State University to develop a Supply Chain Resilience Assessment and Management Tool, also known as SCRAM. This scheme assesses a company’s “vulnerabilities and capabilities;” key strengths and weaknesses regarding personnel, management structure, raw material sourcing, manufacturing, storage, transport, and customer access. Niklas Meintrup explains that, “by utilising this tool, we can improve the resilience of its our supply chain management processes, so that it can recover rapidly from unexpected disruptions, assure business continuity and adapt effectively to changing external conditions.” SCRAM is currently used internally throughout Dow’s operations, and during the floods, Dow Chemical saw the benefit of implementing resilient supply chain processes. While not suffering direct damage to its plants, it did face obstacles to its logistics systems and transport routes. These issues were quickly addressed by Dow’s Emergency Services teams, which managed to solve the problems and “serve all customers’ requirements with no interruption,” according to Arun Hattarach, Dow Supply Chain Operation Leader for Thailand.
Spinning their wheels
Impact of floods on different manufacturers and estimated production loss PLANT LOCATIONPROVINCE
SEVERITY OF IMPACT
PRODUCTION STATUS DUE TO FLOODS
AVERAGE MONTHLY ESTIMATED LOSS OF PRODUCTION(UNITS)
Toyta
Chachoengsao
Medium
Halted-Supply chain disruption
30,000-35,000
Honda
Ayuthaya
High
Halted-Assembly plant flooded
10,000-15,000 10,000-12,000
Nissan
Samut Prakam
Medium
Normal production but likely to be affected due to supply chain disruption
Mitsubishi
Chon Buri
Medium
Halted-Supply chain disruption
12,000-15,000
Auto Alliance Thailand (Ford-Mazda)
Rayong
Medium
Ford PV production resumed but pick-up production halted
5,000-8,000
GM
Rayong
Low
Normal production
/
Isuzu
Chachoengsao
Medium
Halted-Supply chain disruption
10,000-15,000 80,000-100,000
Total
ing sign, it must be noted that Thailand is prone to flooding, and natural disasters as a whole when we consider its 2004 tsunami. This has led many to wonder: “why didn’t more companies with operations in Thailand do more to protect themselves in the first place?” Short-sightedness is the answer, as so many companies seeing the immediate benefit of consolidating production in one area, overlooked how over-concentration could leave them vulnerable. Now, however, major Japanese companies are considering moving production to such countries as Indonesia, Malaysia and Vietnam, which are seen as having less risk of flooding. But can they expect the same not to happen again? While reducing investment in Thailand might make sense, moving production facilities will not necessarily solve all problems. By their very nature, natural disasters are unpredictable, and can affect any region of the world, especially as the greenhouse effect makes for a more unpredictable climate. Moreover, the Thai floods should be a wake-up call for companies to take risk management seriously, by establishing effective crisis response systems, diversifying their sourcing strategies so as to provide a back-up in case of unavoidable disruptions, and in general, defending their entire supply chains, from the “raw materials to the cash.”
Final Thoughts If the Japanese earthquake wasn’t a big enough a warn-
December 10th
Microsoft, Computer Makers May Be Hurt as Floods Crimp Sales, IDC Says
MUNICH RE reinsurer estimated the cost of flood for businesses in US653 million 9th
Toyota profit forecast for 2011 decreases twofold
Goodyear forecast problems in aviation tyres supply for 2012 12th
Intel cuts revenue forecast for the fourth quarter by 7% due to the flood.
20th
EMC announces 5-15% rise in prices of disk drives from the 1st of January.
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FEATURE
The Brand Scam
Uncovering the Made-for-Outlet Apparel Supply Chain
G
etting to Sheshan, the only mountain in Shanghai can sometimes be a time-consuming experience. Every weekend and holiday, a long queue of sometimes hundreds of cars will jam the Sheshan exit of the A20 motorway in Qingpu, the western suburbs of Shanghai. Some people go to see the hill, but for many, a different voyage lays afoot: they are heading to one of the largest factory luxury outlet malls in Shanghai. China is now the world’s 2nd largest consumer of luxury goods according to the Chinese Academy of Social Sciences (second only to the US). The country’s total consumption of high-end brands accounts for 27.5% of the world’s total. In 5 years, it is predicted China will be the biggest global luxury market. Outlet malls originated in the United States in the 1970s. Their history in China came much later, when the Yansha Outlet Group established the first in Beijing, 2002. This new retailing practice grew rapidly after that, bringing together hundreds of shops under one roof, usually outside a main city and near large expressway interchanges, rather than in expensive city centre locations. China is now believed to have more than 200 outlet malls across the country. But what led to this influx of outlets? Many claim they sell merchandise at 30-70% less than elsewhere. Some sell damaged or imperfect goods at reduced rates. Some sell second-season merchandise. And others claim they have
Kerry Allen
low prices from cutting out the middleman. Everybody knows this. But what not many people know is that outlet malls sell items specifically manufactured for them. Ellen Ruppel Shell’s ‘Cheap’ A new book by Ellen Ruppel Shell called “Cheap: The High Cost of Discount Culture” suggests that outlet malls are deliberately fooling consumers. Their distances from city centres isn’t only a result of developers wish to obtain cheaper real estate - it’s also a deliberate strategy that makes consumers want to buy more. “Because the effort required to reach and shop at them is substantial, even extraordinary, the experience of going to the outlet is elevated in our minds to ‘special occasion’ status.” She claims that regular outlet-mall shoppers are akin to gamblers. Instead of loading up on cheap staples, they often go there trying to “beat the house.” However, “what these shoppers too often forget is that, just as in Vegas, the house almost always wins.” Ruppel Shell highlights the fact that manufacturers are actually selling items specifically made for outlet stores, negating the idea that shoppers are getting a luxury fashion item at a discounted price. ”Ralph Lauren, Coach, Gap, Hugo Boss, North Face, among others, add to their mix items made explicitly for the outlets. Generally these items are cheaper to produce, have fewer details, and are of lesser quality.” 51
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FEATURE Choice of retail format for luxury purchases
Source: KPMG
Location of luxury purchases in past year
Source: KPMG
The factory and outlet store phenomena started out as a place for department stores to sell their excess inventories. As retail stores have evolved however, the endof-season inventory problem has been passed to designers, and manufacturers have viewed outlets as a way to patch up their bottom lines.
Cheaper operation costs, higher margins Outlet malls are cheaper to build and operate. Typically one or two storeys high, and outdoors, their rents are inexpensive, and compared with traditional shopping malls, they often contain no elevators or escalators, no central heating or air conditioning and generally fewer frills. The stores themselves are bare-bones. “The overhead and fixed costs are much lower”, explained Dan Miele, a partner at the customer consulting arm of Deloitte & Touche. He also adds that “the rents are cheaper because these stores tend not to be in city centres.” The infrastructure for buying is more streamlined and there may not be as much quality control as at the mall.” Often, irregular items will never make it to the retail store because designers can’t afford to have flaws in their retail products, Miele adds. Yet, “to the naked eye, most irregularities are invisible or don’t look bad,” says Anne Lipscomb, Senior VP of marketing at The Mills. Retail mark-up for clothing, research shows, is typi-
cally 50%, so if the average item sells at an outlet mall for about one-quarter off the original price, the brand generates a lot more money from the outlet malls channels. Shoppers are generally happy, for that matter, to not be paying the full original price and the returns for the brands and the distributor’s substantial due to the volume involved. And with this in mind, designer labels can rely on this market to generate revenue. Diesel can sell defect jeans at upwards of US$65 presumed to be from their boutiques, (“People often walk out with 5 or 6 pairs,” says an assistant manager at a branch), and others such as the aforementioned Coach, Donna Karan and D&G, doing their research on what sells, are able to reproduce designs of their bestsellers on a separate supply chain, which people buy, believing they are getting a good deal. Better supply chain management means less defects and returns In the last few years, experts say that retailers have gotten better at forecasting demand, which has led to fewer production overruns. And because most manufacturing is now done in Asia with contract manufacturers accepting smaller, more frequent orders with stricter quality controls, damaged goods are often eliminated before being shipped to traditional retail stores. “These changes mean outlets are no longer a place to dump the crummy stuff,” said Anne Coughlan, marketing professor at Northwestern’s Kellogg School of Management. As a result, hundreds of well-known fashion brands now have special teams who purchase lower-quality items for the outlet channels. A new supply chain has taken shape with specific contract manufacturers in China, Vietnam, India and Bangladesh who are manufacturing lower-quality items on the same design and collection. “Retailers can’t depend on leftovers, returns, and seconds to stock the outlets [anymore],” said Marie Driscoll, retail analyst with Standard & Poor’s Equity Research, “so goods are being made specifically for sale in this distribution channel.”
52 january/ FEBRUARY
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FEATURE Top Chinese Factory Outlet Centres from Shopping Review Websites
Comparison of Outlets in the United States, European Union and China
Ratings Origin of Brands Product Class
Region
Tenants
China
Apparel, shoes, accessories
U.S., E.U. and Japan
High-end
United States & European Union
Apparel, shoes, accessories, furniture, speciality items
All
High-end and Middlemarket
Source: ICSC.org
Similar designs, often inferior quality Although the clothes in these outlets may look like the real brand, they can sometimes be a totally different product! They have the same colours and designs, and at a glance, they look to be the same Ralph Lauren, Gap or Calvin Klein you’re searching for - but the clothing is often of entirely different quality. “In today’s world, the outlet business is a business upon itself. The average shopper cannot tell the difference between a shirt made for an outlet centre compared to one made for the original boutique,” analyst Marshal Cohen said. “The difference mainly is cosmetic - you’d see a little less embroidering or a little less detail.” In the United States, it has been estimated that as many as 85% of items sold at outlet malls were never available at traditional boutiques. In China, that number could be even higher due to the proximity of the suppliers and the raw materials. The vast majority of what you’ll find at outlet malls isn’t leftover items or damaged goods from the traditional mall, but goods that are produced specifically for sale at the outlets, and typically, they’re produced on the cheap. Branding strategy confusing shoppers Very few brands let shoppers know that they’re getting the “outlet” merchandise, but there are a few exceptions. LL Bean marks clothing with a “Factory Store” label, and Brooks Brothers merchandise that is exclusive to the outlets has a “346” label. All ‘The Gap’ merchandise, which includes Old Navy and Banana Republic, has 3 small squares underneath the logo, indicating it is made specifically for the outlet. Shop employees at Burberry, Bally, Benneton and Armani in China told CHaINA magazine that their outlets sell old merchandise from regular stores, made just for the outlets. Zegna and Lacoste shop employees likewise told us that they fill its shelves with discontinued items, and Mango and Miss Sixty offers apparel that never saw the light of day in a regular store. But some retailers don’t draw the line between outlet and regular merchandise, or make it very confusing for shoppers to understand. So by leveraging the power of their premium brands, these stores get us to make the trip. Then, once they have us there, and totally psyched about the idea of getting
Overall Centre Product Environmental Service Rating Rating Popularity Rating Rating 19 17 15 2,452 Shanghai Qingpu 89 26 85 21 19 271 Bejiing Scitech 18 82 19 16 1,564 Beijing Yansha 15 66 19 16 341 Hangzhou EX 19 64 18 14 14 Chongqing West CentreName
Source: ICSC.org
a huge discount on the clothes we love, the truth is, we might be buying a knock-off. A three-layer retail and distribution network Because many outlets stores are run by different levels of distributors, licensees and franchisees in China, brands need to manage their sales sequences much more carefully. Merchandise first available only at the primary boutiques for a couple weeks or months enables the brand time to be able to appoint a contract manufacturer to make the new line using inferior quality textiles, zips, sewing, etc. After the order is completed, the same clothes will appear as “New Arrivals” at the outlet store, at a 40% discount. Meanwhile, any units still on the racks of the primary retailer might also be marked down 40%. Several designers - like Ralph Lauren, Zegna and Liz Claiborne — have found outlets so effective at moving merchandise that they now design lines exclusively for that market. It’s a clever scheme, which Robert Trinka from American Diagnostica Inc. explains “take[s] advantage of the fact that some people will pay top price to be ‘early adopters’, while others will pay a discount price for what they believe is the same product, with the designer’s name, without being able to discern the inferior quality.” And most recently, brands have been targeting the internet platform as a means for supplying even cheaper apparel. This is concerning, not only because the consumer is unable to properly assess the quality of their goods prior to purchase, but also because the influx of B2C plat-
53 www.chainamag.com
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FEATURE
What to Look for When Outlet Shopping
forms like eBay, Taobao, Vancl and 360Buy means that more and more companies are doing this, appealing to the increase of online consumers. A recent InternetRetailer.com poll found that 41% of global respondents shopping for luxury goods, rated discounts as the main reason to search the web over stores. And research from Boston Consulting Group estimates e-commerce in China to be a US$313bn operation by 2015, with an astounding 30 million new internet users every year.
Don’t let your knowledge of outlet mall tactics discourage you from shopping for discount items with designer tags. Not all factory outlets use these tricks, and the ones that do, still offer a percentage (although small) of designer styles that were actually sold on the main store’s floor. Don’t justify a purchase because of a longdistance drive or an unbelievably great discount. Only spend your hard-earned cash on something you actually want, rather than buying simply because it has a designer label. Know the quality and standards of the designer you are shopping for. If you truly love a particular brand, take the time to know what kind of materials are used in their clothing. Ask the manager up front if this clothing is the exact same clothing sold in the traditional boutiques. Check the brand logo on the clothing - is it exactly the same as the real logo? Often it is just slightly different. Everybody’s doing it
Ruppel Shell estimates that up to 80% of all Coach goods in outlets in the US are lower-end quality goods manufactured specifically for these stores, some might say we can expect this of a company like Coach, which has been diluting its image for years. But the net sweeps further, everybody’s doing this - taking advantage of the ignorance of consumers to overlook quality at the expense of a sale - to push cheaper supplies onto these outlet and online platforms. An anonymous sourcing manager told CHaINA Magazine, “This has been going on for years, starting with this distributor. I met the man who sold the same design jeans - rejected by one brand - to two other brands, [which] ended up in store, same time, and different mid/high end label. Law suit followed and was settled out of court. This was some 20 -30 years ago!” Another sourcing professional witnessed buyers flying into the UK seeking out stock that they could replicate the design of and then sell into Australian retail stores at high prices (Topshop being the main source for copying). “The garment industry is closely related to theatre,” she said. Ruppel Shell also includes Levi-Strauss and Mercedes Benz in the mix, but stated that there are “hundreds of other brands,” which “slice and dice their offerings for various markets, selling different products in different types of stores for different prices under the same brand.”
The death of a brand Brands’ selling themselves out in such a way obviously raises the question of whether companies like Coach and Diesel are suffering from slim profits at their boutiques. Michael Levy, professor of retail marketing at Babson College, feels this very much to be the case; that making their products too accessible would reduce the number of customers they are reliant on willing to pay top dollar. “You’re not going to find an outlet store for Rolex wristwatches,” he states, because Rolex has a much more stable high-end market for its products. For those that have already begun to dilute their image on the other hand, the impact is obvious. Anne Keery, Analytical Economist for Teck Coal, noted, “Calvin Klein has reduced their pricing and taken a different position in the industry over the past few decades. They used to be very expensive, but are now a much more moderately priced jeans brand. I don’t think they hold the same clout as they once did.” And similar opinions reach across the board for companies like Esprit, DKNY, Armani, and so on. As more and more companies continue to use outlet stores and private sales platforms to push cheaper versions of their retail goods, they should be conscious of the consequences of diluting, and effectively killing off their brand name. With more and more designer names not properly protecting themselves by failing to manage their suppliers, opening themselves up to exposure - be it through lawsuits, replicas or the cheapening of their name - the impacts on companies like Coach, Armani and Calvin Klein, are clear. Customers need to be conscious of schemes like these and not purchase at outlets or online websites blindly. “I recommend that people become more considered when they make purchases,” stated Ruppel Shell, as a final comment. Because unfortunately, especially in this current economic climate, a bargain is never really a bargain: you get what you pay for, and a lot of the time that simply is, in both quality and price, cheap. Cities with Number of Outlet Centers and Projects 5+ 2+ 1
BEIJING
ZHENZHOU CHENDU CHONGQING CHANGSHA
SHANGHAI NINGBO
54 january/ FEBRUARY
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11
FEATURE
LIVE
Best Practices in SCM Winners of 2011 CHaINA Awards On November 2nd and November 3rd, the Global Supply Chain Council hosted CHaINA’11 Live, the largest supply chain event in China involving a combination of presentations, networking, and workshops followed by an exclusive awards ceremony, the CHaINA Awards. Hosted by Master of Ceremony Curt Mabry, the awards ceremony gathered over 200 senior executives who gave a standing ovation to seven brilliant winners at the prestigious CHaINA Awards at the Intercontinental Shanghai Puxi on November 3rd. The CHaINA Awards are one of the only supply chain awards in China recognising supply chain excellence, and are designed to honour outstanding supply chain achievements as well as promoting excellence of supply chain and logistics in China. 55 www.chainamag.com
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“
Thank you very much to everyone who’s voted for Tesco this award, creating sustainable supply chain solutions is something that’s very important to Tesco and something that we are going to continue doing in China.
“
Thank you to Mr [Yong] Qin (Sinopharm) for a very successful project.
- Jurrien Heynen (Distribution Manager, China)
- Arnold Consegno (MD for Manhattan Associates, North Asia)
Best IT Supply Chain Solution
Green Supply Chain Award Tesco
Manhattan Associates for Sinopharm
Best IT Supply Chain Solution
Green Supply Chain Award
This award recognises a vendor who has developed significant value in the implementation of communications, e-business and innovation management technology in any aspect of passenger/freight transport or supply chain solutions.
This award salutes individuals, programmes or organisations that have set high standards for environmentally friendliness. Recipients of this award are selected on the basis of strong environmental leadership and their firm commitment to cover green shipping standards in China.
Winner: Manhattan Associates for Sinopharm (607 votes)
Winner: Tesco (712 votes)
Manhattan boosted the Sinopharm Supply Chain performance by centralised procurement which not only enhanced Sinopharm’s core business competitiveness but also Sinopharm’s reputation within China, for smooth logistics and distribution operations and pharmaceutical manufacturing.
Nominees:
Tesco built their Jiashan Green Logistics Centre to incorporate a number of renewable energy and energy saving initiatives. The centre is built to the Tesco design standard but complies with Chinese regulations, and after many years of experience in UK, Europe and Asia providing long life, low maintenance and operational efficiency at the lowest cost, the Jiashan Logistics Centre was built, saving 35% carbon emissions compared to a regular warehouse built to local standards.
Nominees:
Best Supply Chain Consulting Partner
This award recognises the best consulting firm who has shown excellence in developing and delivering supply chain expertise and consulting services in China.
Winner: Xuzhou Construction Machinery and IBM (1,111 votes)
XCMG chose IBM to provide comprehensive, sustainable services in implementing a strategic sourcing platform in August 2011. IBM’s information system design allowed XCMG’s sub-companies to quickly access the new centralised procurement platform. IBM also helped to establish group level KPI assessment, which greatly reduced potential procurement risks.
Nominees:
“
Thank you IBM […] we feel this is the start of a new movement, and thank you to the Global Supply Chain [Council]. - Da Wei Jiang (Vice GM for XCMG)
Best Supply Chain Consulting Partner IBM Xuzhou Construction Machinery (XCMG) january/ FEBRUARY
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“
Many thanks to CHaINA, we have been talking about enhancing communication of our people in the supply chain and I think this is a good representation that we will focus on this area further, thank you.
“
Thank you all for voting for us, special thanks to our operational team in South China […] and a very special thanks to all the folks at Crocs.
- Haiyan Zhang (Senior
- Jurrie-Jan Tap (VP Business
Manager, Training and Development)
Development, Greater China)
Shippers’ Choice Award CEVA
Shippers’ Choice Award This award recognises the 3rd party logistics provider who has proven excellence in developing and delivering supply chain solutions and services in China.
Training Education and Development Award
Winner: CEVA (581 votes)
Bosch
Shippers’ Choice went to CEVA Logistics for their designs and implementation of industry leading solutions for large and medium-size national and multinational companies.
Nominees:
“
Editor’s Choice
I don’t know what to say! Thank you very much and thanks for the companies that we have been bashing, you’ve all made a choice that is good for the environment and good for the people.
This award recognises the people or organisation that has helped contribute to CHaINA Magazine.
Winner: Greenpeace Nominees:
- Yifang Li
Training Education and Development Award This award recognises the trainer or training initiative or programme that has shown substantial results in developing or advancing supply chain knowledge or expertise within an organisation in China.
Winner: Bosch (1,160votes)
Bosch established Supply Chain Academy (SCA) in 2008 in order to standardise competence management across Bosch supply chain fields worldwide. It formed an integral part of Bosch Corporate Purchasing and Logistics and is now responsible for defining Competence Matrices (CptM) in Purchasing and Logistics fields, as well as offering tailor-made training modules to close the competence gaps of supply chain associates.
Nominees:
(Campaigner Toxics)
Editor’s Choice
Greenpeace
Supply Chain Operational Excellence
“
I’m excited and honoured to represent our entire Delphi China operations with 22,000 people. I would like to thank Max [Henry] and your GSCC […] and I would also like to thank our customers and our entire supply base, so we can continue to do our very best to contribute to the industry in China, focus on operational excellent, and to continue to build our talent in this great country. On behalf of Delphi, thank you so much. - Dominic Seto (VP, APAC)
This award recognises a manufacturing or retailing organisation that operates significant components of a supply chain and has demonstrated excellence in the design, operation or improvement of vast supply chains in China.
Winner: Delphi (850 votes)
Delphi was awarded for their new MRS scheduling process which enables Delphi China Plants to have full visibility of their inventory in transit. With the improved visibility, material planners’ workload has been significantly reduced and this also enables the logistics team to address exceptional variation in a more proactive manner.
Nominees:
Supply Chain Operational Excellence Delphi
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THE links
And the Award Goes To... With 2011 drawing to a close, a number of organisations hosted their annual supply chain award ceremonies in Asia in November and December last year. The criteria for selection and the winning process were often a bit sketchy, and many “vendors” got their prizes! Below are some of the most notable achievements... Supply Chain Asia Logistics Awards Winner: Kerry Logistics Asian 3PL Award Winner: Maersk Shipping Line of the Year Winner: Kong and Allan Consulting Best Supply Chain Consulting Partner in Asia Winner: Agility Best Global 3PL / The Green Supply Chain Award India Food Retail & SCM and Agro Logistics Summit & Awards Winner: Ferrero India Food Supply Chain Company of the Year (Manufacturer) Winner: Cold Star Logistics Cold Chain Service Provider of the Year Winner: PepsiCo Beverages & Marico Innovator of the Year (Supply Chain) Winner: Yum! Foods Food SCM Newsmaker of the Year China Federation of Logistics and Purchasing Winner: Manhattan Associates Best IT Project in 2011 Lloyd’s List Asia Awards Winner: Agility The Logistics Award SCM Logistics Award Winner: Damco Best Supply Chain Partner 7th China International Logistics Festival Winner: Chengdu 2011 China Logistics Industry City
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THE LINKS
Indirect Tax Reform - Pilot Program in Shanghai
From 1 January 2012 qualified businesses in Shanghai will be required to charge VAT following approval by the local tax bureau; Input VAT is creditable both for qualified pilot participants and their customers; Two new VAT rates will be introduced, 6% and 11%, adding to the existing rates of 13% and 17%; The first VAT return is due on 15 February 2012;
Shanghai pay business tax (BT) based on their revenue, which has long-term ranged from 3% to 5%, but can be significantly higher for specific sectors. That has changed with the implementation of the new tax program, enabling services including transportation, technology, creative, logistics, authentication and consulting, and movable property leasing the benefits of becoming VAT-able rather than BT-able. Companies that are not currently affected by the Shanghai program should consider that it is likely that similar reforms will be rolled out across China in the near future, and should therefore review the impact on existing relationships with Shanghai-based suppliers and customers, as well as analyse the Robert Li, Partner, PWC future impact of similar reforms on tax jurisdiction.
Source: PWC
On 26th October, the China State Council announced their decision to implement a pilot value-added tax (VAT) reform program in Shanghai, which the Ministry of Finance and the State Administration of Taxation released documentation jointly approving in November (Circular 111, the Notice on the Pilot Scheme for Replacing Business Tax on the Transport Sector and Selected Modern Service Sectors with Value-Added Tax in Shanghai). This paved the way for the new indirect tax reform program: effective as of January 1st 2012. This scheme is important in eliminating the inefficiencies of the dual BT and VAT systems for businesses in China, and is the first step in reforming China’s indirect tax system. As BT is not a creditable tax, it is a cost that accumulates through the supply chain. Under the VAT system, VAT incurred by businesses along the supply chain can be credited as input VAT. Currently most enterprises in
Source: PWC
Many thanks to Robert Li, Partner at PricewaterhouseCoopers (PWC), for providing a presentation on the new pilot scheme at the Global Supply Chain Council’s VAT event in December 2011, as well as the following slides on the new Tax reform program. 59
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THE links
Freight Felony
Withholding Payments, Swindling the Bills and Spreading “Trojans”
S
Alexander Gladstone
ometimes, things aren’t as straightforward as they should be when it comes to logistics. Complications can arise involving cash flow problems with clients and partners, corruption and opportunism on the part of employees, and even shady online criminals hi-jacking a company’s name to carry out subversive schemes. Dodging their debts Recently, Hainan-based Grand China Logistics withheld payments amounting to several million dollars on vessels used to transport commodities, resulting in European shipping companies the Vafias Group, Golden Ocean, and Spar Shipping taking either legal action, or withdrawing ships. The Vafias Group resorted to a lawsuit, which resulted in GCL’s assets being frozen in the UK. GCL owes Vafias US$2.2 million, for a US$147 Mn 5-year charter of a capsize bulk carrier. “If you include the legal fees it’s US$2.5 The amount the kickback scheme by million and growing,” said Harry Vafias, Milton Morris cost SC MD of the Vafias Group. “It’s a joke.” Johnson in damages Spar Shipping was forced to withdraw all three ships it had on charter to Grand China Logistics due to missed payments. Jarle Ellefsen, MD of the Norwegian company said at the time of writing, that Spar were in the process of calculating Grand China’s debts and deciding how best to recover the money. Chen Ping, the director of the company’s general administration office, stated that, “Grand China plans to make payments in stages,” though did not give any specific timeline. Such complications highlight the need to scrutinise the financial health of partner companies, in order to prevent letting their cash flow problems become your own.
Fiddling the books Threats can also emerge from within. In 2008, Milton Morris, the former transportation director of S.C. Johnson, American consumer company that manufactures household brands, was convicted for defrauding the company of millions of dollars. Morris along with colleague Katherine Scheller, was running a scheme, whereby they would have trucking companies bill them at inflated rates, part of which was returned to Morris as a kickback. Morris received 8 years in prison and is responsible for $20 million in restitution payments to SC Johnson, with an additional $5.4 million being shared by his codefendants, including Scheller, who faces three years imprisonment, and two unnamed men who ran the transportation companies that were in on the scheme. SC Johnson were awarded US$147 million in damages, and released a prepared statement supporting the conviction. “These individuals admitted to their crimes in plea agreements signed in December 2008, in which they acknowledged their involvement in a scheme to defraud SC Johnson by submitting inflated invoices for transportation services. In delivering the sentences, Chief Judge Charles N. Clevert Jr. commented on the breaches of fiduciary responsibility and trust committed by these individuals.” The more complex a company’s supply chain is, the more it is vulnerable to unscrupulous behavior on the part of employees. The Attorneys preparing for closing arguments in SC Johnson lawsuit against Milton Morris
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THE LINKS
SC Johnson case underscores the importance of closely monitoring financial books, and the employees who are responsible for keeping them. Hacked off There are some problems that are almost impossible to defend against, particularly those created by hackers and other online criminals. In early November, 2011, a UPS “phishing scam” spread, involving hackers who posed as officials at the package delivery company, luring unsuspecting consumers into opening bogus emails that infected their computers with a nasty virus. Victims received e-mails in which the “from” address was faked so that it appears to come from a legitimate UPS sender. By clicking on either a zip-file attachment or a link, the victim ended
up becoming the unwitting recipient of a “Trojan” virus, which infects the computer and can steal personal, confidential data. A blog-post by anti-spam vendor Cloudmark stated, “We’ve seen a number of variants in this campaign (some with attachments, some with no attachments and bad links), all of them personalized to the recipient, and sent from an ever-changing list of fake UPS employees or the generic ‘UPS Customer Services’.” UPS released a statement that they never send emails with zip-file attachments to consumers, and warned that any “UPS” e-mail with such an attachment is almost certainly from a malicious source. Managing the risks While there is nothing that can be done to prevent such behavior, it is how a company reacts when its name is hijacked that can help it withstand fallout. Most important is to communicate with the public to clearly delineate which content is legitimate, and which comes from an impostor. Logistics is a notoriously complicated business. Deceitful and illegal behavior, from partners, clients, employees, or even outside parties, can make it even more so. Companies should develop risk management plans to protect themselves against all potential threats.
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CLASSIFIED Listings
LOGISTICS SERVICES 4SCM A10, 5/F, 61 Old Warehouse Building, 61 Yangshupu Road, Shanghai 200082 上海市杨树浦路61号老栈商务楼5楼A10室 邮编：200082 +86 (21) 6148 9800 www.4scm.com.cn ARJ Commercial Leasing Limited 1500 Lianhua South Road Max-Mall Office Tower Block 8-9 Unit 810, Shanghai 201100 中国上海市闵行区莲花南路1500弄 梅陇镇新都会,商务中心8-9号楼810室 邮编：201100 +86 (21) 3358 2270 www.arjchina.com Arvato Services 3203, Changping Commercial Building, Futian Bonded Zone, Futian District, Shenzhen, P.R.C. 深圳福田区福田保税区长平商务大厦3203室 +86 (755) 3386 1666 www.arvatoservices.com.cn A.S.I Logistic Room 1703,Hitime International Tower No888 North Sichuan Road, Shanghai, 200080 上海市虹口区四川北路888号海泰国际大厦 1703室，邮编：200080 +86 (21) 5187 2772 www.asilogistic.com BDP International Unit 2101-2110, Shanghai Bund Int’l Tower, 99 Huangpu Road, Shanghai 200080 上海市虹口区黄浦路99号上海滩国际大厦 2101-2110室，邮编：200080 +86 (21) 6364 9336 www.bdpinternational.com Best Logistics Technology Bidg 11 West, 1F West Lake Soyea Software Park 176 Tianmushan Road, Hangzhou, Zhejiang, 310013 浙江省杭州市天目山路176号西湖数源软件 园11号楼1层西2201-03室 +86 (571) 8899 5656 +86 (571) 8827 0027 www.800best.com cargo-partner Logistics 6F, Building A, Sun Young Center, No. 398 Jiangsu Road, Chang Ning District, Shanghai 200050 上海市长宁区江苏路398号舜元企业发展大 厦A栋6楼,邮编：200050 +86 (21) 6195 3800 www.cargo-partner.com CEVA Logistics 19/F, Jiang Nan Shipyard Building 600 Luban Road, Shanghai 200023 上海鲁班路600号江南造船大厦19楼 +86 (21) 5302 9988 www.cevalogistics.com Dajin Logistics 3000 South Lianhua Road, Prologis Logistics Park, Minhang, Shanghai 201109 莲花南路3000号，普洛斯闵行物流园区内， 邮编：201109 +86 (21) 3430 7666 www.dajin.com.cn Deret Logistics Asie Suite 1703 Shanghai Bund International Tower, 99 Huangpu Road, Shanghai 200080 上海市黄浦路99号上海滩国际大厦 1703室，邮编：200080 +86 (21) 6306 2592 www.deret-asie.com.cn
LOGISTICS SERVICES
LOGISTICS SERVICES
DHL Supply Chain 3398, Xiupu Road, Shanghai 201315 上海市秀浦路3398号， +86 (21) 3825 6288 www.dhl.com DSV Air & Sea Logistics DSV Logistics 38/F, 1 Grand Gateway, 1 Hongqiao Road, Shanghai 200030 +86 (21) 5406 9800 www.dsv.com www.dsv.com/cn DTW Logistics Group 16 Tianzhu Middle Road, Zone A, Tianzhu Airport Industrial Area, Shunyi District, Beijing 101312 北京市顺义区天竺空港开发区A区天柱中路 16号，邮编：101312 +86 (10) 5923 7777 www.dtw.com.cn Elee Logistics 375, Kefu Road, Nanxiang Town, Jiading District, Shanghai 上海嘉定区南翔镇科福路375号 +86 (21) 3912 4360 www.eleechina.com
1468 Nanjing Road West, Jing’an District
上海市静安区 南京西路1468号 +86 (21) 3222 9999 www.skycargo.com
3 West Guangzhou Road, Taicang EDZ Jiangsu Province
江苏省太仓市经济开发区 广州西路3号 邮编：201103 +86 (512) 8889 8666 www.fmlogistic.com www.fmlogistic.cn HAVI Logistics 6 Xingsheng Jie, Beijing Economic & Technological Development Area, 北京经济技术开发区兴盛街6号， 邮编：100176 +86 (10) 6788 3335 www.havi-logisitics.asia Hercules Logistics Unit 5A, Bldg. A, Shenfubao Hightech Park, No. 3, Huanghuai Road., Futian Free Trade Zone, Shenzhen, Guangdong 518038 广东省深圳市福田保税区， 黄槐道3号深福保科技工业园A栋5A +86 (755) 8358 0000 www.hercules-logistics.com
LOGISTICS SERVICES +86 (21) 2326 2000 www.logwin-logistics.com
3/F. OOCL Plaza, 841 Middle Yan’an Road, Shanghai 200040
上海市静安区延安中路 841号东方海外大厦3楼， 邮编：200040 +86 (21) 6193 2323 www.geodis.com
Menlo 13/F Tower A, Golden Eagle Mansion, 1518 Min Sheng Road, Shanghai 200135 上海浦东新区民 生路1518号 金鹰大厦A座13楼, 邮编：200135 +86 (21) 6160 1198 www.menlochina.com MYS Global Supply Chain 51 Floor, 4068 Excellence Times Plaza, Yi Tian Road, Futian District, Shenzhen 518048 +86 (755) 8288 2131 www.mys-global.com
HYT Logistics HYT Logistics Center, Shiwei Road, Fuyong, Bao’an, Shenzhen 518103 深圳市宝安区福永街道十围路 鸿益达物流中心 +86 (755) 2998 7168 www.hyt-logistics.com
Penske Logistics Room 1801, Honi International Building, 233 Weihai Road, Shanghai 200030 上海威海路233号恒利国际大厦1801室 +86 (21) 6227 8566 www.penskelogistics.com
ID Logistics Room 19D, Dong Tai Plaza, 309 Tanggu Road, Shanghai 上海市塘沽路309号19D +86 (21) 6306 7083 www.id-logistics.com
Schneider Logistics 1001-1004, 10th Floor, MAIGO International Building, #11 Nan Ma Road, Heping District, Tianjin 天津市和平区南马路11号麦购国际大厦10层 1001-1004,邮编：300022 +86 (22) 2622 8888 www.schneider.com
IDS Logistics 8/F Tower Block, LiFung Plaza 2000 Yishan Road, Shanghai 201103 上海市闵行区宜山路2000号利丰广场主楼 8楼，邮编201103 +86 (21) 2416 4700 www.idslogistics.com Kuehne & Nagel Block 1, 11-16F, 1868 Gong He Xin Road, Shanghai 200072 上海共和新路1868号大宁国际商业广场 第一幢11-16楼，邮编：200072 +86 (21) 2602 8000 www.kuehne-nagel.com Linfox Road Transport 26-F, Cross Region Plaza, 899 Ling Ling Road, Xuhui District, Shanghai 200030 上海市徐汇区零陵路899号飞洲国际广场26 楼F座，邮编：200030 +86 (21) 5150 6699 www.linfox.com Linghua Logistics 333 Ke Yuan Road Zhangjiang HiTech Park Pudong New Area, 上海市浦东新区张江高科技园区科苑路333 号，邮编：201203 +86 (21) 5080 0107 Linkstar Logistics 49A, 199 North Riying Road, Waigaoqiao Free Trade Zone, Shanghai 200131 上海市外高桥保税区日樱北路199号49A, +86 (21) 5046 1666 www.linkstarlogistics.com Logisfashion Transportation Tower, Room 1101 218, Hengfeng Road, Shanghai 上海市现代交通大厦恒丰路218号1101室 +86 (21) 5180 1025 www.logisfashion.com Logwin Air+Ocean China 5/F & 6/F, Ocean Towers, 550 East Yan’an Road, Shanghai 200001 上海市延安东路550号海洋大厦5楼和6楼
SDV International Freight Forwarding 20/F, East Building, New Hualian Mansion, 755 Middle Huai Hai Road Shanghai 200020 上海市淮海中路755号新华联大厦东楼20 楼，邮编：200020 +86 (21) 3395 0600 www.sdv.com Sinotrans Guangdong 16/F, 97 Haiyuan Road, Huangpu, Guangzhou, China 510700 广州市黄埔区海员路97号外运大楼16楼， +86 (20) 8710 2800 gd.sinotrans.com Sinolog Logistics No.446, Fu Te Dong Yi Road, Waigaoqiao Free Trade Zone, Shanghai 200131 上海外高桥保税区富特东一路446号 + 86 (21) 5866 6988 www.sinolog163.com SunJet Logitics 299 Huaxiang Road, Shanghai 上海华翔路299号 +86 (21) 6127 2637 www.sunjex.com
Suite 609, Tsidi Building, Shanghai Multimedia Valley No 55, Lane 777, Guangzhong Road (W) Shanghai, China 200072
上海市广中西路777弄 多媒体科技园 55号启迪大厦609室 邮编：200072 +86 (21) 5308 3678 www.ssi-schaefer.cn
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CLASSIFIED Listings
LOGISTICS SERVICES Toll Global Logistics No. 388, Tieli Road, Yanghang Town, Baoshan District, Shanghai, P.R. China 201900 中国上海市宝山区杨行镇铁力路388号 +86 (21) 3379 3366 www.tollgroup.com YatFai Logistics 39-H, Fortune Building, 88 Fuhua San Road Futian District, Shenzhen, Guangdong Province 广东省深圳市福田区福华三路88号， 财富大厦39楼H座 +86 (755) 3336 6898 www.yatfai.com
PROFESSIONAL SERVICES Accenture 30/F, Central Plaza, 381 Huaihai Road, Shanghai 200020 上海市淮海中路381号中环广场30楼， +86 (21) 2305 3333 www.accenture.cn AsiaInspection 2201-03, Guidu Building, 3007 Chun Feng Road, Luo Hu DistricUnit 810, Shenzhen 深圳市罗湖区春风路3007号， 桂都大厦2201-03室 +86 (755) 8231 6796 www.asiainspection.com Baker & McKenzie Suite 3401 China World Tower 2 China World Trade Center, 1 Jianguomenwai Dajie, Beijing 100004 +86 (10) 6535 3800 www.bakernet.com BBK Consulting 1812 Shui On Plaza, 333 Huaihai Middle Road, Shanghai 200021 上海市淮海中路333号瑞安广场1812室 +86 (21) 6137 3052 www.e-bbk.com Booz & Company Suite 2511, One Corporate Ave. No. 222 Hu Bin Road, Shanghai 200021 上海市湖滨路222号企业天地1号楼2511室 +86 (21) 2327 9800 www.booz.com/cn BPS Global Group Unit 3104, Tower 1, Kerry Everbright City, 218 West Tianmu Road, Zhabei District, Shanghai, China 200070 中国上海市闸北区天目西路218号嘉里不夜 城第一座3104室,邮编:200070 +86 (21) 6317 8830 www.bps-group.net Control Risks Suite 1001 East Tower China Merchants Plaza, 333 North Chengdu Road, Shanghai 200041 上海市成都北路333号招商局广场东楼 1001室，邮编：200041 +86 (21) 5298 1800 www.control-risks.com Demand Solutions PO Box 6180, Norwest Business Park, Baulkham Hills BC NSW 2153 +612 9659 4555 www.demandmgmt.com Dragon Sourcing Suite 1502, Jin Tian Di International Mansions 998, Renmin Road 上海市人民路998号今天地国际大厦 1502室, 邮编：20002 +86 21 6141 3955 www.dragonsourcing.com
PROFESSIONAL SERVICES Elemica 300 Beach Road #13-06 The Concourse Singapore 199555 +65 6327 6143 www.elemica.com InnoCSR Room 17-16, Yu An Building, 738 Dongfang Rd, Pudong New Area, Shanghai, China 200122 中国上海市浦东新区东方路738号 裕安大厦17楼16室, 邮编：200122 +86 (21) 5237 7387 www.innocsr.com iiAPS 27/F, Room 02 418-428 Jiang Ning Road 200041 Shanghai, China 上海市江宁路418号-428号，27楼02室 + 86 (21) 6217 0253 www.iiaps.org Kinaxis Level 19, Two International Finance Centre, 8 Finance Street, Central, Hong Kong 19层,国际金融中心2座金融街8号, 中环,香港中国 +852 2251 1859 www.kinaxis.com Lloyd’s Register Asia 20/F Ocean Towers, 550 East Yan’an Road, Shanghai 200001 上海市延安东路550号海洋大厦20楼， +86 (21) 5158 5700 www.lr.org www.lloydsregisterasia.com Logistics Executive Suite 13G, Shanghai Ind’l Investment Bldg. 18 North Caoxi Road, Shanghai 200030 上海市徐汇区漕溪北路18号， 上海实业大厦13楼G座, 邮编：200030 +86 (21) 6427 6697 www.logisticsrecruitment.com.cn Michael Page International 601-603 Shanghai Kerry Centre 1515 West Nanjing Road, Shanghai 200040 上海南京西路1515号，嘉里中心601- 603 +86 (21) 3222 4758 www.michaelpage.com.cn MKT China Jiedi Building, Unit 1102, 2790 Zhongshan North Road, Putuo District, Shanghai 200063 上海市普陀区中山北路2790号杰地大厦 1102室,邮编：200063 +86 (21) 6095 5225 www.mkt-china.com
PROFESSIONAL SERVICES Resources Global Professionals Room 2705-06, Lippo Plaza, 222 Middle Huaihai Road, Shanghai 上海市卢湾区淮海中路222号力宝广场 2705-06室 +86 (21) 6386 8700 www.resourcesglobal.com ThreeSixty Sourcing 5/F, 686 Jiujiang Building, No 686 Jiujiang Road, Shanghai 200001 上海市黄浦区九江路686号宝龙大厦5楼 +86 (21) 6322 5000 www.threesixtysourcing.com Tompkins International 58 Mao Ming Road (South) Room 502, Jin Tai Building Shanghai 200020, China 上海市茂名南路58号锦泰办公楼502室， +86 (21) 6473 2588 www.tompkinsinc.com
REAL ESTATE SERVICES Blogis International Logistics +86 (755) 2669 4211 www.blogis.com.cn BlueScope Steel 12F HSBC Tower, 1000 Lujiazui Ring Road, Shanghai 200120 上海陆家嘴环路1000号汇丰大厦12楼, +86 (21) 6841 1898 +86 (21) 6841 2340 www.bluescopesteel.com CB Richard Ellis 11th Floor Shanghai Wheelock Square 1717 Nanjing West Road Shanghai 上海市南京西路1717号会德丰广场11楼 邮编：200040 +86 (21) 2401 1200 www.cbre.com.cn Colliers International 16/F Hong Kong New World Tower, 300 Middle Huaihai Road, Shanghai 200021 上海淮海中路300号， 香港新世界大厦16楼，邮编：200021 +86 (21) 6141 3688 www.colliers.com/china
Room 805, Kerry Centre, No 1515 Nanjing Road (W), Shanghai
上海南京西路1515号嘉里 中心805室
11/F, PricewaterhouseCoopers Center, 202 Hubin Road Shanghai 200021
上海湖滨路202号普华永 道中心11楼， 邮编：200021 +86 (21) 2323 8888 www.pwccn.com
+86 (21) 5298 6622 www.gazeley.com Global Logistic Properties Room 2708 Azia Center, 1233 Lujiazui Ring Road, Shanghai 200120 上海市陆家嘴环路1233号 汇亚大厦2708室， 邮编200120 +86 (21) 6105 3999 www.GLProp.com Goodman Group 2107 - 2109, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 200021
REAL ESTATE SERVICES 上海淮海中路333号瑞安广场2107-2109室 邮编：200021 +86 (21) 6133 2000 +86 (21) 6386 2386 www.goodman.com GSE China 27C Industry Building, 18 North Caoxi Road, Shanghai 200030 上海市徐家汇漕溪北路18号实业大厦27C, 邮编：200030 +86 (21) 6090 1388 www.gsegroup.cn Jones Lang LaSalle 25/F, Tower 2 Plaza 66, 1366 West Nanjing Road, Shanghai 200040 中国上海市南京西路1366号恒隆广场2座25楼 邮编：200040 +86 (21) 6393 3333 www.joneslanglasalle.com.cn Lingang Free Trade Port Economic Development 6/F, 188 Yesheng Road, Pudong, Shanghai 201308 上海市浦东新区业盛路188号6楼, 邮编：201308 +86 (21) 2095 0600 +86 (21) 2095 0604 www.linganglogistics.com Mapletree Suite A-D,14/F, Times Square Office Building, 500 Zhangyang Road, Pudong, Shanghai 200122 上海市浦东新区张扬路500号, 华润时代广场办公楼14楼ABCD单元， 邮编：200122 +86 (21) 5836 7177 www.mapletreelogisticstrust.com www.mapletree.com.sg Nanjing ZAL Management Office 18 B Deji Mansion, 188 Changjiang Rd. Nanjing 210018 南京市长江路188号德基大厦18楼B座， 邮编:210018 +86 (25) 8572 6079 info@nzmcl.com Prologis Plaza 66 II ,Suite 2908 1366 Nanjing Road West Shanghai, 200040 上海南京西路1366号恒隆广场二座2908单元 邮编：200040 +86 (21) 6135 1688 www.prologis.com Vailog Room 3102-3104, City Gateway, 398 North Caoxi Road, Shanghai 200030 上海市漕溪北路398号汇智大厦3102-3104 室，邮编：200030 +86 (21) 6090 5292 www.vailog.com Volume Industrial Park Zhuhai Gaolan Container Port Zone, Zhuhai, Guangdong 广东省珠海市平沙镇丰收路36号 +86 (756) 772 7118 www.volumeip.com Yupei Group No. 2500 Jinchang Road, Shanghai 200331 上海市普陀区金昌路2500号， 邮编：200331 +86 (21) 6627 7577 www.yupeigroup.com
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IT & SOFTWARE SOLUTIONS Barloworld Supply Chain Software 15/F NCI Tower, 12A Jianguomenwai Avenue, Chaoyang District, Beijing 100022 北京市朝阳区建国门外大街甲12号新华 保险大厦15楼, 邮编：100022 +86 (10) 8523 3103 www.barloworldscs.com BravoSolution 13F-01, Tian’an Center 338 West Nanjing Road, Shanghai 上海市黄埔区南京西路338号 天安中心1301室 +86 (21) 6145 8500 www.bravosolution.cn Emptoris Unit 01, Floor 7, 1 Grand Gateway 1 Hong Qiao Road, Shanghai 200030 虹桥路1号港汇中心1座701单元， +86 (21) 6447 6600 www.emptorischina.com Epicor Software 2008 Cross Tower, 318 Fuzhou Road Huangpu District, Shanghai 200001 上海市黄浦区福州路318号 高腾大厦2008单元，邮编：200001 +86 (21) 63912808 www.epicor.com GXS International Room 1602, 16/F, Grand Gateway Tower 1, 1 Hongqiao Road, Shanghai 200030 上海市虹桥路1号港汇广场1座1602室， +86 (21) 6120 1088 www.gxschina.com.cn JDA Software Unit 06, 29/F, Raffles City, 268 Xizang Middle Road, Shanghai, 200001
IT & SOFTWARE SOLUTIONS 上海市西藏中路268号, 来福士广场2906室， +86 (21) 2327 9400 +86 (21) 2327 9401 www.jda.com Kewill Room D, 9F Baoding Building No.550 Xu Jia Hui Road, Luwan District Shanghai 200025 上海市徐家汇路550号宝鼎大厦9楼D座 +86 (21) 6466 3030 www.kewill.com Lawson Software Room 2H, Apollo Building, Yan Zhong Lu 1440, Shanghai 上海延安中路1440号阿波罗大厦2H +86 (21) 6248 5853 www.lawson.com
Unit 2110, 21/F, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 200021
上海淮海中路333号瑞安 广场21楼2110室 邮编：200021 +86 (21) 6057 3500 www.manh.com
IT & SOFTWARE SOLUTIONS PowerE2E 20A, Tower 3, No.600 Tian Shan Rd, Shanghai China 上海天山路600弄3号20A(近芙蓉江路) +86 (21) 6274 9608 www.powere2e.com Schmidt Room 2406 Huashen Mansion, 398 Hankou Road, Shanghai 200001 上海市黄浦区汉口路398号华盛大厦2406室 +86 (21) 6133 9708 +86 (21) 6133 9718 www.schmidthk.com SEEBURGER Room 523-526, 5F, Cimic Tower, 800 Shangcheng Road, Shanghai 200120 上海浦东新区商城路800号 斯米克大厦5层523-526室, +86 (21) 5835 7779 www.seeburger.cn
Room B, 23/F, Jinrun Mansion, 6109 Shennan Road, Futian District, Shenzhen 518040
深圳市福田区 深南路6109号 金润大厦23楼B座， 邮编：518040
+86 (755) 8830 9265 www.tradecard.com
IT & SOFTWARE SOLUTIONS SupplyOn Suite 1501, Silver Centre, 1388 North Shanxi Road, Putuo District, Shanghai 200060 上海普陀区陕西北路1388号银座中心 1501室，邮编：200060 +86 (21) 6149 8042 www.supplyon.com Vocollect Unit 3, 29/F, Sino Plaza, 255-257 Gloucester Road, Causeway Bay, Hong Kong 香港铜锣湾告士打道255-257号信 和广场3单元29楼 +852 3915 7000 www.vocollect.com
EQUIPMENT PROVIDERS CHEP 40/F, Suites 8-10, 2 Grand Gateway, 3 Hongqiao Road, Shanghai 200030 上海市虹桥路3号港汇二座40楼08-10室 +86 (21) 6127 2488 www.chep.com Dexion (Shanghai) Logistics Equipment Room 1102, Block A, Phase 1 Zhang Jiang Riverfront Harbour, 3000 Longdong Avenue, Pudong New Area, 上海市浦东新区龙东大道3000号张江集电 港第一期A楼1102室，邮编：201203 +86 (21) 6879 4413 www.dexion.biz Loscam Packing Equipment Room 508, 707 ZhangYang Road, Pudong, Shanghai 200120 上海市浦东新区张扬路707号508室， +86 (21) 6104 8156 www.loscam.com
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THE LINKS
What do you look for in a toothbrush? In November, Colgate generated market research by posting this question on Linkedin. A total of 3376 voted
% of votes
70 70 60 50 40 30 20 10
Male
Age
Specially designed bristles
25%
A thick ergonomic handle All 3 mentioned
63%
30
4%
Unique cheek & tongue cleaner
8%
360 300 336 240 180 120 60
Head, Innovation & Strategy Tonic Media
Interesting Poll. Like the way Colgate is using LinkedIn for Consumer Insights & Product Innovation. Good initiative by the brand managers to think beyond just Facebook & Twitter.
Phani Kumar Executive Officer IPFC
The toothbrush is a good product for innovation. Many features, many benefits..
66
18-29 30-36 37-44
Female
Manoj Khiyani
169 27 45+
Source:
Prithiraj Panigrahi Product Specialist CEIC Data
“Dentists suggest to use the simplest toothbrush, not one with ornamentation and varieties of bristles..... these are all gimmicks.”
Salitha As HR Contractual Services
The important think is how long we can use a brush. We should get proper value for our money. I need all the above qualities in a brush that’s low value.
Dig avaital E ilab diti o iPa le on n d
2.0
Digital Edition: www.chainamag.com 65 www.chainamag.com
january/ FEBRUARY
The Magazine for Global Supply Chain Leaders
INNOVATION: THE BRIGHTEST NEW IDEAS IN SUPPLY CHAIN 创新: 供应链的明智之选
January / February 2012