2008 May-Jun Issue

ANHUI PROVINCE

Emerging from the shadows

WORLD BANK INDEX

Measuring logistics performance

MADE IN CHINA Still makes sense?

INDUSTRIAL PROPERTY Going Green

MAY/JUNE 2008 www.chainaonline.com AUS$7.50 EUR€5 HK$40 RMB40 SG$9 UK£3.50 US$6

THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS

China Bottlers lead the dive into pallet pooling

Managing Editor & Publisher Russel Beron russel@chainamagazine.com Contributing Writers Chris Deans, Pilar Deiter, Chris Horton, Michael Mackey, Melanie McGanney, John Sun, Sam Sun, Cameron Wilson

Art Director Colin Dizengoff colind@imprintasia.com Graphic Designer How Xu Pho tographers Grant-Oh! Buchwald Jackson Lowen

Chaina magazine editorial advisory committee Dittmar Nerger Head of Global Sourcing Bayer Healthcare

Max Henry Founder and Executive Director, Global Supply Chain Council

Dong-Hong Zhu Head of WW Procurement (China), Materials Manager, Agilent Technologies Shanghai

Michiel Hijma Senior Manager, Bertelsmann Directgroup China

Guy Tran Logistics Manager, Auchan China Hypermarkets Jean-Luc Laboucheix Supply Chain Director Asia Pacific, Goodyear

Nis-Peter Iwersen Vice President, Danfoss China Robert Jiang General Manager, Dajin Logistics Tony Li Logistics Manager, Amway China

CHaINA Sponsorship For information on sponsorship opportunities with CHaINA Magazine, please contact: Russel Beron russel@chainamagazine.com ADVERTISING SALES Kaman Cheng, Business Development Manager kaman@chainamagazine.com +86 21 5102 1617/18 DISTRIBUTION We distribute CHaINA free by direct mail to subscribers in China, Hong Kong and Singapore who are involved in all aspects of supply chain management, manufacturing and logistics. Our target subscribers are logistics, warehousing and transportation directors and managers; sourcing, procurement and purchasing directors and managers; and manufacturing executives at foreign and domestic Chinese companies.

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FROM THE EDITOR The writing on the wall is in bright red in both English and Chinese characters: “China’s manufacturing for export boom is over.” This was the gist of a much cited major consulting firm’s study on the state of manufacturing competitiveness in China and is evident in the scramble of many companies with manufacturing operations in China to find a fix.

Inflation, evident on a small scale in local food and utility prices and on a bigger scale in dramatic increases in the price of commodities and services has hit the logistics sector hard. This is putting increased pressure on already squeezed manufacturers and supply chains which have added incentive to tighten efficiency and lower costs.

Headlines of businessmen not being able to participate in April’s Canton Fair, either due to tightened visa restrictions for foreigners or more stringent security checks for Chinese, have set the tone for business activity in China lately. Gone are the days of rolling out the red carpet for foreign enterprises with money to spend in China if their goals are primarily export oriented. With the Olympics less than 90 days away, and relentless external political pressure, Beijing’s eyes are fixed with an inward look.

While an inward focus on domestic growth and moving China up the value from low cost producer to provider of value added services is positive for China as whole, it has made doing business here difficult and created more than a few kinks in China’s outgoing supply chain.

Does “Made in China” still make sense, one case study in this issue asks? The answer really depends on what business you are in and how efficient your operation is. If your business relied on low cost labour and government tax rebates for profit, then probably you are already on the boat to Vietnam or some other potentially lower cost producer. In that case the government pressure is a good thing; where will the search for low cost production end?

Russel Beron Editor and Publisher CHaINA Magazine

CHaINA Magazine (ISSN 1992-9668) is published jointly by Painted Horse Media Limited (Hong Kong) and the China Supply Chain Council Limited (Hong Kong). There is no charge for qualified readers to receive subscriptions. Send subscription requests or address changes to subs@chainamagazine.com. The contents of the magazine may not be reprinted in whole or in part without the permission of the publisher. The publisher is not responsible for product claims and representations. CHaINA is a registered trademark of the China Supply Chain Council. www.chainaonline.com

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THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS

MAY/JUNE 2008

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CONTENTS PAGE

38 REGIONAL FOCUS

Anhui:

Emerging from the Yangtze Delta shadow This issue our regional focus covers Anhui, a province that is trying to make its mark as one of China’s leading trade centers.

PAGE

28 QUESTION & ANSWER

SPECIAL REPORT

World Bank Logistics Performance Index Offers guidance for developing countries

Going Green We sat down with Jonathan Fenton Jones to discuss the steps that Gazeley is taking to “go green.”

PAGE

52 CASE STUDY

Does made in China still make sense?

PAGE

25 4

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PAGE

36

This case study examines the pros and cons of industrial manufacturing in China.

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COVER STORY

China Bottlers lead the dive into pallet pooling

REGULAR FEATURES INSIDE VIEW 34 COMPANY PROFILE 6 Midea: Property developer AMB cranks up the heat on microhunts for space in China wave oven production in China 42 BOOK REVIEW 8 Greed and Fear in China’s Managing the Dragon e-Commerce Market 10 IN THEIR OWN WORDS 11 STARS & DUDS NEWS ROUNDUP 12 The big picture 23 Supply Chain Management 24 INSIGHT

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EVENT UPDATE 44 China’s talent war rages on 46 The ins and outs of sourcing in China 48 TIER TWO Q&A Ningbo profile 50 KNOW HOW Cycle counting: part II

51 EXECUTIVE INSIGHT Q&A with Jonathan Qiao 54 SCM GADGET 55 MOVERS & SHAKERS 56 BLOG WATCH 57 PRODUCT RECALLS 58 CLASSIFIED LISTINGS 62 COMPANY INDEX 62 EVENTS CALENDAR

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INSIDEVIEW

Midea

cranks up the heat on microwave oven production in China

At present, China ranks first in the world in terms of both production and export of microwave ovens.

Located in Foshan City, Guangdong Province, Midea Microwave Oven Manufacturing is one of the three largest production bases of microwaves in the world.

3,000 100 90%

+ employees occupy a plant that covers 150,000m2 that produces more than 15 million sets each year.

billion yuan (US$12.33 billion) is Midea’s total revenue goal for 2010.

on time delivery rate was achieved by Midea’s for its refrigeration units once they upgraded to Oracle E-Business Suite 11e in 2005. Onhand inventory was reduced to 70%, and lower procurement costs were also met by establishing a portal to improve communications with suppliers.

55-60 50

million units is the market demand for microwaves worldwide.

million microwave units were produced in China by Galanz, LG, and Midea combined in 2007. 85% were exported.

Midea Microwave Oven Manufacturing facility in Foshan City, Guangdong Province 6

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INSIDEVIEW

Greed and Fear in China’s e-Commerce Market

L

-Reliable delivery of merchandise with the ability to facilitate easy return processing and payment on delivery.

Due to the swift growth of the Internet and the country’s rising middle class, China’s e-commerce market is considered to have great potential.

The online shopping population has skyrocketed from 1.6 million users in 2001 to 32 million in 2006, and all signs point towards the online user population growing at an unprecedented rate of 26% year on year. Conversion of this increasing pool from online users to online shoppers has ecommerce merchants salivating at the opportunity to capitalize on China’s evolving internet buying population.

China’s Unique e-Commerce Logistics Hurdles

ogistics in China is complex and the additional complexities of managing logistics services for e-Commerce transactions make it even more daunting. But regardless of the challenges, the lure of China’s burgeoning e-Commerce market is too enticing to be ignored.

Pilar M. Dieter and Sam Sun are directors at Alaris Consulting, an advisor y firm that helps companies solve issues related to operations, strategy and supply chain management.

Regardless of business model - Business to Consumer (B2C), Business to Business (B2B) or Consumer to Consumer (C2C) – successful e-Commerce business platforms subscribe to a number of basic core pillars:

Existing players and new entrants to China’s e-Commerce market must recognize the unique challenges that exist within China’s budding market yet still strive to achieve their strategic imperatives. They will do this through forming partnerships with banks, marketing agencies and most critically, logistics service providers.

Putting aside the realities of China’s logistics challenges such as regionalization, poor infrastructure, high resource turnover, weak IT capabilities and fragmentation among providers, serving the logistics needs of the e-Commerce sector brings a distinct set of challenges anywhere in the world.

LSP’s (Logistics Service Providers) that serve e-Commerce companies must offer reverse logistics -Sound IT infrastructure to handle all including the ability to handle returns efficiently aspects of transactions including, but not and manage customer relations effectively. Major limited to, online payment processing and activities in reverse logistics include collection, order tracking. sorting and disposing of “serving the logistics needs of goods to their appropriate -Trustworthiness in that the DC, warehouse or OEM. the e-Commerce sector brings product is indeed delivered Moreover, e-Commerce after payment is made and a distinct set of challenges companies often foster a the product quality lives up to anywhere in the world” sales culture that will put its claims. This is particularly critical amongst Chinese consumers whose shopping a premium on customer service, requiring the tendencies are traditionally governed by thorough LSP to own both the problem and solution when handling returns. While these additional services investigation of a product before purchase. may generate significant returns for logistics -Strong customer service so consumers feel companies, the LSP’s lack of retail expertise confident their transaction can be supported by a coupled with the unpredictable volume of returns human being if needed. creates an inherent risk in the system. Indeed the -Availability of product for immediate fulfillment risk and returns are so high that specialists in reverse logistics have emerged. upon completion of the online transaction.

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INSIDEVIEW

Full-service e-Commerce related LSPs must offer payment processing in order to be effective.

And China’s underdeveloped electronic payment process systems means that LSPs serve as payment collector upon delivery. As the cultural bias against debt and credit card usage wanes and online banking transactions become more common, collections services will require less support from the LSP. Until that time however, the LSP will have to invest in the skills and a level of technology to support customer account maintenance functions related to payment and collections.

Now, compound China’s logistics challenges with the need to service these specialized requirements of the e-Commerce industry and the critical question becomes explicitly clear: Can logistics service providers throughout China meet the high demand of the e-Commerce industry?

particularly vibrant among China’s tier 2 and tier 3 cities, largely due to the coupling effects of lacking choices in traditional retail stores in those regions and growing internet penetration. It poses unique challenges to LSPs as they need to process small shipments under tight time constraints across a wide geography, and in a cost-effective manner.

China’s complicated logistics realities coupled with the high demands of the e-Commerce market make logistics services in this sector quite tricky. However, the desire to capitalize on the logistics needs of the growing internet shopping population is justifiable and one that warrants serious consideration.

Viable e-Commerce companies have proven that distribution can be managed despite China’s complex set of challenges. 8848.net, a Beijingbased online seller of books, software, and consumer products came under early criticism for unreliable delivery by one of its subcontracting Being part of the e-Commerce supply chain logistics partners. In response, the company turned to the national requires LSPs have a level postal service to deliver of technical integration “e-Commerce is particularly goods and collect money capabilities to provide for the vibrant among China’s tier 2 for cash-on-delivery orders. real-time data demands of and tier 3 cities, largely due to In an effort to ease the flow the industry. EDI (electronic the coupling effects of lacking of goods distribution, China data interchange) and bar online retailer Dangdang. coding are some of the more choices in traditional retail com established more than standard features already stores in those regions and required by many brick and growing internet penetration.” 20,000 square meters of warehouse space in Beijing mortar shippers, however the as well as in the southern expectation for web enabled tracking, GPS, electronic signature and wireless and south eastern regions of China. Additionally, technology exceeds what many China based LSPs by partnering with local 3PLs throughout 180 cities Dandang was able to ensure efficient distribution currently provide.

Contrary to common belief, e-Commerce is to their customers.

www.chainaonline.com

MAY/JUNE 2008

9

“

THEWORD

In their own words

Som recent comments reported from within China indicating th climate for both domestic business and overseas exports.

en Dongqi, from the Ac

We don’t need pact, th

my of Macroeconomic Research, was quoted by state media as saying:

worry about the long-term economic boom just because of the shortwill be robust at least till 2020,” (BizChinaUpdate).

A ppropriate app ciation of the yuan does help contain inflation in China, but fighting inflation will not be a main reason for the exchange rate reforms or market fluctuations.”

- Central bank governor Zhou Xiaochuan on the country’s exchange rate reforms Zhou at an NPC press conference on March 6, 2008.

MAKING BUSINESS FLOW CEVA designs, implements and operates complex supply chain solutions on a national, regional or global scale for medium to large enterprises.

With more than 52,000 dedicated professionals CEVA maintains 614 warehouses globally with a combined space of approximately 8,6 million square meters and operates an extensive global network in over 100 countries.

“Please keep a close watch on your purses and do not splurge,” Li Rongrong, minister of the State Owned Assets Supervision and Administration Commission (SASAC), was quoted as saying by the Economic Observer newspaper on April 24 when he was reviewing the performance of the SOEs with their bosses.

“The Chinese are basically the same bunch of goons and thugs they have been in the past 50 years,” said Jack Cafferty, in a CNN show, Situation Room that aired on April 9, infuriating many Chinese. and in response...

According to a China Daily ed torial,

“He is obviously unhappy with China ‘holding hundreds of billions of dollars’ of U.S. paper deficits, more and more American consumers ‘buying from (inexpensive) Wal-Mart’, and certainly the ‘changed relationship’ with China.”

“Rising labor and material costs and dismal overseas markets hit by the subprime crisis are making the Chinese food export situation more complicated,” said Ou Minggang, deputy editor-in-chief of Chinese Banker magazine.

“A 10 percent increase in Chinese ports th year is ugh,” www.cevalogistics.com 10

MAY/JUNE 2008

said Huo Jiang Commerce of Import and Native Produce and Anim

China Chamb ort of Foodstuffs, yproducts (CFNA).

www.chainaonline

STARS&DUDS

Stars

& Duds

Our stars and duds section takes a look at some of the individuals and companies in and around China that are on their way up and others who on their way down or out. Unfortunately this issue there more duds than stars.

Why Nokia is No.1 in China

Nokia is the standout example of a firm that was able to learn the rules of the game in China and swiftly revamp its strategy for the local market. The firm recently announced that it sold 70.7 million mobile phones in China last year, up 38.6% year-on-year. As of the final quarter of 2007, Nokia held a 35.3% share of the mobile phone market in China. Samsung was its closest competitor, with 13.2%. Analysts said that Nokia’s success here has been built in large part on a revamped distribution strategy. Originally it focused on building relationships with national distributors but then jettisoned many of them in favor of alliances with smaller provincial players.

Trust-Mart COO Resigns

After taking the position of COO of Trust-Mart only a year ago, Meng Yongming formally resigned on April 30. An insider says that Meng asked for the resignation in a high-level meeting with Wal-Mart held in Shenzhen. WalMart purchased Trust-Mart just over a year ago and rumour has it that Meng’s resignation has to do with the ineffectiveness of Trust-Mart’s integration, a most obvious example being that Trust-Mart opened not one new store over the year.

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Samsung Group’s Lee stands down amid accusations

Lee Kun-hee

South Korea’s most powerful businessman, Lee Kun-hee, 66, announced recently that he will stand down after 20 years at the head of the giant Samsung Group following his indictment for tax evasion and breach of trust. “I deeply apologize for causing concern to the nation and will take full responsibility for that,” an expressionless Lee said. Lee and his family still control the country’s largest conglomerate though. The group has more than 250,000 employees, and its annual revenues of US$160 billion are around the size of Singapore’s GDP.

Zong Qinghou

giant Wahaha Group on tax evasion allegations after they received a report accusing Zong Qinghou of not paying his tax bill.

Workers take on food giant

KRAFT Foods Inc has been accused of violating China’s new labor law for failing to consult with employees before shifting its headquarters from Beijing to Shanghai. Employees have formed a union, asking for compensation.

Wahaha’s chairman investigated for tax evasion

The tax authority in Hangzhou City, Zhejiang Province, has started probing the chairman of Chinese beverage

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NEWSROUNDUP

THE BIG PICTURE

A synopsis of key news relevant to business in China HR Picky Chinese workers spell end of cheap labour For decades, China’s massive workforce of factory hands and construction workers had little choice but to work long hours in often poor conditions for pitifully low salaries.

But a mushrooming of factories, even in the country’s sluggish interior, mean that these days workers have more clout than ever when hunting for jobs.

Wages are being pushed up and firms’ margins are being squeezed.

“Companies are finding it harder and harder to get people,” said Xue Guojie, visiting his parents’ three-

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MAY/JUNE 2008

room farmhouse in Henan, a central province which is home to millions of migrant labourers who fan across China ever year. Business might be booming in China but the workforce is shrinking as the “one child policy” generation -- products of a 1979 law banning couples from having more than one child -- enters the crucial 1835 age bracket, the main workforce for factories.

A smaller workforce for more jobs in more locales translates into stiffer competition among businesses for new hires. Migrant workers’ pay is increasing by as much as 15 percent a year from low single-digit growth a few years earlier, UBS economist Jonathan Anderson calculates.

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NEWSROUNDUP news@chainamagazine.com

POLICY China factory gloom plays into state plan When production lines close in the United States, protectionism tends to rear its head. In China, the opposite is happening. A volatile mix of inflation, a rising yuan and new labour legislation has corroded profits in the country’s manufacturing heartland. Hundreds, possibly thousands, of factories have been forced to close or leave the Pearl River Delta, which churns out more than a quarter of China’s exports.

Some are moving inland. Others are going to places like Vietnam, where labour is even cheaper. ut analysts say

the movement dovetails with -- and in no small way results from -- state policies designed to propel China’s economy up the value ladder. Guangdong led reforms, and it is leading the reinvention of China’s manufacturing industry.

CSR/GREEN

China, like other rapidly industrialising economies, is learning it cannot compete forever by churning out cheap, simple goods while gobbling up increasingly costly resources such as oil and iron ore.

Policymakers are keen to promote more efficient industries and higher-value products as a route to more predictable and sustainable economic growth.

“The factories that are closing are really victims of creative destruction,” said Edith Terry, author of a report on the changes in the Delta published in February.

Zhang Yaqin, second left, Vice President of Microsoft and Chairman of the Microsoft China R&D Group, Yang Wenjun, third left, President of Mengniu Dairy Group, Martin Lau, fourth left, President of Tencent, Chinese TV host Bai Yansong and other participants during an event of the Boao Forum for Asia Annual Conference in Boao city, south Chinas Hainan province 11 April 2008.

Wal-Mart to extend green supply chain strategy into China Wal-Mart has announced it is to crank up pressure on its thousands of Chinese suppliers later this year as it enters the next phase of its plan to slash the environmental impact of its supply chain.

According to a Reuters’ reports, the company is planning to meet with its Chinese partners this autumn as it attempts to apply the same green procurement policies it has pioneered in the US to its international suppliers.

It is expected to focus on ensuring all its Chinese suppliers have strategies in place to ensure waste is disposed of in an environmentally sustainable manner and cut carbon emissions.

Annual conference of Boao Forum for Asia closes The annual conference of the Boao Forum for Asia (BFA) held in China’s southern Hainan Province concluded recently. More than 1,700 officials business leaders, intellectuals and journalists from around the globe gathered for 3 days to discuss the green energy sector, financial reform and climate change.

In the closing plenary session entitled “sustainable development, sustainable partnerships: towards a win-win future”, former U.S. Secretary of State Colin Powell delivered a speech, in which he praised the achievements that China has made since its opening and reform in 1978.

Chinese President Hu Jintao attended the opening ceremony and delivered the keynote speech entitled “Continuing Reform and Opening-up and Advancing Win-Win Cooperation”.

During the Forum, under the theme of “Green Asia: moving towards win-win through changes”, the participants also discussed topics including corporate social responsibility, the future of the Internet and the intense competition on global markets.

Established in 2001, the BFA is a pan-Asian platform of dialogue for key issues relating to Asia and the world.

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The company said it will also call on them to reduce the amount of packaging they produce and enhance the energy efficiency of their products. Speaking at the Wall Street Journal ECO:nomics conference in Goleta, California last week, Wal-Mart chief executive Lee Scott said that the company has hired an outside consulting firm to help support the strategy and was looking to work with non-governmental organizations to help train its factory and plant inspectors to better monitor suppliers’ environmental performance.

China factories move inland to avoid green scrutiny New “green laws” and growing public intolerance for polluters are driving dirty Chinese factories inland from coastal regions to escape higher costs and tighter scrutiny, a think-tank said on Wednesday.

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NEWSROUNDUP

The Institute of Public and Environmental Affairs (IPE), a pioneering environmental campaign group in China, said while tougher anti-pollution laws and a more vigilant public might force greener investing in China, some of the country’s worst polluters were opting to relocate inland rather than clean up.

“It’s quite prevalent, especially in the Pearl River Delta where the government is trying to clear the mess and strengthen the enforcement,” said Ma Jun, the think tank’s director.

The trend comes at a time of surging costs in China’s major manufacturing hubs, including Guangdong’s Pearl River Delta and other coastal regions, which have forced thousands of factories to close and relocate to lower-cost centers, such as Vietnam.

While cheap labor made China the world’s manufacturing base, stricter pollution control measures are among a basket of factors adding to the cost of manufacturing there, including rising wages and a strengthening yuan and cuts in export tax rebates.

China bans Italian mozzarrella

Union by recalling the products, according to a statement by Agriculture Minister Michel Barnier.

CORPORATE SOCIAL RESPONSIBILITY

FOOD & PRODUCT SAFETY China bans Italian mozzarella cheese imports after recalls

Carbon Disclosure Project and Merrill Lynch enter three year global partnership

China ordered a ban on imports of Italian mozzarella cheese after Italy recalled the buffalo milk used to make the cheese on concerns it may be tainted with dioxin.

“All entry and exit ports should not handle quarantine applications for the Italian-made mozzarella,’’ the General Administration of Quality Supervision, Inspection and Quarantine said in a statement on its Web site.

Italy announced on March 28 a recall of cheese from 25 buffalo herds after tests revealed levels of dioxin, a carcinogenic and disease-causing byproduct of herbicides, which exceeded the legal European Union limit.

The Chinese administration asked importers to stop sales of the cheese and recall products that had been sold, the statement said. All kinds of cheese products from Italy must go through laboratory tests before they are allowed to enter the country, the administration said.

France halted mozzarella sales on Friday, and later lifted the ban after Italian authorities satisfied the European 14

MAY/JUNE 2008

It is reported that the company’s difficulties are a reflection of the depth of some of the problems faced by manufacturing businesses in China, which reportedly is Nike’s largest single sourcing country, with around 180 manufacturers and about 210,000 employees, at a time when prices are rising and the legal environment is stiffening. The report, which was posted on Nike’s website, said: “As China continues to develop we see progress and best practices emerging. But like our partners in any other country, the factories we contract with in China continue to face challenges as well.”

Nike’s supply chain report highlights problems at China factories

The Carbon Disclosure Project (CDP), a collaboration of 385 institutional investors with assets under management of US $57 trillion, announced a three-year global partnership with Merrill Lynch & Co, Inc. CDP is the world’s largest investor collaboration on climate change.

Each year it sends out a request to over 3,000 companies globally on behalf of investors including Merrill Lynch, AXA,

Nike has said that it has been facing a lot of problems with manufacturing in China with suppliers giving falsified documents, underage workers and unpaid wages topping the list, Reuters stated in a recent report. The sneakers and sportswear manufacturer, has said that the company has been trying to get the Chinese suppliers to follow its code of conduct and Chinese law, in the wake of the upcoming Beijing Olympics. Onethird of the company’s shoes are made in China, in addition to a major part of the apparel and equipment it manufactures. www.chainaonline.com

NEWSROUNDUP news@chainamagazine.com

Allianz, ANZ, Banco do Brazil, Mitsubishi UFJ, AIG Investments, The RBS Group and HSBC. The request asks companies to measure and disclose their greenhouse gas emissions and report on their strategy for dealing with risks and opportunities associated with climate change.

China ‘s textile exports fall

Carbon Disclosure Project CEO, Paul Dickinson commented, ‘This global partnership will help CDP to build on its current success in creating a unified business response to climate change. As regulations on greenhouse gas emissions tighten, CDP data will become increasingly useful to help guide investment models. We hope other leading global institutions will follow Merrill Lynch’s lead in working with CDP as part of a Consortium of Global Partners.’

NUMBERS China’s textile and apparel exports fall China’s textile and apparel exports fell 24.3 percent year on year to 7.98 billion U.S. dollars in March, according to a

report from the National Development and Reform Commission on Tuesday.

The country exported 31.35 billion U.S. dollars worth of textiles and apparel in the first quarter, up 14.7 percent from the same period of last year.

China’s textile production maintained fast growth in the first quarter, with yarn

output rising 21.6 percent to 4.17 million tons, said the report. Last year, China’s textile and apparel exports grew 25.2 percent to 143.99 billion U.S. dollars, while imports edged up 5.6 percent to 18.09 billion U.S. dollars. To help balance the trade surplus, the government is planning to cut the export tax rebate on textile products.

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NEWSROUNDUP

SUPPLY CHAIN MANAGEMENT A synopsis of relevant supply chain management news.

R&D Sanofi turns to China for R&D partnerships The R&D wing at Sanofi-Aventis is turning to China to find new ways to fight cancer and rheumatoid arthritis. The French pharma giant wants to forge a half dozen research partnerships with scientists in state-funded labs and Chinese universities.

Analysts note that while China has become a key player for low cost- -and sometimes high risk--drug manufacturing, Chinese officials have been investing huge sums to build up its drug research operations. China intends to become a leader in drug research, and the world’s drug developers are playing close attention to the opportunities that trend will offer them.

“I think the amount of people with a master’s in biology in China is now bigger than the number of people with a master’s in biology in the U.S.,” Marc Cluzel (photo), head of Sanofi’s R&D, tells the Wall Street Journal. “The number of people with a Ph.D. in biology in the U.S. is still higher than in China, but it’s getting closer and closer. And they are doing some good fundamental science.”

Caohejing’s “Headquarters Economy” off to a good start in 2008 Swiss watchmaker The Swatch Group has recently set up a technology support centre in the Caohejing Development Zone. The technology centre will serve as the firm’s national tech training and client service centre. Rockwell Automation, a major industrial automation supplier, set up an R & D and operational headquarters in a 9,700 sm space in Caohejing in January. (courtesy of CBRE)

SOURCING Citroen auto firm ups Chineses local sourcing French carmaker PSA Peugeot Citroen plans to boost its sourcing of spare parts from China by the end of this decade, according to its local car joint venture. The venture with Dongfeng Motor Corp, the nation’s No 3 auto group, said yesterday that PSA Peugeot Citroen plans to procure 600 million euros of spare parts from China a year by 2010 for its production in Europe and South America.

The tie-up, based in the central city of Wuhan, said the French carmaker bought a total 350 million euros in spare parts from China during the 2004-07 period, without providing a figure for last year. “Its China sourcing will be on a fast track in the coming years ... this is a big opportunity for our suppliers,” said a spokesperson for the venture which now has 326 suppliers in China.

A spate of other global automakers, such as Volkswagen, Ford and General Motors, are also increasing procurement from China, taking advantage of low costs and the improving quality of the spare parts industry here.

(Source: China Daily)

LG Display to create R&D center in China LG Display plans to jointly set up a research and development (R&D) center in Shenzhen, China, with Skyworth Digital Holdings, a Chinese TV set manufacturer. LG Display, the world’s No. 2 manufacturer of largesized liquid crystal display (LCD) panels after Samsung Electronics, said Skyworth bought small stakes of its subsidiary in Guangzhou in early January, which the South Korean company claims is a move to secure stable demand channels for LCD panels amid the market boom.

“The strategic partnership will pave the way for LG Display to nurture our business in China,’’ a spokesperson said. The announcement came a month after the LG was seeking alliances with Taiwan’s Amtran Technology and other companies as part of its strategy to expand its client base after its Dutch joint venture Philips had gradually dumped its stakes in the South Korean company.

The Korean firm hopes that its share of China’s flat-screen TV panel market will rise to 40 percent in 2009 from 35 percent this year as millions of Chinese are buying new TV sets, particularly 42-inch ones, which are the company’s main product. To meet surging demand for such TV sets, LG Display will expand the production capacity of its assembly lines for LCD panels and PC monitors in the southern city of Guangzhou to 20 million units by 2010.

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MAY/JUNE 2008

Yeo Sang-deog, right, executive vice President of LG Display’s TV business unit, shakes hands with Zang Xuebin, chairman of Skyworth Digital Holdings, after signing a contract to buy a stake in LG Display’s Guangzhou subsidiary.

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NEWSROUNDUP news@chainamagazine.com

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NERG NG NA ndd 1 BMW toCHincrease auto parts sourcing from China

Bayerische Motoren Werke AG wants to increase its production capacity in China and is considering to do this by either building a new manufacturing facility or use intensively the existing plant in Shenyang, management board member Frank-Peter Arndt said in an interview with trade magazine Automobil-Produktion.

The report, without citing anyone, said BMW plans to increase its production in China up to 60,000 units annually, or up 50 percent compared with 2007.

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A spokesman for BMW told the magazine that 60,000 ‘is a possible volume’ but that nothing concrete has been planned as yet.

MANUFACTURING China pushes industries up the value chain As China’s manufacturing industry faces continued pressure and the Chinese government shifts its own policies in the form of new labour laws and less favourable tax policies,

2/08 3 57 7their PM companies are having to rethink China strategy, reports Steven He in the Bangkok Post.

In December the government published a new list of prohibited processing trade businesses covering 589 kinds of products, which was the second set of restrictions announced on the sector during the year. “Factories going bankrupt have been emerging in succession since late 2007,” Huang Mingzhi, the director of the Taiwan Merchant Association in Shenzhen said.

“More factories will close down or move after the Chinese New Year.”

Big and capable businesses have already considered moving their factories to cheaper places such in China’s hinterland and to Asean countries such as Vietnam. Because they are afraid of causing instability among their suppliers, most of them choose to do so stealthily, even giving up their former company names, while many small factories that rely on these big factories for survival simply have to close down.

A recent report by Japan’s Nomura Research Institute said that the Greater Mekong Sub-region spanning Vietnam, Thailand, Cambodia and Laos, would become the fastest-growing region in

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Asia for the next 10 years. Growth would be a direct result of demand set off by fast-growing China and India.

LOGISTICS China’s logistics industry posts more than 20% growth in added value China’s logistics sector realized 1.7 trillion yuan (241.2 billion U.S. dollars) in added value last year, a growth of 20.3 percent on the previous year, according to the National Development and Reform Commission(NDRC).

The growth rate was 5.2 percentage points higher than the year-earlier level. The added value accounted for 17.6 percent of the total added value for the service industry at large, up 0.5 percentage points year-on-year, or made up 6.9 percent of China’s gross domestic product (GDP), up 0.2 percentage points.

Last year saw the sector’s gross business volume amount to 75.2trillion yuan, up 26.2 percent. The growth rate was 2.2 percentage points higher than the year-earlier level.

The logistics sector’s expenditure reached 4.5 trillion yuan nationwide in 2007, up 18.2 percent. The growth rate was 4.7 percentage points higher. The increased cost was ascribed to price hikes for oil and mounting labor cost, according to NDRC. (Xinhua)

Adidas sets up transit hub in Tianjin Bonded Logistics Park GLOBAL giant in the sporting goods industry Adidas Group decided to set up its international transit hub in Tianjin Bonded Logistics Park, Xinhua reported.

Adidas will store more than US$10 million in goods at its Tianjin hub every month when it’s completed and it will save 20 per cent transport cost compared with transitting through Hong Kong, the report said. the traveling distance between the two port cities by 120 km and driving time from 4 to 2 hours, said the deputy director of Hangzhou Bay Bridge project, Jin Jianming.

Many enterprises have come to set up factories and workshops at Hangzhou Bay New Zone, the starting point of the bridge in Ningbo, due to the convenient location and lower costs compared with neighboring areas.

The heaviest vehicle load capacity would be 55 tons in order to protect the bridge. The toll fee will be 80 yuan (around US$ 12) per vehicle and expects the 11.8 billion yuan ($1.68 billion) expenditure will be recouped within 15 years.

Hangzhou Bay Bridge – the world’s longest sea spanning bridge

Worlds longest sea bridge to open in May

Cargo slump bodes ill for supply chain

Hangzhou Bay Bridge, the world’s longest sea-spanning bridge, is set to open May 1 after almost five years of construction.

A sharp drop in freight shipped across the Pacific during the past two months suggests the shipping-industry slump is about to get worse.

The bridge links Shanghai to Ningbo in Zhejiang Province, cutting

At the major ports of Los Angeles and Long Beach, Calif., which bring

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in nearly two-thirds of West Coast containerized goods, import volume fell 8.8% in both January and February compared with a year earlier, as the weakening economy, tough housing market and high gasoline prices eroded U.S. demand.

China Minmetals plans expanded logistics arm China’s state-owned Minmetals Corp plans to consolidate its logistics business into an independent subsidiary and boost the unit’s annual capacity, its president Zhou Zhongshu said recently.

Minmetals, the country’s largest base metals trader, plans to double the annual transportation capacity of the unit to 100 million tonnes in coming years, Zhou told reporters at the sideline of the ongoing National People’s Congress.China’s logistics sector, which has expanded rapidly in recent years but continues to pose bottlenecks for the country’s fast-growing economy, has drawn a number of new entrants.

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Zhou also proposed that China set up a national mining development fund for domestic and overseas projects, under the initiative of the country’s sovereign wealth fund, which manages $200 billion.”We suggest that the China Investment Corp take the lead, in cooperation with major domestic metals and minerals enterprises, to develop domestic and overseas mineral resources,” Zhou said.

wallpaper imported from France, in this new store.

Leroy Merlin entered the Beijing market in November 2004 and opened its first store at Kexing Road. However, it was not accustomed to the climate of the new market, so the company has been concentrating on investigating the Beijing market and adjusting operation and management modes during the past few years.

A Chinese man walks past the newly opened Dajiaoting branch

Gazeley goes up for sale Wal-Mart is carrying out a strategic review of its ownership of Gazeley which will probably result in the sale of Gazeley to a third party, the company announced recently.

“I wish to assure you that we are carrying on business as usual and will continue working with you into the future,” said Gazeley CEO, Pat McGillycuddy. UBS have been appointed to conduct the sale process which should be completed within three months.

HIGH TECH IBM launches supply chain innovation center Technology giant IBM recently announced it has opened its first supply chain innovation center, which will based in Beijing, China. The company said the center will be focused on helping companies throughout the world integrate and transform their global supply chain capabilities.

IBM also noted that the center will leverage the company’s expertise in supply chain research, business consulting services, software capabilities, and its own Integrated Supply Chain background. The center will be available to IBM’s worldwide client base across all industries.

RETAIL Leroy Merlin opens second Beijing store at Dajiaoting Leroy Merlin, a French decorative and constructional materials chain supermarket, has opened its second Beijing store at Dajiaoting after entering the Beijing market for more than three years.

With a commercial area of 7,500 square meters, the new store is not far from Wal-Mart, Parkson, Metro City and M Macalline. Lin Boyi, president of Leroy Merlin China, says that the new store will continue to push Leroy Merlin’s low-price strategy. In addition, customers will be able to buy new products, such as www.chainaonline.com

INDUSTRIAL PROPERTY General Motors to launch US$250 m in GM campus in Jinqiao

Sanjeev Nagrath, Global Supply Chain Management Leader for IBM Global Business Services, said in an interview that the planning and launch phase for the center spanned nine months. He also said that Beijing was selected as the site for the center, so IBM could best leverage its team of supply chain researchers in its China-based research labs and to also address the supply chain needs of both local Chinese customers and multinational companies for whom China is a key link in their global supply chain.

General Motors Corp, the world’s largest car maker, will set up a US$250 million GM campus in Jinqiao Office Park Phase II, Pudong District. The land is about 120,000 sm. The GM campus is scheduled to commence operation at the end of 2009. By then the campus will act as the headquarters for GM China and the Asia Pacific region.

Jinqiao Office Park, Phase I, which was completed in 2007, attracted well-known tenants such as Motorola, Kodak and Huawei.

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world’s No. 1 PC vendor, until it lost that spot to Hewlett-Packard. But after such a long run of success it was easy to ignore that distribution needs were changing, said Mike Cannon, Dell’s president of global operations, during a Webcast from the company’s financial analyst meeting in Round Rock, Texas.

The fast growing emerging markets, like India and Brazil, demand fixed and limited PC configurations, not the “build it yourself” style that Dell is used to. The company is now evolving its supply chain to meet those needs and keep the company competitive globally, Cannon said.

Dell ironing out kinks in supply chain, executive says The direct sales model that helped Dell conquer the PC industry over the last decade wound up eating into its profit margins and competitiveness, but it now

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Latest eProcurement tools and technologies - eSourcing and eAuctions - Purchase-to-Pay (P2P) - Contract and spend mana gement Achieving and sustaining regulatory compliance Visibility, efficiency, controls Improving contract complianc e and reducing spend leakage

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has a plan to reshape its supply chain and manufacturing operations to meet changing market needs, a Dell executive said Wednesday.

The direct model has served Dell for 20 years and helped it become the

t ucture, culture & behaviours

Cannon said it was hard to say if the direct-sales model was flawed. It is the best way to serve customers who want highly customized PCs, so Dell will continue to offer that option, Cannon said. However, offering high levels customization puts a burden on the supply chain because it is hard for PC makers to manage the complexity, he said. (By Agam Shah, IDG News Service) AMD heads for Chengdu AMD has formally announced the establishment and operation of its branch in Chengdu. This is a major move that the company has taken since the landing of the

Engaging with sceptical business spend owners Commercial and cost conscious cultur e The changing nature of the procuremen t professional’s role Internal governance

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Current maturity level vs. external best practice Business process outsourc ing (BPO) - Make vs. ‘buy’ - Risk vs. reward Strategic sourcing Supplier relationship / stra tegic supplier management Supplier and customer perf ormance measurement Low-cost country sourcing Int rat ng bus ne s req ir me ts

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Stradling Global Sourcing launches Asia headquarters in India Stradling Global Sourcing, recognised as one of the “Top-10” strategic sourcing advisory firms by the Black Book of Outsourcing, has launched its Asian Headquarters in Mumbai, India.

Guo Kezun (R2), Senior Vice-chairman of AMD global and President of AMD China, during the opening ceremony of AMD Chengdu Office, in Chengdu, southwest Chinas Sichuan province, March 29, 2008.

its Greater China headquarters in Beijing’s Zhongguancun, the investment in a CUP factory in Suzhou and the establishment of a R&D Center in Shanghai.

Analysts believe this also marks a further completion of the company’s strategic business layout in China. Guo Kezun, president of AMD Greater China, says that the landing of AMD’s new branch in Chengdu will make the company’s business closer to the consumers in west China.

In consideration of Chengdu’s strategic location in China, the branch will serve as AMD’s strategic base in west China and it will be connected with the company’s business in the rest parts of the country.

BMW India, a 100% subsidiary of the BMW Group, has its headquarters in Gurgaon, Haryana.

BMW’s international purchasing office (IPO) which opened in the country last year is already sourcing handle bars and die casts among other parts for its high-end motorcycles. It has also been sourcing much of its software from India from multinationals like Mico Bosch and Conti.

BMW to increase sourcing of components from India

Although the company has been maintaining a low profile in the Indian auto market, Dr. Norbert Reithofer, Chairman of the Board of Management, BMW AG, said that India is an important growth market for BMW and by 2015 the market for premium cars will reach 10,000 units a year. They also plan to increase the share of their CKD units in the country.

German luxury car and bike manufacturer BMW will soon begin to source engines and chassis from India for their global manufacturing operations.

BMW India’s International Purchasing Office is currently evaluating over 100 component manufacturers in order to identify potential suppliers.

The company set up its production plant in Chennai (Tamil Nadu) in March 2007 where it assembles the BMW 3 Series and BMW 5 Series Sedans in petrol and diesel variants from CKD (completely knocked down) kits .The Chennai plant has a capacity to produce 3000 units per year on a single shift basis.

INDIA

The President and Managing Partner of this office will be Dr. Pradeep K. Mukherji, who until recently was Managing Partner at Tholons. Under his leadership, Stradling’s Asian operations will provide a full range of sourcing and management consulting services to its clients. The reach of the office will cover the subcontinent, including China, Singapore, Philippines and Vietnam.

“Stradling Global Sourcing has aggressive plans to expand its footprint into new target markets across the globe, and the establishment of the India office is an important step,” said Kevin Parikh, CEO of Stradling. “The office will provide us a direct entry to the Asia market and will become an important leverage for our global advisory services. We plan to execute and impact over $1 billion worth of global services business through our Asian operations over next 12 to 18 months,” he added.

Indian Pharma logistics market size The market size of Indian pharmaceutical logistics was $ 199.5 million in 2006 and the industry has been growing at an average annual growth rate of four percent since 2002. In 2006, it registered a growth rate of 5.1 percent over the previous year.

From the cost composition point of view, the major logistics costs in the pharmaceutical industry include packaging, distribution, etc. Hence, logistics comprises 45-55 percent of the costs in the pharmaceutical value chain.

Samsung aims to add 300 retail outlets in India by year-end Samsung has said that it aims to open 300 new retail outlets in India by the end of this year as the company aims to double its market share in the country.

The company also wants to open an unspecified number of flagship outlets in the main cities.

Peter Kronschnabl BMW India President

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Samsung, which has expressed interest in building a plant in Vietnam for more than a year now, has moved closer to that goal with reports out this month that the company will invest $670 million in the mobile handset plant to be located in northern Vietnam.

TakaraTomy to shift “Tomica” production to Vietnam from China

fold in 2008. The way we are progressing, we are moving forward towards the target,” Samsung India Electronics Head for Mobile Business, Sunil Dutt told reporters here on the sidelines of the Technopak marketing summit.

The company currently has a market share in the region of 7-8 percent and has said that it wants to double this by the end of this year. The company recently bolstered its distribution logistics by appointing two new wholesalers to sell its handsets.

VIETNAM Is Vietnam the next China?

Electronic Business began posing that question last fall after Vietnam entered

the World Trade Organization and a string of electronics companies announced investments in the country. Of note is Intel, which in 2007 announced it would put $1 billion into Vietnam or an assemblyand-test house that will be the company’s largest backend IC plant worldwide, and STMicroelectronics, which opened its Hanoi, Vietnam, location in November.

Toy maker Tomy Co. <7867>, better known as TakaraTomy, plans to fully shift production of its mainstay “Tomica” miniature cars to Vietnam from China by March 2011. The company will spend some 500,000 dollars to install Tomica manufacturing facilities at its plant in Haiphong, northern Vietnam. Initially, the Haiphong plant will make annually 2-3 million Tomica cars from September this year. But the miniature car series will be entirely produced at the Vietnamese foothold three years later, when annual output there will be raised to 15 million units, company officials said.

A group of Silicon Valley executives also got into the act last year and unveiled a $200 million assembly and test startup, Vietnam Chipscale Advanced Packaging Services, planning a 300,000-square-foot facility that is expected to employ 1,500. And Korea’s Samsung Electronics stated plans for a mobile phone factory that would in time turn out 100 million units annually.

TakaraTomy once had considered raising Tomica prices in order to cope with soaring labor costs in China, but it managed to avoid the price hike by transferring production to Vietnam, where the costs are less than half that of China, they said. The company intends to study the possibility of shifting production from China of other products, such as “Plarail” toy trains and “Choro-Q” miniature cars.

It plans to transfer about 30 pct of overall toy production in China to Vietnam three years after the initial move. About 90 pct of the company’s toys are made in China at present. (Jiji Press) Vietnam work culture different than China For Taiwanese and other foreignowned companies with operations in Vietnam, running a furniture plant involves more than an investment of

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Security clampdown on Canton trade fair Tighter security regulations ahead of this summer’s Beijing Olympic games have caused widespread confusion at an unlikely venue – China’s largest trade fair in the far-away southern city of Guangzhou.

Foreign traders were told that their Chinese business partners, employees and interpreters, on whom many depend to do business at the semi-annual China Import and Export Fair, have to produce a police document confirming that they do not have criminal records before they can enter the venue.

“We can’t make any exceptions,” one official said. “This is a very special fair for our country. There are terrorists who want to take advantage of it.”

The China Import and Export Fair, better known as the Canton Fair, is the most cosmopolitan event on the country’s commercial calendar, attracting tens of thousands of visitors from more than 200 countries.

The new entry requirement for Chinese nationals attending the fair comes on the heels of tighter visa regulations for foreign businessmen.

The foreign ministry’s Hong Kong office recently began restricting the issuance of multiple entry visas, causing massive headaches for businessmen in the territory who regularly cross the border to visit factories and source products for export.

(By Tom Mitchell, Financial Times) time and money. It’s also an education in how to blend different cultures. As many plant owners and operators have learned, Vietnamese production workers often play by a different set of rules than their Chinese counterparts.

These officials say the Vietnamese are nice, hardworking people who are capable of producing quality goods. They also value their free time. So, unlike factory workers in China, the Vietnamese often don’t want to work much overtime. When they do, it’s only on Saturday. Sunday is their day off and many don’t volunteer for a seven-day schedule.

“Compared with China, the Vietnamese don’t want to work on Saturday,” said Clare Tsai, a sales representative with Taiwaneseowned Return Gold International. “They want to enjoy their life.” $1.4bn in FDI to splash down in Dong Nai A provincial department of planning and investment (DPI) source revealed to Vietnam Investment Review last week that four foreign direct investment (FDI) projects with pledged capital of over $1.4 billion would be licenced in the Dong Nai and economic hub in Southern Vietnam.

The biggest project in the pipeline is the $750 million, 366 hectare Waterfront Dong Nai City, a joint venture between Dong Nai Agriculture Services Co-Operative union, www.chainaonline.com

An Phu Long Joint Stock Company and Singapore’s Ports Ville Pte. The project developers plan to kickstart the construction of the urban areas right after receiving the certificate as they are doing site clearance now,” said

the source, adding that this would also be the largest property project in the province. Dong Nai is focused on luring foreign investors from Japan, the US and Europe in hi-tech, environment and service projects.

Jack Ma (Ma Yun), Chairman and CEO of Alibaba Group, speaks during a forum in Beijing in March

Alibaba.com downgraded to “hold” Analysts at Deutsche Bank Securities recently downgrade Alibaba.com Limited (4AL) from “buy” to “hold.” The target price has been reduced from HK$20.35 to HK$18.

In a research note, the analysts mention that channel checks have been conducted with respect to the impact of the January/February snowstorms and the commencement of the Chinese New Year on the coverage universe, specifically Alibaba.com. The growth of the company’s Gold Supplier (GS) memberships, which are more expensive than other memberships, to the international website might have slowed down substantially, Deutsche Bank Securities says. The analysts add, however, that growth in the less expensive ITP and CTP memberships continues to be robust.

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INSIGHT

China’s manufacturing for export boom is over

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he era of China as a low-cost, manufacturing-for-export market has come to an end, says global management consulting firm, Booz Allen Hamilton. Companies that integrate China into their global supply chains as a source of competitive advantage are far more successful than companies that pursue narrower objectives in China, the study found.

More specifically, companies that pursue China as both a growth market and a market for lower-cost labor and sources, enjoy significantly higher profits than companies pursuing just one of those objectives.

Companies that employ dual sourcing and sales strategies report an average profitability rate two-thirds higher than those focused on just one of those objectives.

The first annual, “China Manufacturing Competitiveness 2007-2008,” study found

that while a stronger Chinese currency and rising wages were putting pressures on manufacturing margins, failures to deploy operational best practices and to fully leverage China as both a growth market and source of labor and products are also limiting profits.

“The manufacturing philosophy employed by many foreign multinationals in China in recent decades is in need of an overhaul,” said Ronald Haddock, Vice President, Booz Allen. “China’s changing cost and currency structure have shifted, forcing companies to rethink how they structure their Chinese operations and how they perceive China in their overall global strategy. At the same time, China is increasingly a major source of product and business model innovation. We’re seeing globalization at work and China’s role has changed.”

May 22, 2008

More than half of the surveyed foreignowned or foreign-invested companies manufacturing products in China believe that the country is losing its competitive edge in manufacturing. As a result, nearly one in five manufacturers surveyed has concrete plans to relocate or expand China operations to other countries, with Vietnam and India seen as the top alternatives to China.

Respondents’ perspectives on whether local market access or labor cost savings is the primary motive for operating in china Local market access as major motive

Neither motive

10%

43%

27%

Both motives

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Labor cost savings as major motive

Shanghai

Understand key challenges & opportunities in moving your sourcing, manufacturing & logistics inland.

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SPECIALREPORT

New

World Bank Logistics Performance Index offers guidance for developing countries Good economies rely on good supply chains says a new Logistics Performance Index put out by the world bank. China ranked in the top third out of more than 100 countries, and ahead of competing markets India and Vietnam; yet still has room for improvement. Roving CHaINA correspondent, Michael Mackey, currently in South America, takes a look at this report paying special attention to the insights gained for developing countries in Asia and South America.

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is who China beats. It is a ahead of every country in South America, with the nearest in that block being Chile at 32, followed by Mexico at 56 and emerging trade giant Brazil at 61. It also tops out a number of key Asian rivals particularly India positioned at 39 and Vietnam at 53. It also edged out Thailand which comes in at 31. Taking an overview of this the world that emerges is of a number of distinct regions. Western “The best way to build Europe and North America a decent economy is to do well but East Asia and have a decent supply chain China is starting to get into which trades things other than the mainframe and big time as it works and reforms its way raw commodities.” to wealth.

recent report by the World Bank shows not only one of the great successes of China’s recent economic development but offers some surprising insight into why. It also implicitly calls into question the view hovering around the industry that the software side and practices are a weakness suggesting instead that others could do well to follow the precedent.

Entitled “Connecting to Compete,” the World Bank has innovatively set up a Logistics Performance Index or LPI. This is a benchmarking tool developed by the Bank that measures performance along the logistics supply chain within a country. The report reveals an East Asia that is doing well, with some room for improvement and suggests subtly that some other countries might be better off if they adopted parts of the approach here. As pats on the back go its cautious and qualified but its support and reward none the less. Singapore tops the index, with Japan coming in sixth, pipping Hong Kong, the first place in China to be mentioned, by a very narrow margin. China itself comes in thirtieth not bad out of the hundred plus countries mentioned but showing that there is scope for further improvement. What is instructive www.chainaonline.com

Michael Mackey is a freelance writer who covers supply chain and trade issues across the globe.

For developing countries where trade has been an important factor in accelerating growth, logistics performance is also significantly better than in other countries with similar incomes.

Examples include South Africa (24), Malaysia (27), Chile (32), and Turkey (34) among the upper middle income countries; China (30) and Thailand (31) among the lower middle income; and India (39) and Vietnam (53) among the low income,” it said. To make the point another way, the best way to build a decent economy is to MAY/JUNE 2008

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SPECIALREPORT have a decent supply chain which trades things other than raw commodities, where the emphasis is on value-adding rather than just on extraction and storage. One of the glaring details of the report is that despite being rich the oil states by and large are in the bottom half of the index, there are some counter examples such as Dubai and Qatar, but supply chains worth talking about are created by trade. What is surprising is that the emphasis is not so much on physical hardware although that is obviously a part of the equation but on the software and services side of the agenda. And it is this the Bank holds out as an example for those regions struggling.

“The LPI suggests that policymakers should look beyond the traditional “facilitation agenda” and focus on traderelated infrastructure and information technology. To close the logistics gap, they should also look to reforms in the markets for logistics services, reduce coordination failures (especially those of public agencies active in border control), and build strong domestic constituencies to support reform. This effort will demand a more integrated, comprehensive approach to reforms all along the supply chain,” it said.

Whilst the Bank concedes this might not suit all regions, it specifically mentions the problems of Africa and the landlocked countries of Central Asia, one part of the world where this template might be used is Central and South America.

Here the issues are a more subtle, middling brew.

Not riven by extreme poverty or geography, with only two, Bolivia and Paraguay, landlocked the continent fails to live up to its logistical potential for a number of reasons. Even Chile, the highest rated on the LPI at thirty illustrates many of the problems.

Firstly there is an uneven population. Of the country of 16 million people some 40% or around six million are in the Metropolitan area of Santiago with the rest spread out along the 4,000 mile country which faces the Pacific whilst having its back to the Andes mountain range. Its a combination unheard of in Asia, but then the world is different here.

It trades primarily copper ore and agricultural products, so it has developed good logistics services for those products, although there is some awareness that the situation is starting to creak a bit at the moment. But this touches on another problem common throughout the region; that it lives not so much by selling things as by selling commodities.

This is of course both opportunity and problem for Chinese companies wanting to do business in the region, of which of course there are any number. It also works the other way round as the number of trade delegtaions from South America to China proves.

“The volumes between China and South America are increasing quickly,” said Gustavo Paschoa, A&P Trade Lane Manager for CEVA Logistics in an e-mailed response to questions.

“Last year CEVA had a volume of 9000 TEU’s from and to China and this number tends to be much higher in 2008.” Brazil is exporting commodities and importing high-tech, electronics, textiles and furniture, a mix not much different from the rest of the world. What also remains to be seen is if the South American surge will continue this year or be derailed by the expected recession in the United States.

The precedent of China has been noted with people like CEVA’s Paschoa already wanting to emulate it.

“South America and especially Brazil needs to start a medium term plan to implement the concept of HUB ports. This concept will improve the demand of space and will increase the connection between South American main ports. All logistics companies, carriers and ocean transport operators agree with this concept and want its implementation, but the government needs to help and develop programs as its already happening in the main ports and regions around the world. China is a good example of that, operating with HUB ports and feeders to serve all other ports and some other countries.”

What remains to be seen is whether the South American region’s governments often headed by reformers, with one or two ideological and polemic exceptions, will follow the World Bank’s urging and China’s example in going beyond the traditional infrastructure and facilitation agenda and thereby be able to copy Chinese dynamicism or whether they will continue outside the frame.

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China Bottlers lead the dive into pallet pooling

COVERSTORY

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he lack of effective packaging management and standardization of equipment are two key issues which come up in discussions about low rates of efficiency and relatively higher logistics costs in China. For this article, CHaINA Magazine visited Coca-Cola Bottlers Manufacturing (Dongguan) Co Ltd, talking to their CEO, Ainsley Mann about their operation with a specific focus on the operational efficiencies that Coke has implemented, especially through their pallet pooling arrangement with CHEP Shanghai.

A market leader Everyone knows “Coke is it,” but few know what it takes to make “it” so. In his role as CEO of Coca-Cola Bottlers Manufacturing (Dongguan) Co Ltd (CCBMC), Ainsley Mann oversees the bottling operations of Coca-Cola’s non-carbonated beverages. A long time Asia resident, Ainsley Mann has been working within the Coca-Cola system in different functions for more than 10 years. While this is not the front line of CocaCola’s operations, it certainly seems to be a key part of the company’s success.

CCBMC is a company set up by Coca-Cola and their Bottlers in China to provide a comprehensive supply chain solution for the supply of Still (noncarbonated) beverages. CCBMC currently operates from 16 manufacturing locations throughout China. The facility we visited predominantly serves customers in Shanghai and nearby provinces such as Jiangsu and Zhejiang with brands such as Minute Maid Juice and Yuan Yi tea.

Coca-Cola has around 30 carbonated and 16 non-carbonated or Still bottling plants in China; the latter include teas and juices. “Our non-carbonated beverage business is growing at about 40-50% per year. Since these are relatively newer categories” Mann noted. Carbonated beverages, being around longer, have a slower growth curve.

Driving supply chain efficiency One has only to think of the strength of the brand to acknowledge that Coca-Cola is an innovator in terms of their marketing and long term brandwww.chainaonline.com

building strategy. Although, after looking at their Bottlers’ operation, it seems that some of their secret to success lies behind the colourful ads and catchy slogans, in the less glossy side of their operations and supply chain strategies.

With rising costs of manufacturing in China making headlines, companies are looking at their supply chains to extract costs and maximize efficiency. Asked about how rising costs in China are affecting the business he manages, Mann responded, “Some of the base costs are going up, and utility costs are going up, but we have to be more efficient to offset that. In our business, we are not exporting a lot; we are competing with companies locally, so it’s really a case of innovation in packaging and efficiency in lines and processes.”

Another issue in China is one that many companies deal with, a shortfall in logistics services. “Part of the problem is that there are no real logistics companies in China. They are mostly transportation companies, especially in FMCG,” says Mann. “We are essentially a 4PL. The 3PL’s that we work with are the ones that execute; they don’t come to us with ideas about how to optimize, the innovation has to come internally.”

In Europe and North America, logistics service providers compete on the value that they are providing rather than on costs. Here there is not the understanding how to do that.

As a result for CCBMC as with many companies, not just in FMCG, all the transportation is contracted out locally. According to Ainsley Mann, “We tend to favor entrepreneurial local companies who are able to react quicker and will invest in the right equipment.”

Written by Russel Beron Photography by Grant-Oh Buchwald

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COVERSTORY

Ainsley Mann, CEO of Coca-Cola Bottlers Manufacturing (Dongguan) Co Ltd, next to a truck loading non-carbonated beverages produced at the bottling facility he manages

Through effective management of their logistics services and operational processes, Coca-Cola Bottlers Manufacturing (Dongguan) Co Ltd is able to maintain a high level of efficiency and keep costs down.

The argument for Pallet Pooling

Leasing pallets is really a form of value-added service, a concept which in most cases is still playing catch-up in China. One of the problems with pallet management is that companies have slow times and busy times and if they need to be able to balance the cost of having enough pallets to cover busy times, against the investment this requires. Pallet pooling allows companies to better manage the amount of pallets they need.

Obviously pallet pooling is another way for CCBMC to stay on top of the efficiency curve. “At its basic level, pallet pooling is sharing the same asset amongst Another challenge in selling pallet pooling is many users in the supply chain. When you do that, that much of the benefit lies in saving on you have the opportunity indirect costs, which to share costs. Another requires a more strategic “One of the reasons we moved key benefit is the fact that approach. “Unless a to the pallet pool is that companies can lease rather company understands someone has to go first, we than buy pallets,” explains the full costs, both direct clearly understand the benefit Paul Kovie, Sales Director, and indirect,” says Mann, CHEP China. and other companies will follow” “You have no chance of selling pallet pooling.”

Getting CCBMC to accept the idea of pallet pooling seems to have made sense The challenge given the companies forward thinking approach for pallet John Wan, President, to supply chain management. “It is no secret that CHEP China pooling in Coke is an innovative leader in the FMCG beverage China market, says Frank Tonna, National Key Account Manager for CHEP China, which manages CocaCola’s pallet pool. “Whether it is in the introduction For CHEP, of new products or processes, Coca-Cola is one of getting those organizations that are at the forefront; it is no CCBMC as a client different from a supply chain perspective,” was a key According to Ainsley Mann, “The move to pallet strategic pooling was firstly an asset management play move to allowing us to hire and de-hire pallets based upon catch the demand and thus reduce our balance sheet and Queen secondly our goal was supply chain optimization Bee. in getting other companies to join the pool.

Actually, CCBMC was already using their own pool of plastic pallets prior to signing on with CHEP, so it seems natural they would make the move to working with CHEP. “One of the reasons we moved to the pallet pool is that someone has to go first, we clearly understand the benefit and other companies will follow,” says Mann.

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COVERSTORY CCBMC can essentially demand that their suppliers use plastic pallets and themselves use the pallet pool.

Although getting CCBMC to join the pallet pool was not necessarily easy. “CHEP used its core competency in supply chain analysis in China, to illustrate to Coke the value proposition of moving to the CHEP pallet pool,” says Tonna of his client.

Although in the end, CCBMC actually went with their own internal analysis which helped them make the decision.

the American companies brought the 1.2 x 1.0 (48 x 40 inches) size pallet, the Japanese and Koreans the 1.1 x 1.1 size pallet (44 x 44 inches),” explains Tonna. “Where you have the presence of multiple pallet sizes/platforms, this can slow the speed of supply chain change down.”

The issue of standard pallet sizing also impacts standardization of other equipment used in the supply chain. Ainsley Mann notes that “The big benefit is in the transport. If more and more companies adopt pallet pooling, we can standardize the types of trucks, make them more fuel efficient.” Truck and trailer standardization is a significant issue in China which 3PL’s and transportation companies, especially foreign ones, are trying to address, but is likely to take some time given the fragmented nature of the trucking sector in China.

The untapped potential of packaging

Paul Kovie, Sales Director, CHEP China.

Pallet pooling is obviously a concept that can be applied beyond the FMCG and beverage industries, and given the ongoing growth in China’s automotive sector, holds significant potential in the automotive logistics arena.

For CCBMC, the choice to go with CHEP was In a report on survey research he conducted in an extension of their own philosophy which for association with European 3PL GEFCO and the a number of reasons is to make a complete shift Chinese Federation of Logistics and Purchasing to pallet pooling. Although according to Mann, (CFLP) on practices of packaging in the auto getting the supermarkets to buy in has been parts industry, Luo Shuai, a post-graduate difficult. “It is easier for us to get our suppliers student at Tsinghua University, found that “90% into pallet pooling. Going of respondents indicated “90% of respondents indicated out to customers has been that standardization of disappointingly slow.” packaging is their biggest that standardization of packaging concern.” is their biggest concern. ” Part of the challenge in China with pallet pooling will be the same challenge faced in implementing costly IT systems in the country; companies need to be convinced that making a significant investment will pay off in the long term. But first they need to have this long term view.

Another challenge, according to Tonna, may be cultural. “In Asia the traditional trading approach/ mentality that existed for ages has led to a culture of ‘owning’ assets, rather than leasing assets.

Having stated this, once we illustrate the value proposition to organizations across China, they appear to be open to the idea of change if it helps them to materialize cost savings and greater supply chain efficiencies.”

In the supply chain world, packaging actually means more than plastic and cardboard, it includes pallets, collapsible boxes for shipping and other related material handling equipment. “There is no pooling management for packaging in China, partly due to non-standardization,” says Luo Shuai. Part of the problem is the wide geography in China and different practices regionally, coupled with a lack of understanding of best practices.

The standardization roadblock Another issue in China, not just in terms of pallet pooling, but across the supply chain, is the lack of standardization.

Part of the problem in China is that companies from different countries use different pallet sizes based on their own regional standards. “For example, the European companies brought the Euro 1.2 x 0.8 standard (48 x 32 inches) inches by, www.chainaonline.com

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COVERSTORY

Roots

& Shoots

brings shade to the desert Volunteer High School students plant trees in Inner Mongolia

allowed to interplant in between the trees,” says Zwisler. “In addition these farmers will be getting a percentage of the 20 year cutting of these trees.

We also bring the kids up there to measure the trees.”

Tori Zwisler, Executive Director, Roots and Shoots

R

oots and Shoots is a non-profit organization, affiliated with the Jane Goodall Institute, which promotes environmental awareness and drives a variety of grass roots environmental programs in China through working with schools, communities and business.

of local and foreign universities and forestry bureaus to get the right expertise, with the goal of eventually planting 1 million trees on 667 hectares or 10,000mu of land in Inner Mongolia. They bring groups of school kids as volunteers to come and do the actual tree planting.

“We are the only foreign affiliated non-profit in China approved by the Chinese Government,” says Tori Zwisler the program’s Executive Director. “What we do is considered safe and good in China. We work with kids in their elective slots to promote environmental awareness through experiential learning.”

Roots and Shoots raise money for this program by selling sponsorship of trees at the rate of 25 rmb per tree. “We provide the money to buy the trees and the local farmers are

Coca-Cola Bottlers Manufacturing (Dongguan) Co Ltd. is one of the key corporate sponsors of this program.

CCBMC’s goal is to try and offset 100% of their outbound freight carbon emissions through planting trees in Inner Mongolia. Their target goal to lighten their carbon footprint is to plant 30,000 trees. “We were looking for a program to get our supply based involved and this program had a fairly low entry barrier,” says Coca-Cola Bottlers Manufacturing (Dongguan) Co Ltd. CEO, Ainsley Mann.

Roots and Shoots work with 170 schools in and around Shanghai, most of which are local schools, who learn about environmental issues through participating in hands-on Roots and Shoots programs.

One of Roots and Shoots key programs in China is a tree-planting initiative they are carrying out in InnerMongolia to stop the desertification of the region. They work with a variety

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COVERSTORY

Frank Tonna, National Key Account Manager, CHEP China and Li Rui, Logistics Manager, CocaCola Bottlers Manufacturing (Dongguan) Co., Ltd, in front of a pile of CHEP pallets which make up part of the Bottlers’ pallet pool

cleaning, are very low, which highlight the large gap in packaging best practices in China. On the plus side, noted Luo Shuai, “Both the industry and the government are attaching more importance to the issue of standardization.”

The way forward For obvious reasons it is mostly foreign companies that are buying into the idea of pallet pooling in China so far. “This is simply because companies like Coca-Cola have been using pallet pools like CHEP’s for decades in other countries,” explains Tonna. This makes it easier for them to understand the need in the Chinese context and helps them to adopt quicker.”

Since CHEP started operations in China in 2006, the market has been very receptive to the solutions the company offers, says John Wan, President, CHEP China. “Most companies welcome us in to do the analysis of their processes and systems, because basically we’re providing a service to look at their supply chain.” John Wan and his Sales Director, Paul Kovie are optimistic that both Chinese and foreign companies are equally receptive to value added services as proven by the fact that numerous foreign and Chinese companies are now CHEP pallet pooling customers across China.

When discussions in China business circles no longer include a foreign versus local debate, this will likely mean that on the one hand the level of services in China have been raised to an international level and on the other hand that multinational companies have learned how to better operate in China. Then the catch phrase, “same bed, different dreams,” so often used in China to describe foreign/local business relationships can be changed to, “same bed, same dreams,” or in the case of pallets, “different company, same pool.”

Another issue, in FMCG as well as in the auto sector is the return of empty containers from North America and Europe given the imbalanced trade flow. “From North America, it is cheap to return the packaging. What’s key is to remove the expendable packaging,” said Norm Kokuk Senior Automotive Marketing Manager, ORBIS Corporation at the recent Automotive Logistics Like many key multinational brands, Coca-Cola is China conference in Beijing. Using pallet pooling will mean pallets will need to flow both ways, one of the 2008 Beijing Olympics sponsors and will be one the key suppliers of reducing the need for “Most companies welcome us in to products to the Olympics. expendable packaging.

To make their point The challenge though do the analysis of their processes from an environmental will be to fill those and systems, because basically perspective, CCBMC returning containers. we’re providing a service to look at has mandated the use According to Kovie, their supply chain.” of plastic pallets for the automotive sector supplying their Still in China holds a lot of promise for packaging and pallet pooling products to the Olympics. Such initiatives build “CHEP has two different business segments awareness and hopefully lead to greater adoption of in China, one is focused on FMCG, another best practices in China. is focused on Automotive. While the FMCG market development is ahead at this point, we see in time that the automotive business in China has a lot of promise to be equally as large as FMCG.” Other key indicators, uncovered by the Chinese researcher in terms of packaging in China is that environmentally friendly concerns are the least important consideration in packaging design, and rates of packaging management, for example www.chainaonline.com

One of the key issues going forward says Ainsley Mann, is that “At the moment in China, there doesn’t seem to be focal point for someone to drive issues such as standardization in the industry.” This space will likely be filled as China climbs up the value chain, but it is likely to take some time. Until then it is the business sector and not the government that will be driving innovation and efficiency across the supply chain in China.

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COMPANYPROFILE

Property developer AMB hunts for space in China

AMB Property is a key player in the world of industrial real estate and its Asian arm is in the midst of an expansion program in the Chinese market. CHaINA caught up with its president of Europe & Asia, Guy Jaquier, and his colleague, Thomas Marquis, senior vice president and managing director for AMB in China, to hear their thoughts on the development of real estate in China, Asia and beyond.

C

Cameron Wilson is a freelance journalist specializing in China business and trade issues based in Shanghai. He is a regular contributor to Chaina magazine.

hina’s continual expansion creates as many problems as it solves. Amongst the most pressing issues in the Chinese business world today, is how to handle the booming export volumes in the country to everyone’s satisfaction. For example, the clothes shoppers see hanging in a western high street have to pass through many more processes than simply being loaded onto a truck at the factory door and shipped overseas. Warehouses, inventory control systems, packing and quality controls, and customs houses are just some of the facilities which occupy industrial real estate – and the shortage of this type of land is currently one of the biggest bottlenecks in China.

Thomas Marquis, Senior Vice President and Managing Director for AMB in China, with Guy Jacquier

For AMB, expansion is dictated by customer demand, says Jaquier, hence the company starting operations in the tier one cities and at various hub locations in China including Chengdu, Tianjin, Dalian, Qingdao, Shenyang, Wuhan, and Wuxi.

Across the entire Asia region, Jaquier says that there is a shift taking place between China and Vietnam with low-tech manufacturing starting to move to Vietnam as costs in China rise.

with longer trucking times and fuel costs so there is a delicate equation here,” he says, adding “The parts all need to fit together.”

The migration of industrial estate away from city centers is partly due to local government’s lukewarm attitude to logistical facilities because of the low tax returns they offer. Marquis says, “Why would I give you land to put a 50,000 sqm box on, and 35 employees moving forklifts around – where is my tax benefit?” is a popular example.

So how is AMB dealing with this problem? “It’s a continual education frankly, because if you are running a municipality and you want to attract a manufacturer to your town it doesn’t do them any good if they can’t move the product,” Jacquier says, “It’s easy to make a short term decision ‘I don’t want logistics here I just want the high grossing manufacturing in town’ but manufacturing won’t want to go because there are no logistics.”

But overall, if the industrial property market is being driven by the now rapidly developing logistics sector. Marquis says that local governments which “couldn’t even spell logistics four years ago” were now pushing ahead having realised the need for a solid infrastructure to support the supply chain – driven by demands from the big players.

“DHL and guys like that four years ago weren’t stomping their foot on the table,” says Marquis, “now they have their shoe off and are saying – I need modern logistics just like I would in Dallas, Texas... its all about education.”

India was another expansion area he feels will become more significant in Asia, mainly as an export and domestic consumption market, but added, “with its 1.1 billion people, its has a logistics and supply chain infrastructure that is woefully under servicing that population - there’s at least 10 years of development or more to catch up with the Indian consumer base.”

In China, Jacquier says the current industrial property shortage is partly due to rising land costs – in particular in Shanghai. “This has a tendency to push existing logistics providers further and further out into the surrounding communities, which is fine – you can find cheaper land and charge cheaper rent, but we have to offset that 34

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Guy Jacquier, President of Europe and Asia, AMB Property

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CASESTUDY

?

Does made in China still make sense T John Sun was born in Shanghai, and received his masterâ&#x20AC;&#x2122;s from California State University after which he joined Emerson Electric.

Returning to China in 1993 he set up 2 manufacturing joint ventures for Emerson.

John is currently COO for Hollysys in Beijing.

For a free Cost Analysis Model, contact John Sun at sjohn5646@gmail.com

he message is clear: costs in China are rising. In this detailed analysis, John Sun explains how variables like labor costs and RMB appreciation can be the determining factors of whether it still makes sense to manufacture certain products in China. Projecting the cost in 2008 for the product analyzed here, a steel casting control valve body, the conclusion is that there is a negative cost advantage (-16%) to manufacturing in China relative to a strong advantage in 2006 (39.8%) or slightly stronger advantage in 2007 (10.5%).

Rising costs If you receive a price increase notice from your Chinese supplier, you are not alone. In fact the cost of manufacturing in China has dramatically increased in the last year and we are looking at more increases in 2008.

Labor cost which were the number one advantage for â&#x20AC;&#x153;made in Chinaâ&#x20AC;? products are being impacted from all sides. According to the China National Bureau of Statistics February report, living costs have increased by 8.2%, food prices alone increased 22.4% compared to the same period last year. New house prices in 70 major cities also increased 11.3% compared to last year same period. This means that wage and salary cost have increased about 12%.

At the same time the USD to RMB exchange rate decreased by 15%. Industrial material cost increases are a global issue, but China is still ahead of the global market. Putting all these elements together, the significant cost increases are evident.

The following case study gives some suggestions as to how managing the cost increases through better management of the China Supply Chain.

Building a comparative cost model The subject of this case study (see picture) is a 24 inch steel casting control valve body, weighing 150 lbs. In our analysis, we broke down manufacturing costs in China vs. the USA in a spreadsheet which also looked at year on year cost inflation.. The cost elements in the spreadsheet are multivariable, meaning that changes to these variables will affect the final cost of the product.

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The product cost advantage of Made in China vs.

USA is Percentage Comparative Advantage (PCA).

Through analyzing the relationship of each cost element and the PCA in the Output Panel, we can see the impact of the cost inflation.

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The data used in the model is from a Chinese valve manufacturer which has its own foundry. We then compared this data to the cost breakdown from a company manufacturing the same valve in the US. To simplify the analysis, we did not individually list some of the non-significant costs such as equipment depreciation, maintenance, and rental cost. Instead we added all of them into labor cost. We know they are changing in very similar patterns. We also did not count the duty and other government tax incentives. We added steel slab, scrap steel, alloy and mold material together as they are all increasing at a rate of 20-30% in China.

We assumed material price increases of 27% in 2007 and 32% in 2008. While the steel price in the US is about 10% higher than in China, inflation is about 2% lower in the US than in China. www.chainaonline.com

CASESTUDY

Under the microscope Using the above model, we then inputted different inflationary data and simulated operational scenarios.

•Using the model, If only buying raw casting, for 2007 there was still an 11.6% PCA, but in 2008 this advantage lowered to -7.2% giving a cost increase in China (CIC) of 86.2%. In this case, heavy material content products with high shipping costs will not be competitive if made in China. To change the situation, we first add machining in the China supply value chain. If we add machining equal to 20% of the total product value, the material content drops to 28.6% and shipping cost drops to 10.4% of the total product cost. This case would improve the PCA to 20.9% .

•In the early days in China many companies did not know enough and may have started to build their supply chain in San Francisco. This added a middle-man cost of about 20%. Now companies can buy directly, giving more transparency and control and also giving a cost advantage.

If middle-man commission is reduced to 0, the PCA will increase to 30.5%.

Cutting out middle-man commissions will give a 16.8% cost advantage and the CIC drops to 79.3%.

•Chart 1 shows the impact of the labor rate increase to the PCA, same as the above scenario. But if the inflation continues and labor rates increase to 20% a year, the PCA will drop to 26.2%.

This tells us that an additional 8% wage and salary increase in

Labor Rate Increase vs. PCA 31% 30%

Competitiveness

In 2007, labor costs increased about 12% and in 2008 these costs will are projected to be about 15%. We estimated the management hours based on the management attention required for a lot size of 100 units of valve body at the same 2 factories.

If the product is made in China, we would see higher global supply chain management costs, but manufacturing management costs will be much lower. We can assume 8.30 as an exchange rate for 2006, 7.20 for 2007 which is a 15% increase, and 6.50 for 2008 which is a 10.8% increase.

Additional ocean shipping costs for products made in China are offset by labor costs.

China will bring down the PCA by 4.2% and CIC to 85.5%. This shows the labor rate increase is not very closely related to our cost.

29% 28% 27% 26% 25% 24% 23% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25%

Labor Rate Increase

•Chart 2 shows the impact of the foreign exchange rate. Same as the above scenario.

However, if the USD devalues at 20%, the PCA will drop at the same rate to 16.4%, but the CIC will be 100.9%, an increase of 15.4%. This also tells us the Cost in China is most sensitive to exchange rate.

Exchange Rate vs. PCA 44% 41%

Competitiveness

Labor cost was based on actual labor hours and fully loaded labor costs from 2 factories both manufacturing the same valve body. After considering the efficiency, we assume that USA wages and salaries cost 3 times more than in China and we assume the major cost for casting and machining is labor cost.

38% 35% 32% 29% 26% 23% 20% 5.9

6.0

6.1

6.2

6.3

6.4

6.5

6.6

6.7

Exchange Rate

6.8

6.9

7.0

7.1

7.2

7.3

In conclusion As a result of RMB devaluation and living cost inflation, the price of ‘made in China’ is now more expensive than ever. While there are some low cost manufacturing benefits these savings are off-set by high cost shipping and management overhead expenses. While this is a specific case study on a valve body, the method can be used for many other products. The message is clear; costs are only going to increase in China. There are some solutions for companies to create efficiency: •Work directly with manufacturers with good quality and logistic control capability.

•Go to the west of China where labor costs are still low.

•Improve efficiency and reduce labor and overhead costs.

•Stay informed on legislation in areas such the environment, labor and tax costs To stay competitive companies will need to use quantitative and other analysis to review their supply chain management strategies and make hard decisions about where they want to manufacture.

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Anhui: Emerging from the Yangtze Deltaâ&#x20AC;&#x2122;s shadow

The sun rises over Hefei, a major industrial city in Anhui Province

REGIONALFOCUS

S

by the wealthy Yangtze River Delta regions of Shanghai, Jiangsu and Zhejiang, Anhui province has spent the last two decades rather removed from the economic development and dynamism found in its neighbors to the east.

Once overlooked by manufacturers and logistics providers, Anhui’s economic fortunes have been improving steadily in recent years as the province continues to log impressive growth. According to the Anhui Provincial Bureau of Statistics, the province’s GDP totaled more than 734.5 billion yuan in 2007 – a yearon-year jump of 13.9 percent and the fastest growth recorded in 12 years.

A central location in terms of north-south and east-west transport plus the combination of growing domestic and international interest in China’s interior provinces, increased manufacturing capacity and improving logistical infrastructure all point to Anhui becoming a stronger and more important link in China’s supply chain in the coming years.

Connecting north and south Two of China’s most important rivers flow through Anhui – the Huai River in the province’s north and the Yangtze River in its south. The two rivers are connected by a complex system of canals and are key transport routes in their respective halves of the province.

The industrial city of Bengbu is the largest port on the Huai, with access to Jiangsu, Zhejiang, Shanghai and even Hong Kong. The port of Wuhu in the province’s east is the last deepwater port on the Yangtze heading inland. Not surprisingly, most of the province’s wealth is concentrated in industrial centers located near or on the Yangtze River including Hefei plus the port cities of Wuhu and major steel producer Ma’anshan.

With encouragement from the central government, Anhui has been investing much effort and money in upgrading its basic infrastructure. Last year it spent 510.5 billion yuan on fixed asset investments, most of which was aimed at improving industrial and transport infrastructure. Increased foreign trade is one of the major driving forces behind the effort to increase Anhui’s internal and external www.chainaonline.com

connectivity – much of which has been focused on smoothing out transport issues between the north and south of the province.

Northern Anhui is home to the bulk of the province’s industry, with Hefei the clear leader in terms of attracting domestic and foreign investment in its manufacturing sector. White goods and electronics manufacturers including Hitachi, Meiling, Changhong, Midea, Haier and Royalstar have all established manufacturing operations in Hefei. Hefei is also home to a small but flourishing automobile industry which includes JAC, Changhe Automobile and Hefei Forklift Factory.

Southern Anhui has traditionally functioned as the province’s agricultural base, with the tea and walnuts produced in the area around Huang Shan being most noteworthy. However, in the last few years southern Anhui has experienced rapid industrial development, with several large companies such as Chery and Anhui Conch Cement – both located in Wuhu creating increased demand for logistics services in the region.

Foreign trade pushing logistics development According to customs statistics, Anhui’s foreign trade in 2007 totaled a record US$15.9 billion, more than 30.1 percent growth year-on-year, with exports exceeding imports US$8.8 billion to US$7.1 billion. Anhui’s major trading partners include the EU, with which it had total trade of nearly US$2.4 billion, followed by the US, Chile, Japan, ASEAN and Hong Kong.

Hefei and other industrial hubs in the province are increasingly able to attract investment from some large international companies – a good example being the Unilever Hefei Industrial Park which opened in the Hefei Economic Development Zone in 2005 – but comparatively slow development of the province’s logistics network has prevented more foreign enterprises from setting up operations in the province.

Chris Horton is managing director of the Meridian Group of Hong Kong, a research firm with offices in Hong Kong and Kunming. He is also the editor of GoKunming.com and is a regular contributor t o C h a i n a magazine.

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REGIONALFOCUS Sun Guoqing, General Manager at the Hefei office of Japan-based shipping and logistics provider Kawasaki Kisen Kaisha (K-Line), said that the company set up its presence in Anhui based upon a strong belief in the growth potential for Hefei and other cities in the province. K-Line established its Hefei office in 2005.

“K-Line’s main reason for setting up in Anhui is that we are taking a long-term view of development of the province’s trade and economy,” Sun said.

“Anhui’s white goods, automobile and agricultural product market all possess significant potential,” he said. “Projected growth in the province’s import and export trade are quite positive, which led to K-Line setting up in Anhui to promote its business interests locally.”

basically they can’t keep up with the demands of international logistics.”

Because of this, most international logistics in Anhui still relies upon Nanjing port. According to Liu, Anhui’s most important ports continue to be underdeveloped and backward due to distance issues resulting in a waste of resources as well as Wuhu and Anqing ports’ inability to attract enough throughput to drive the next steps in developing themselves.

Development of Anhui’s container ports will be determined by factors including local and national policy as well as foreign trade trends, K-Line’s Sun said. In the wake of steadily increasing imports and exports over the last several years, demand for increased scale, throughput, infrastructure and higher levels of service at Anhui’s ports has also grown, he added.

Port development needs to grow in tandem with external trade, Sun said, adding that in the next several years he believes Anhui’s port development will focus more on cooperation with coastal ports, raising overall quality and satisfying growing market demand. Although Anhui’s ports tend to be focused on the port of Nanjing, which is just across the province’s eastern border, a growing number of Anhui-based enterprises are looking to Shanghai as a transshipment port, he said.

The missing link – Wuhu port Although much of Anhui is still a work in progress, Sun said he is bullish on the province’s short- and mid-term prospects.

Tangible results speak louder than projections, and Sun says that K-Line’s steadily expanding business in Hefei is proof that the decision to establish operations in the city was the right choice.

“In my opinion, Anhui’s future prospects and potential in terms of the logistics market are huge,” he said, adding that the province’s imbalanced relationship with downstream neighbor Jiangsu is the biggest obstacle to fulfilling that potential.

In addition to Anhui’s significant untapped “The majority of Anhui’s logistics market is potential, supportive government policies controlled by a few Jiangsu companies with a offer an advantage for logistics providers and monopoly on barge services offered at Nanjing manufacturers with operations in the province. port. This is the biggest problem with logistics in But, as Sun told CHaINA, Anhui’s major challenge Anhui today,” Sun said. in terms of logistics Looking at a map of development was the lack “The majority of Anhui’s China, it is obvious that of a clear, integrated plan logistics market is controlled by Anhui has a central and to upgrade connectivity a few Jiangsu companies” advantageous geographical within the province. position in the country’s Gump Liu, manager east. Furthermore, Wuhu of Shanghai Dragon Win International Freight and Anqing ports both boast ideal locations along Forwarding’s Hefei office and a native of Anhui the Yangtze with deepwater port Wuhu poised to province, said that although Anhui shows promise make major contributions to provincial development. in terms of becoming more integrated within China’s If Anhui is to take control of its shipping sector, supply chain, there are major structural weaknesses development of Wuhu port will be crucial. that must be overcome to fulfill that potential.

Being located near the center of the province, “Anhui’s logistics situation is similar to much of Wuhu has potential to compete with Hefei as the rest of China’s situation,” Liu said. “The problems Anhui’s economic center. The Wuhu Yangtze Bridge are the same - it is not truly modern logistics.” connects the north and south of Anhui, making the shipping of goods manufactured in the north “At present, logistics in Anhui is essentially of the province out of Wuhu port cost much less domestic cargo transport, this is owing to inadequacies at the ports of Wuhu and Anqing – than going through Nanjing port. But according to 40

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REGIONALFOCUS

Wuhu is a key river port city in Anhui Province

Liu, Wuhu port is inefficient and has long suffered from ineffective management - it also lacks adequate support from the local government. The combination of these factors has led to potential business for the port looking elsewhere.

Liu doesn’t mince words when it comes to Wuhu’s importance to the rest of the province.

“Development of Wuhu port into a modern, efficient port is crucial to Anhui’s economic development,” he said, “as it will reduce shipping costs at the province’s largest port and it will raise the overall quality of the province’s logistics network, further open up markets and attract competition.

Road, rail and air transport steadily improving In terms of highway infrastructure, Anhui suffers from some undeniable geographical drawbacks – the biggest being that the province’s south is extremely mountainous, hindering the flow of goods in and out of the region. As Anhui is also one of China’s poorer provinces, highway construction has been unable to keep up with market needs, hence creating major difficulties for development of its logistics industry, although this has improved steadily in recent years.

As for Anhui’s rail development, the biggest project on the horizon for the province is an extension of the Beijing-Shanghai highspeed railway line that is scheduled to begin construction in 2010. The existing high-speed rail line will be extended southward from Bengbu, passing through Hefei and Huangshan before terminating in Fuzhou, Fujian province. The railway is expected to run at least 300 kilometers per hour, which will greatly improve north-south rail transport in and through the province.

The recent completion of the Shanghai-WuhanChengdu express railway has also contributed to the general improvement of Anhui’s rail network. The new railway has reduced travel time to several major domestic markets – now it takes only 45 minutes for goods from Hefei to reach Nanjing and just over two hours to reach either Wuhan or Shanghai.

Hefei Luogang International Airport is the main air cargo hub for northern and western Anhui, whereas eastern cities such as Ma’anshan and Wuhu rely on www.chainaonline.com

nearby Nanjing Lukou International Airport in Jiangsu for their air transport needs. Expansion projects at both airports are expected to bring immediate benefits to both northern and southern Anhui.

Moving forward, looking outward K-Line’s Sun said he believes that increased interaction with Shanghai and other coastal ports will help drive infrastructure improvements at Anhui’s ports and will lead to an overall improvement in service quality. Growing numbers of international shipping companies such as operating in Anhui will also serve as a catalyst for much-needed improvements, he added.

Major domestic and international logistics providers are gradually beginning to establish footholds in Anhui, especially in Hefei. Sinotrans has invested more than 160 million yuan in its Sinotrans Hefei Logistics Park. Yusen Shenda Air & Sea Service (Shanghai), a subsidiary of Japanbased Yusen Air & Sea Service, established an office in Hefei in December 2007.

Dragon Win’s Liu said that he expects companies from other parts of China as well as foreign companies to focus on Anhui’s agriculture, home appliance and automobile industries in the next five to ten years. But it is ultimately logistical efficiency that will dictate whether Anhui is able to move up a rung on China’s supply chain ladder: “The entry of larger international logistics companies with advanced management in the Anhui market - especially with regards to barges on the Yangtze’s interior - should help smaller local logistics providers raise their levels of service and performance.”

MAY/JUNE 2008

41

BOOKREVIEW

Business Building lessons from an Managing the Dragon,

by Jack Perkowski Crown Publishing Group U.S.$27.50 Hardcover 336 pages

American entrepreneur

Y

ou have to hand it to Jack Perkowski. The working-class Pittsburgh kid who won a football scholarship to Yale, spent 20 years on Wall Street and became head of investment banking at PaineWebber could have rested on his laurels and enjoyed his personal wealth.

Instead he chose in the 1990s to set up a new business in a difficult country and in a difficult industry he knew nothing about. This book is the story of how Perkowski went to China and established a Chinese motor components group called Asian Strategic Investments Corporation, now Asimco Technologies.

Managing the Dragon is not a great work of literature. The memoir, Mr. China

by Tim Clissold, a Chinese-speaking accountant who helped Perkowski build Asimco, covered some of the same ground with more eloquence and wit four years ago. But Perkowski’s book is worth reading, both for its insights into business in China and for its self-portrait of a relentlessly optimistic American entrepreneur who has persevered in spite of disasters and disappointments.

As Perkowski admits, China is changing extraordinarily fast and most of these events happened a decade ago.

in China

But the book’s central section - including a blow-by-blow account of how Asimco removed the awkward boss of a rubber products joint venture in Anhui province - make gripping reading for any industrial investor contemplating a move to China.

Perkowski chose the almost virgin business territory of China when he learnt that other Asian economies were in the grip of a few powerful business families (the subject of Joe Studwell’s Asian Godfathers). He sensibly lays to rest the absurd myth that guanxi or connections are unique to Chinese dealmaking, pointing to his own use of guanxi as a graduate of Yale. And, half in jest, he recommends giving a new company eager for recognition a name beginning with A. The core of Perkowski’s argument is that investors in China face a “management gap” between bureaucratic managers reared in state-owned companies and managers so entrepreneurial that they “concocted deals with criminal elements or tried to set themselves up in competition with us”.

Through painful years of trial and error, Perkowski and Asimco struggled to bridge this gap. They started with expatriate managers, but that did not work and Perkowski admits he made his biggest mistakes in the early days “when I discounted the views of my Chinese managers.” Next, they tried converting the unsuitable “bureaucratic” and “entrepreneurial” Chinese managers they already had into the kind they wanted, but by and large that failed too.

Finally, they decided to find and empower Asimco’s own “New China managers,” open-minded mainlanders with some management experience, some exposure to modern management

Jack Perkowski

42

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“If you want to do business in China, Jack Perkowski is your man.”

—Tom Brokaw

concepts and, typically, an engineering background. In retrospect this was as obvious as the need for a strategy, but it was evidently effective.

The question remains as to whether Perkowski needed to go through such agonies to build a company that now has 17 factories in eight provinces in China.

Clissold could not understand why Perkowski did not learn Chinese.

This is a sore point for Perkowski.

Although he writes that 90 per cent of the mistakes made in China are due to “misunderstanding and miscommunication,” he spends nearly three pages justifying his reluctance to try to learn to speak Chinese.

Reading the two books together, one of the most valuable lessons to emerge is that if you want to build a billion-dollar business, it pays to learn the local language.”

For more wisdom, I also recommend The Chine Executive by Wei Wang - a great thinker on this topic, in my view.

This is an shortened version of a review by Victor Mallet which originally appeared in the Financial Times www.chainaonline.com

DON’T MISS OUT!

List your company in the most comprehensive

supply chain services directory in China

VENDORS DIRECTORY 2008 •Logistics Service Providers • IT & Software Solutions •Real Estate Services •Consulting Firms

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Any China-based company that provides services or solutions to the supply chain and logistics industry should be listed.

How much does a company listing cost?

A 12-month company listing costs only RMB4,000 (or RMB2,500 for China Supply Chain Council members). Because the Directory is re-printed every three months, we give companies the opportunity to update their profile online, meaning your company information will always be up-to-date.

朗达玛赛

n Cor orate HQ 公司总部 Pari , F ance 国 n stab ished in China 在中国成 2004 立于

• More than 15 yea s f experience • Conso id ted pro forma tu n ve : 56,5 mil ion € for the ye r, ending march 3 th 2007 • 435 empl yees around the wor d • 1 500 a tive c ie t , 55% f them li ted on the AC 4 , 43 of the Fortune 500 • 18 ffices in the world • 1996: Found ing f M saï y Thie y Fournier and Fr nçois-Xavie Ter y • 996-20 4: 120 expert s in 6 fices in Europe, i Japan and the U ited t tes and 7 sourcing o fices in developing cou tries • 2004: pening of the fi t fice in China in Shang hai • 2006: acqui ition by L wenda g oup f Ma l aï. Masaï becom LowendalMa es saï

22

u C mpany Introdu

tion

L wend a Masa ï China is a Optimiz tion consu tancy company speci and Opera tio al Pe forma Pu chasing, alized in Co nce. Its territo G ob l Sou t cing, Va ue ries are tr Supp y Chain tegic Ana ysi , Indu Optimiz tio trial Process .

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u Services and

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GLOBAL SOUR C NG • Global Sourc ing St ate y / Diagnosis • Supp ier Selec tion / Qua ific Deve opme tion / t • Sourcing Ope ations Ramp-Up • I tern tional Purchasing ffice et-Up / Organis tion Coaching / COST O TIM Z TION • Supp y Chain Design / Optim ization • Retail Life Co t Optim iz tion • Design To Cost • An lytical Co ting

OFFSHORE PURCHASI NG OFFIC • Added-Va E ue Ho ting

CONS U TING FIRM S

Who reads the 2008 VENDORS DIRECTORY? The Directory is read and used by key decision-makers in companies that regularly buy and use supply chain and logistics services and facilities in China. These are the people that decide which supply chain and logistics service providers to use in China.

How is the 2008 VENDORS DIRECTORY distributed and promoted?

Targeted at qualified decision-makers, the directory is distributed free-of-charge to subscribers of CHaINA Magazine and companies based in mainland China who request a copy (companies are only asked to cover the mailing cost). In 2008, we will print more than 10,000 copies, which will be given out at more than 100 supply chain and logistics-focused events each year.

To find out more about how the VENDORS DIRECTORY can contribute to your marketing needs in China, please contact: Kaman Cheng

) +86 (21) 5102 1617/18 + directory@supplychain.cn

8 www.supplychain.cn

EVENTUPDATE

China’s Talent War

Rages on

Melanie McGanney reports from the 2008 China Supply Chain HR Summit

E

mployee loyalty may sound like an oxymoron to any manager used to living and working in China. So often, employers spend months searching for the right employee, negotiating an acceptable salary, and training the person, just to watch him walk out the door one year later for a slightly larger office in a competitor’s firm.

Who is to blame for this unfortunate situation? Is it the disloyal employee, looking out only for himself? Is it the shortage of talent in China that forces one company to poach another’s company’s employees? Or does the responsibility lie in the hands of the management for not giving the employee incentive to stick?

Certainly, a skillful human resources department can play an enormous role in a company’s ability to find and retain employees.

On February 28, The Global Supply Chain Council held a Human Resources Summit at Shanghai’s Millennium Hotel, where managers from China’s logistics community gathered to pool together experiences and knowledge. Representatives from small, mid-sized and large companies spent the entire day discussing how to create an environment where employees want to invest themselves into a company.

Larry Wang, Managing Director, Wang & Li Asia Resources

Engaging the employee The average employee is strikingly disengaged in his work.

Lindsay Olivier, a compensation consultant fop Hewitt Associate quoted startling statistics regarding employees’ involvement in their own companies. For instance, only 8 % of employees surveyed in the China logistics sector report that they feel highly engaged at their jobs. Yet, 60 % of those who feel disengaged stay with the company. These statistics translate into a population more than half of all employees who maintain employment at a job they don’t care about.

What is the best way to engage employees? Not with higher salaries, according to Oliver. Oliver suggested that the company that candidly communicates its ideals is the most likely to find itself with loyal employees. It’s not necessarily what you pay that matters, but accurately conveying your pay philosophy to employees.

A survey of best employers discovered that these companies only pay at the 50th percentile. Their success in attracting and retaining employees lies in honestly conveying their position in the market and showing that they are a competitive employer by taking a total rewards approach as opposed to pure cash compensation.

Attracting the talent China is currently experiencing a talent gap, especially in the booming logistics industry. A McKinsey survey shows that the industry demands 75,000 new employees each year but that only 5,000 graduate. This gap gives a lot of leverage to the employee who knows that his talents are in demand.

Employers are at a particular disadvantage the higher up on the talent chain they search. The passive candidate, the individual who has absolutely no interest in leaving his or current job, is generally the most appealing to employers. This is a person, however, who will not switch employees unless there is major incentive to do so.

Hiring good recruiters, tossing the job descriptions, understanding the job you are hiring for, making sure it has growth opportunity, and knowing the competition are some places to start when you are looking to hire good people.

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www.chainaonline.com ine.com

EVENTUPDATE

Lindsay Oliver, Hewitt Associates; Meg Utterback, Thelen; Christine Cheng, Manpower China

Retaining the talent

What does the new law mean for employers? When implementation tools for these laws finally come into effect, The increase in talent over the past decade has not been the employee’s feeling of insecurity that comes from not matched by an increase in employee retention. having a contact may transfer to the employer, who will have Eric Cassagne of Schneider Electric notes that he can “spend to fine-tune hiring skills in order to avoid getting stuck with 30 percent of the time on training and communication, cross a disengaged, poorly performing employee. This is especially function management only to find that one year later a fully true for the foreign employer, who must operate with trained individual will leave.” complete transparency and carefully “the single most important abide by the laws. “Many Chinese Retaining the highly qualified employee run companies are not too concerned factor in finding someone who is largely a question of hiring the right about these laws at the moment,” says will stay with the company is person from the get go. Employers will Utterback, “they are not convinced be attracted to the individual with the locating the right match.” they will have to abide by them.” most degrees or the most prestigious professional background. However, Ivo A Hahn, CEO of Stanton Chase says, “the single most important factor in finding someone who will stay with the company is locating the right match.”

Sourcing & Supply Chain Director of Ingersoll-Rand, Michael Huang also points the finger of blame at management for failing to locate and hire loyal workers. Huang believes a manager can find the perfectly matched employee through well-conducted interviews. “By asking probing questions it is simple to ascertain if someone is looking for training and will then leave, or is otherwise unfit for the job.”

Conclusion With the talent gap in the logistics industry and the new labor contract laws, it may be tough times ahead for the employer.

However, the power to attract and retain loyal employees does ultimately lie within the hands of the company, which can effectively communicate ideals, select the right candidates through the interview process and keep them at the company by understanding his needs.

The other side of the finding-the-right-match coin is when you interview an individual whose skills does not “match” currently open positions but is nonetheless a qualified candidate. “Make sure to leave the door open,” says Brian Fenerty, General Manager of Admark China.

The bottom line is, it is within the employer’s control to get the best people and make sure that they stay.

The labor contract law The new Labor Contract Law in China, “which heavily favors the employee, promises to impact the way in which managers handle employees,” says attorney Meg Utterback, a partner a Thelen law firm. The new regulations, which include a mandatory contact for all employees, and major changes in severance obligations, will mark the first time there have been true labor standards in China—a country where more than 80% of employees currently work without contracts. www.chaina www.chainaonline.com

MAY/JUNE 2008

45

EVENTUPDATE

The ins and outs of

Sourcing inChina W

ho would have thought that running a successful international company had so much in common with top European football teams like Bayern Munich or Manchester United? Everyone knows that sports clubs must be run like businesses in order to exist, but there are striking parallels between the way the big European teams source the best footballing talent from all over the globe, and the need for multinationals to be able to source from the destinations offering best value, regardless of location, according to Seoul Min, Managing Director, Andlinger & Company China at the recent China Sourcing Summit.

For example, the smaller teams in the lower leagues of say, England or Germany, have neither the means nor necessity to expand their scouting networks to find top talent in far-flung footballing hotspots like Brazil or Argentina. They compete in a smaller league – or market, if you will, just like the smaller local businesses which exist in their communities. “This is a typical situation for minor league football, but also a typical situation for minor league procurement – you buy your goods within a 50 kilometre radius and one or two parts you might source from Eastern Europe,” says Min, referring to the fact that many clubs in western Europe can afford cheaper but high quality players from the likes of Poland, Ukraine and the Czech Republic.

Cameron Wilson reports from the 2008 China Sourcing Summit

So where does China fit into all this? Unfortunately, China has yet to unearth a rich vein of soccer talent, but in the rest of the business world it does of course export just about everything else.

Min says the statistics show China is a hot market right now with a vast range of products available. “Finding the right supplier is not so sophisticated - sourcing is a very complex topic but in general its not rocket science you need to do your homework step by step.” He also pointed out that things are not always as difficult or awkward as they appear – and revealed that a Chinese politician told him, “If the government says its impossible, its impossible. But if some officials tell you its very difficult, then it can be very easy.”

China’s continual improvement in the range and quality of products which can be sourced within its borders means that it offers savings on sourcing a similar range of components from one supplier, rather than cherry-picking the cheapest supplier for each individual product. And although particular items might not be available yet in China, Min says developing suppliers is the key to building a secure supply chain in the future. He said “You may have seen a few companies and audited a few, and found some potential,” he said, adding, “You should not just focus on buying or thinking the Chinese are just waiting to sell, often they are not waiting because the local market is very strong - if you see some potential you better think of developing potential suppliers.”

Much of Min’s speech emphasised the need to treat suppliers in China the same way as a company would anywhere else – and this was reflected by Chinese delegates’ concerns during an after-talk discussion – suppliers complained that poor communication was creating many problems, because buyers were not listening to suppliers concerns.

Min said, “I would never recommend to change habit or attitude just because you are trading in China- I will start with some small talk, as I would anywhere else, we are all human beings and as long as you are polite and honest things are fine.”

Clement Homolle, General Manager China, LowendalMasai

Min said, “Even the sports world, which many people don’t take very seriously, is two steps ahead of the rest of the German economy and from my point of view [sports teams] are a good example to follow – if you want to compete with the best you need to do global sourcing from all over the world.”

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Speaking during the same session was Clement Homolle, general manager of LowendalMasai China – a consultancy which helps companies optimize sourcing costs. He insisted that the most common problems are invariably the easiest to avoid, adding that established business practices used in Europe were still being used in China and obvious differences on the ground being overlooked, particularly with regard to communication with suppliers.

“There is a mentality that “if the supplier is good he will understand,” said Homolle, “One example we saw had specifications written in Basque, a region in Spain and France whose language has nothing in common with any other language, and we are still looking for the Chinese – Basque dictionary.” www.chainaonline.com ine.com

EVENTUPDATE

Homolle’s talk was centred on the theme of ten “rotten rules” on how not to go about sourcing in China, and the Basque example was one of many he had encountered. “If you provide the wrong drawings to your suppliers that’s a good way to ensure failure,” he said, “Another example is a European home appliance manufacturer who provided specifications with two vital pieces of information missing – the first was that the raw material to be used was not mentioned, and the second, the dimensions were not specified.”

Whilst the issues and examples of what can go wrong here may seem commonplace to those familiar with China, sourcing departments back in Europe or North America may not

understand that the reality of China is often very different to its appearance to the outside. In a post-presentation discussion, Homolle outlined his firm’s dual-approach, with offices at both sides of the supply chain. The advantage of this he said, was that concerns or reluctance for firms to source from China are eased in Western HQs, whilst practical know-how is given to the employees in China who are tasked with making the sourcing process as smooth as possible.

China may have started its economic momentum rolling on a solid platform of low-price and abundant labour, but if anything, all the issues discussed above goes a long way to illustrating that it’s not just about the lowest price...

SHANGHAI – FENGXIAN DISTRICT 120,000 sqm for China domestic & international logistics 上海奉贤库－12万平米的物流中心开展国内和国际业务 Operations start in August 2008 Strategic loca ion for Distribution, FMCG, Retail, Automotive, Fashion, Interna ional Supply Chain and High-Tech

For space and service inquiries, please contact Sinotrans Logistics Ltd. frederichoudoyer@sinotrans.com • lirenzhi@sinotrans.com • www.SinoTransOne.com www.chaina www.chainaonline.com

MAY/JUNE 2008

47

TIERTWO

A Tier 2 alternate

to Shanghai Vittorio Brucoli is the purchasing manager of Flenco Ningbo, an Italian company producing lubrication and auxiliary systems for power generation and the oil&gas and chemical industries.

Ningbo

: Can you tell us a bit about your company company?

V ittorio

Brucoli: Flenco (Fluid Engineering Company) has its headquarter in Italy and its plants in Italy, Mexico, Romania, Slovenia, China (Flenco Ningbo and Flenco Huasheng Automobiles tools).

Flenco Ningbo opened in 2003 and our main customers are General Electric Energy, General Electric Oil&Gas, Alstom, AtlasCopco, Linde, NTC. We received GEâ&#x20AC;&#x2122;s Award as Best Migrating Supplier for 2004 and other awards in the following years. : What are some of the projects that your company is currently working on?

VB: In 2008 some of our engineers will spend few months in Italy for a special training. In 2009 we will move to our new facility, always in NETD (Ningbo Economic & Technical Development Zone) in order to increase the production capacity and respond to the internal and international growing demand.

VB: The Asia-Pacific area is an emerging

: Why did the company decide to open

: What types of industries/sectors are

in Ningbo, as opposed to another part of China or Asia?

market and Ningbo is positioned in a strategic location. Its port is the second largest in China, and it is a natural deepwater port. For this reason many shipping companies and forwarders have their branches here. Some of them started or are starting 3PL business. prevalent in Ningbo?

VB: The main industries are in Textile

& Garment, Mechanical, Chemical, Metallurgical, Stationery and Food sectors.

There are also many trading companies enjoying the availability of Consumer goods and the proximity to the port.

see that if the company offers training, decent salary and housing, people are devoted to the company. The Ningbo education system is quickly improving.

There are some good vocational schools and the University is focused on technology and business. : Does Ningbo offer the professional support companies may need?

VB: Yes, in Ningbo there are some business advisory and accounting services as well as legal consultants.

Furthermore, the Foreign Expert Committee of the Chamber of International Commerce (COIC) of Ningbo holds seminars, social activities and networking events.

: What are some advantages and disadvantages of being in Ningbo?

Vittorio Brucoli 48

MAY/JUNE 2008

VB: In the Ningbo area the land is less expensive, but we still are close to Shanghai; thanks to the Hangzhou Bay Bridge we will be only two hours away. About the manpower, pros and cons should be carefully considered. On one side labour cost is cheaper and the turnover is lower than in other areas. On the other side it can be not always easy to find high specialized resources (both workers and employees). But we also www.chainaonline.com

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KNOWHOW

Suppy Chain 101 Back to the Basics!

Chris R Deans is a seasoned supply chain executive, with over 25 years of experience in the Energy, Forest Products, Government and Consulting Industries. He has provided leadership and supply chain consulting and training for Fortune 100 corporations such as AT&T, Lucent and Kraft.

Cycle Counting: Part II Last issue we looked at reasons why Cycle Counting —counting a few items or a few locations in the warehouse every day—is far superior to periodic wall-to-wall physical inventories. Now we are going to look at the mechanics of cycle counting—how to perform it in your warehouse or stockroom. With a little planning and a couple of spreadsheets, you will be cycle counting in this edition of ‘Supply Chain 101—Back to the Basics.’

What to Count With cycle counting a few SKUs or a few locations are counted every day. Items that introduce greater levels of risk in the Supply Chain are counted more frequently than others. Generally, these are SKUs having: •high pick frequencies •large average inventory dollar value •large dollar usage A simple statistical tool called “Pareto Analysis” is used to identify important items. The minimum data required to perform this analysis is: •SKU •For each SKU for the period either the Number of Picks, the Average Inventory Dollar Value, or Dollar Usage •Current on-hand quantity

A Pareto Example For simplicity, assume a warehouse with 11 items (in reality there are usually thousands of SKUs), and assume the following Management decisions: •The entire warehouse will be counted every 6 months •Items having larger Period Average Inventory Dollar Value are considered more important •“A” items are the top 20% of all items and are counted once a month •“B” items are the next 30% and are counted once every 3 months •“C” items are all other items and are counted once every 6 months Data for each of the SKUs is collected and arranged in a spreadsheet where three things are calculated: •Cumulative Period Average Inventory Dollar Value •Cumulative percent of Period Average Inventory Dollar Value •Cumulative percent of SKUs 50

MAY/JUNE 2008

The spreadsheet is then sorted largest-to-smallest on the Period Average Inventory Dollar Value.

The first 20% of SKUs are deemed “A” items, the next 30% are “B”, and so on. The final spreadsheet looks like this:

# 1 2 3 4 5 6 7 8 9 10 11

SKU 45825 97523 2319 78545 73563 43621 35625 2364 23154 78843 83356

Period Average Quantity On $$ Value Hand $351,873.00 24,851 $236,127.00 1,975 $73,277.19 430 $42,749.00 2,229 $19,562.00 214,326 $13,189.00 0 $10,112.00 16,787 $8,493.00 1,726 $5,589.00 817 $1,962.00 130 $344.00 3

location gets counted in each period.

Empty locations should be verified within each period—it is easy to do and many errors are found in supposedly empty locations. Counting SKUs is not the same as counting locations; counting SKUs often involves counting multiple locations.

Cumulative Pd Cumulative Average $$ % Avg $$ Cumulative Class Value Value % of Items Count A $351,873.00 46.10% 9% A $588,000.00 77.04% 18% B $661,277.19 86.64% 27% B $704,026.19 92.24% 36% B $723,588.19 94.80% 45% C $736,777.19 96.53% 55% C $746,889.19 97.85% 64% C $755,382.19 98.97% 73% C $760,971.19 99.70% 82% C $762,933.19 99.95% 91% C $763,277.19 100.00% 100%

Notice that about 80% of the average inventory value is found in 20% of the items.

This phenomenon, called “Pareto’s Law“ or the “80/20 rule” is a statistical reality true of most populations. Because inventories are dynamic, a Pareto Analysis should be performed at the start of each period.

Here are some other things to keep in mind as you cycle count:

Daily Counts

•Classify new items as “A” items until history can be generated

In a warehouse containing 5,491 items, the number of daily counts required is calculated as follows, assuming 290 workdays/year: Items “A” -20%

•Remember the primary purpose of cycle counting is to find and fix errors in business processes •SKUs with a 0 on-hand quantity must be verified

•A pick exception or an inventory adjustment should be counted immediately

Number of Items 1,098

Annual Count Frequency 12 (once a month)

Total Counts 13,178

“B” - 20%-50%

1,647

4 (once a quarter)

6,589

“C” - 50%-100%

2,746

2 (twice annually)

5,491

Total

5,491

25,259

Daily Counts Required: 25,259/290=88

Keep track of counted SKUs and locations to ensure every SKU and every

•Adjust the cycle count program for local operational realities

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EXECUTIVEINSIGHT

Executive

Insight

In this second article in the Executive Insight series, global recruitment firm Michael Page International asks Jonathan Qiao, General Manager (China) at Sai Cheng Logistics for his views on career development.

Jonathan Qiao is General Manager for China at Sai Cheng Logistics International, a joint venture company established by China Post and Australia Post to provide customers trading between China and Australia with an integrated supply chain solution.

His primary role is to manage trade between China and Australia which involves coordinating logistics and supply chain management services including hub operations,

transportation, value added services and international forwarding agency services.

He has worked in the industry for the past 18 years, including a six year stint in California with APL Logistics, and has extensive global experience developing and executing tailored logistics solutions for customers around the world.

In this article on career development, he shares his experiences and advice on climbing the corporate ladder.

What are some of the changes and trends in the procurement & supply chain profession?

What are the factors that have made you successful in your career?

Johnathan Qiao: To be successful, I think it’s important to keep learning and understand your customers’ needs.

Wherever possible, you should try and gain experience across the various functions of the supply chain including transportation, warehousing, imports and exports and customer service. Learning about the different areas will give you a broader understanding of the logistics field and help you successfully identify and implement strategic solutions for your clients. It’s also important to keep up-to-date with industry best practice and market trends so that you can tailor your services for each customer and provide innovative ideas and advice. Having the right people in the right roles to support you is also important, particularly as you progress in your career. Your customers will have their own set of key performance indicators so you need strong capable staff below you to execute tasks and deliver a win-win outcome.

What do you look for when hiring new staff?

JQ: There are three things I look for in potential employees: an open mind, solid education and team spirit. We work in a complex environment where you need to be able to pick things up quickly so you must be open to learning new things every day. Education is also very important. In a fast growing economy like China, it’s very hard to find good logistics people with the right educational background. I look for people who are well educated and up-to-date with industry best practice. Finally, you need to be a team player who is willing to contribute to www.chainaonline.com

A Sai Cheng Logistics warehouse

get the job done. If you possess these qualities, you are more likely to stand out from the crowd and improve your chances of success.

JQ: In China, the supply chain is quite fragmented with many logistics service providers operating only a part of the chain. However, with foreign manufacturers coming into China to set up their regional and global production facilities, as well as more foreign companies willing to purchase commodities from China, the focus on integrated supply chain management is rapidly increasing. The profession’s profile is also growing and we are seeing some major players emerge who are beginning to have a substantial influence in the market. This is good news for the industry and is increasing demand for logistics professionals to improve supply chain efficiency.

What is your advice on progressing to the top?

JQ: To progress to the senior level, you

need to be prepared to take challenges and be open to new opportunities.

Don’t be afraid to put your hand up to work on new projects outside your traditional role as exposure to other parts of the business will help you advance your career. By volunteering to work on other projects, you can not only improve your technical knowledge but also pick up additional skills and experience. Individuals that seek out and make the most of professional development opportunities available to them will expand their portfolio of expertise and progress much quicker than those who don’t.

Jonathan Qiao

For further advice on career development or for general information on current employment opportunities, please contact Olly Riches at Michael Page International on +8621 3222 4758 or email ollyriches@ michaelpage.com.cn.

MAY/JUNE 2008

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QUESTION&ANSWER

Industrial property turns

Green

Gazeley China recently put out a report on sustainability which outlined the company’s goals for being “Carbon Positive” and gave clear pledges in the areas of energy, water, waste, biodiversity habitat and pollutants.

In September 2007, Gazeley delivered a 42,000-squaremeter Distribution Center (DC) in Tianjin as a joint-venture project for Wal-Mart in North China.

This DC employs sustainable measures and standards to cut down CO2 emissions, reduce energy and water consumption and uses renewable materials, which saves the operational costs and make the center more environmentally friendly. : Can you talk about how you got into the environmental aspect of design?

Jonathan Fenton Jones: I’m actually trained in 3 dimensional design, majoring in interior design. I had my own architectural design practice in London for 15 years. Over the time, I became personally interested from a design point of view in the effect that designers could have to hasten the pace of change for good, in working with their supply chains.

When I joined Gazeley in 1999, I was the only one in the company at the time with a design background. It was a coming together of my passion in this area from a design background and our Chairman John Duggans emerging passion from a business perspective which really brought the thing into Gazeley’s consciousness.

G. Park Tianjin Phase I – Wal*Mart DC

“With a company like Gazeley, it’s our responsibility to shape the industry, not just in terms of warehousing, but for logistics as whole,” said Jack Yang, Country Managing Director, Gazeley China.

In an exclusive interview with CHaINA Magazine, Russel Beron spoke with Gazeley’s procurement and sustainability director, Jonathan Fenton Jones from his office in the UK about Gazeley’s long term approach to sustainability.

: When did Gazeley start promoting the sustainability aspect of their building practices?

JFJ: We started a little bit unknowingly,

but we were doing what might be recognized as environmental sustainable buildings as early as 1987. When I say that, at one of our flagship projects at Magna Park in the UK, we’ve planted over a million trees, we didn’t remove any material from the site, the grey water is dealt with biodisks and reedbeds. These things at the time were very much in the vanguard of thinking. : What are some of the required

elements of a successful sustainability strategy for any company?

JFJ: The very first thing that any company

needs is strong senior management

commitment, without that it will be difficult to implement a sustainability strategy.

The second thing that any company then needs to do with that commitment is to understand and quantify the extent to which a company has environmental and social impacts. For us, we have the senior management commitment, we understand, the environmental and social impact. In each country we operate in, we are developing mitigation strategies which will reduce operational costs for the running of the building and reduce the negative impact through our supply chain on the environment? : Is there a unique strategy for China in terms of sustainability?

JFJ: Our strategy is a global one. For

example in Mexico, what is prevalent is water shortage and the fact that you have loads of sunshine. So in Mexico, we are putting together a program that will maximize the use of sunlight and mitigate the shortage of water. The opportunity we have in China is the value of the number of people and the wherewithal to get things done and to align that with the things we know about right now, such as the unique applicability of certain construction materials to China. : What exactly is a sustainable warehouse?

JFJ: Before I comment directly on that

I will briefly explain what I see as being the required elements of a successful sustainability strategy for any company.

For us this means that we have senior management commitment, that we 52

MAY/JUNE 2008

www.chainaonline.com

QUESTION&ANSWER JFJ:

Some are and some aren’t. Back in 2002, the first thing we did once we developed our research, we gave the first copy of our research to Prologis and basically asked them to come and join the party.

we operate and making sustainability as a consideration imbedded within them.

Quite simply if we believe that we can go on for the next 15 to 20 years as we have carried on in the past 15 to 20 years, we would very quickly be out of business.

: What are some key elements about the sustainability report?

JFJ: We wanted to demonstrate that we

are accountable and I think that what the 2008 report does is that it sets some very challenging targets for our company in terms of environmental performance. : Is the report a kind of philosophical mission statement?

Wind Turbines and PV panels

understand the environmental and social impacts and that we develop in each of our countries of operation mitigation strategies to reduce operational costs to the running of the building for our customers and to increase the benefits in terms of the extent to which negative impacts through our supply chain have on the environment. : Is it going to be tricky to convince manufacturers in China that sustainability is viable in terms of costs?

JFJ: This

scenario is everywhere we go. Sustainability needn’t cost money. If we make our buildings more insulated and more airtight by using materials that anyone can buy, we can create buildings that need a lot less heat in them. So I don’t accept that sustainability costs money.

: So there’s not necessarily a cost disadvantage of building in a sustainable way?

JFJ: There is a lot that many developers

do well and we need to be asking the right questions of our suppliers. It might be that not everyone knows what those questions are which unlocks the story which needn’t cost any money at all? : Which customers are most receptive to the idea of sustainable warehousing?

JFJ: The profile of our customers is

mostly large Multinational companies.

For example we work with Proctor and Gamble in many countries to create sustainable buildings. : Are your competitors, other developers

doing the same kinds of things? www.chainaonline.com

JFJ: Yes, with very hard edge commitments

against which we are prepared to manage and measure. At the moment we have one particular project we are developing, which is featured in the Sustainability Report, Chatterly Valley in the UK, which is a carbon positive development. We have others that we are making carbon reductions of maybe 10%. We are doing what we can in the understanding that the targets we are putting together are in the aggregate of our global operation.

We are not in the business of green washing. We are seeking to make a real difference, to put our money where it matters and make the most impact for Gazeley and therefore for our customers.

The fact of the matter is that 51 of the largest world economies at the moment are multinational companies, they are not nation states. Business is ahead of regulation. I also think business is the most powerful engine for change right now rather than national government. : So if business is pushing the government, are consumers pushing business?

Rooflights and Heat Recovery System for HVAC

No organization in modern society could be considered sustainable because we are all reliant on the burning of fossil fuels and the use of natural resources of this planet, which we return as waste.

It’s highly unlikely, with the present structures, that any company even has the potential to become sustainable under the existing economic and political structures.

I think that the most important sustainability issue by far is high level system change which is to do with practically and collaboratively improving the overarching economic, political and social systems. So my belief at the moment is that we are putting 80% of the effort to 20% of the problem.

JFJ: Ultimately, yes, it’s the customers.

The whole environmental sustainability thing is headed the way it is ultimately because of consumer pressure. : What’s the future direction of the sustainability movement as it relates to supply chain? It went from some awareness to implementation and now there is a lot of talk that it makes viable economic sense to be sustainable? What’s coming next?

JFJ: I think the biggest forthcoming area

of sustainability is what I would refer to as high level system change. It’s to do with prevailing upon the economic, social and financial frameworks within which

Jonathan Fenton-Jones, Gazeley Procurement and Sustainability Director

MAY/JUNE 2008

53

SCMGADGETS

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Specifications • Fully MIL-STD-810F Compliant

• Built-in Wireless b/g Networking

• IP54 Rated

• Built-in GlobalSat GPS Module

• Microsoft® Windows® XP Pro (standard)

• Intel® Stealey A110 ULV (McCaslin) Processor

• 8.4 in. widescreen TFT Wide Angle View LCD Touch Screen Display (Sunlight Readable Standard)

• For more features, see: http://www.tabletkiosk.com

• 1.0GB DDR2-533 RAM • 80GB Hard Disk Drive

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MAY/JUNE 2008

• Microsoft® Windows® XP Embedded (optional)

www.chainaonline.com

MOVERS&SHAKERS Changed jobs in the past month? Hired someone new recently? news@chainamagazine.com

With supply chain talent at a premium, CHaINA keeps an eye on which executives are moving where.

Ali Ma, Regional General Manager, Eastern China, YAT FAI Logistics (Group) Co Ltd Ali Ma joined YAT FAI Logistics recently after 8 years with Panasonic Logistics Co. Ltd and prior to that, 5 years with Matsushita Electric International Logistics (HK) Co., Ltd. in HK as the Assistant General Manager,

James Gagne, CEO for the Greater China region, AGILITY AGILITY, a global logistics provider, has appointed James Gagne as its new CEO for the Greater China region. Mr Gagne takes on the role of leading the company’s business on the mainland and in Hong Kong and Taiwan. Before this role, Mr. Gagne was managing director of Schenker’s central China operation.

Birkart Globistics restructures Asia Pacific operations BIRKART Globistics, the Air + Ocean division of Thiel Logistik AG, has announced a realignment of its sales division in the Asia Pacific region.

Shanghai-based Henk Westerhoek joins Birkart Globistics as deputy managing director for China with responsibility for developing the company’s business across central, northern and southern China.

Fabrizio Stanig will be the new deputy managing director for Birkart Globistics in central and northern China with responsibility for spearheading the company’s expansion and overseeing day-to-day operations.

Axel Herzhauser has been promoted to the position of regional sales and marketing director in the Far East.

www.chainaonline.com

Eric Friedlander, Manager Director, Asia Operations,YRC Logistics Eric Friedlander has been named Managing Director for Asia of YRC Logistics, a subsidiary of YRC Worldwide. In this role, Mr. Friedlander will be responsible for all aspects of business operations, development, government relations, and financial performance in China and all other countries in the region. He will report to Jim Ritchie, President and CEO of YRC Logistics.

Lorenzo Moretti, Chief Operating Officer, Tesco China Recently appointed from his position as Operations Director in Slovakia to his new position as Chief Operating Officer of Tesco China, Lorenzo Moretti is accountable for running the end to end operation of Tesco’s fast growing Chinese hypermarket and newly developing Express Business.

Steven Gettleman, Managing Director, China Procurement Office, MSC Industrial Supply Co.’s, Prior to his new appointment as Managing Director, Mr. Gettleman ran the company’s abrasives, machinery, and welding divisions for seven years. MSC is one of North America’s largest distributors of industrial products, satisfying their customers’ maintenance, repair and operations (MRO) supply requirements with a stocked product offering of more than 500,000 items.

MAY/JUNE 2008

55

H WATC BLOG

Our blog section features recent entries from Blogs relevant to China’s supply chain.

www.3plwire.com

2008 Ocean Export Capacity Crunch Having trouble booking a container of widgets to Asia? You’re not alone. With the sagging U.S. dollar, container exports are booming especially on the Trans-Pacific Westbound lane. 2007 saw a substantial increase in containerized exports and reports I have been reading show that exports to Asia are anticipated to increase 20 percent this year.

These factors are causing significant pressures on shippers and forwarders alike trying to secure space. We are starting to see export containers being rolled to subsequent bookings due to lack of vessel space and new export bookings limited to vessel sailings 4 to 6 weeks out. In addition, due to carriers switching Asia Eastbound containers to more lucrative European lanes, there are fewer containers available to load back to Asia. Inland container pools are a at a premium and many shippers are electing to move their product via full truck loads to major port locations in order to take advantage of larger container pools.

BLOG WATCH

We could be in for a rough ride as far as containerized exports are concerned. If you have regular shipments on a specific trade lane, make sure to contact your forwarder to develop a contingency plan and agree on pre-booking containers as far out as you can. Of course, if you have trouble moving your product via ocean, you can always ship it by air…spoken like a true forwarder.

www.allroadschina.com

Go West...Chengdu Investment News 1. Sichuan’s imports and exports increased quickly in the first quarter

From January to March, the accumulated imports and exports of Sichuan province reached 4.06 billion US dollars, up 59.7% year-on-year, while 24.6% higher than the national average for the corresponding period, a journalist reported recently from the Chengdu Customs Office.

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2. 150-million-yuan bill agreed for receiving transplantation of shoemaking industry from Guangdong province.

On April 16, at the seminar of Sichuan’s Reception of Transplantation of Shoemaking Industry of Guangzhou held in Guangzhou, “China Female Shoes Capital,” Chongzhou Base concluded 7 projects for shoemaking and accessory industries, involving investment of 1.5 billion yuan, which made itself the industrial park with the most projects and largest investment signed.

3. China’s first specialized international talent market established in Chengdu On April 17, the Chengdu Software Talent Market of China International Talent Market was officially established. It is reported that it is so far China’s first specialized international talent market approved by the State Foreign Experts Administration.

MAY/JUN

All Roads is written by Richard Brubaker, Founder and Managing Director of China Strategic Development Partners. Based in Shanghai, Rich assists clients understand the China market. www.chainaonline.com

PRODUCTRECALLS

Danger!

Danger!

The U.S. Consumer Product Safety Commission is charged with protecting the public from unreasonable risks of serious injury or death from more than 15,000 types of consumer products. Below are just a few of those products.

Fisher Controls International Recalls Gas Regulators for Leak Hazard Fisher Controls International (FCI), of McKinney, Texas has recalled gas regulators which were manufactured from June 2006 through January 2008 and installed on LP-gas supply systems in homes and small commercial buildings. Gas can leak from regulator when the diaphragm pulls inward into the casing, posing a fire or explosion hazard to consumers. The recall involves model R622H LPgas regulators.

Hobby-Lobby Int’l Recalls Battery Chargers Used with Helicopters Due to Fire Hazard

Master Lock Recalls Lock and Leash™ Locks Due to Violation of Lead Paint Standard Fullyear-Brother Enterprise Co. Ltd, of Taiwan has recalled red Lock and Leash™ locks with model number 1551D. The locks have a matching red coiled cable used to anchor items. Master Lock® is printed in white above the combination display.

Red surface paint on the locks contains excessive levels of lead, violating the federal lead paint standard. Other colors are not affected by this recall.

Salton Inc. Recalls Electric Toasters Due to Fire Hazard

RE CA LLE D

Hobby-Lobby International Inc., of Brentwood, Tenn. has recalled the l i t h i u m - polymer battery charger and batteries sold with the AT600 Falcon Helicopter kit.

The lithium-polymer batteries can ignite while charging, posing a fire hazard to consumers. The recall also includes any spare battery (Model AT600B) or spare charger (Model ATS6046) purchased for this kit.

Salton Inc., of Lake Forest, Ill. has recalled the chrome two-slice electric toasters sold under the following brands: Farberware (model # FCT200 or FCT100), Hoffritz (model # HZT2 and HZT2M), and Russell Hobbs (model #RH2MT).

The toaster can turn on without bread in the slots and ignite items placed on top of it, posing a fire hazard. The brand name and model number are printed on a plate located on the underside of the toaster.

Children’s ‘Main Street Drag’ Sunglasses Recalled by StyleMark Due to Violation of Lead Paint Standard

JCPenney Recalls Cooks Deep Fryers Due to Fire and Burn Hazards

StyleMark Inc., of Ormond Beach, Fla. has recalled children’s sunglasses that have “Main Street Drag” characters on the bottom of one lens. The sunglass frames have dark metallic blue or dark metallic red fronts and gray checkered sides. “Main Street Drag” is printed in orange at the temples. Style number DI25K7116 is printed on the left temple. Surface paint in the orange lettering on the temples of the sunglasses contains excessive levels of lead, violating the federal lead paint standard. No other styles are included in this recall.

JCPenney, of Plano, Texas has recalled the Cooks deep fryer which has a brushed stainless steel exterior, a wire mesh basket with a handle, a lid with a window and black handles.

The deep fryer has a faulty heating element which can cause it to overheat, posing a fire and burn hazard to consumers. The deep fryer has a 1/3-gallon capacity. “Cooks” is stamped on the side of the deep fryer.

Model number 22016 is printed on the bottom of the deep fryer.

www.chainaonline.com

MAY/JUNE 2008

57

CLASSIFIEDLISTINGS

LOGISTICS SERVICE PROVIDERS

LOGISTICS SERVICE PROVIDERS ALLWINGS LOGISTICS 1688 Sichuan North Road, 26/F Fude Business Centre South Shanghai 200080, People‘s Republic of China +86 21 6306 3134 www.alls-sh.com APL LOGISTICS 5F Raffles City Office Tower, 268 Xizang Zhong Road, Shanghai 200001 上海西藏中路268号来福士办公楼5 200001 +86 21 2301 2800 www.apllogistics.com BDP INTERNATIONAL Unit 2102-2106, Shanghai Bund Int’l Tower, 99 Huangpu Road, Shanghai 200080, China 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 B RKART GLOBISTICS Room 618, Ocean Towers, 550 Yanan Dong Lu, Shanghai, 200001 上海市延安东路550号海洋大厦618室, 200001 +86 21 5352 4766 www.birkart com

CEVA LOGISTICS 上海长宁区延安西路1118 号龙之梦大厦2608室 +86 21 5258 6611 www.cevalogisitics.com CHINDEX 2/F Tower B, China Arts&Crafts Building, 103 Jixiangli, Chaoyangmenwai, Beijing, 100020 北京市朝阳区朝阳门外吉祥里103号中国 工艺大厦B座2层 邮编:100020 +86 10 6552 8822 www.chindex.com CONNEXTIONS LOGISTIC SOLUTIONS 1211, Jinmao Towers, Chouzhou North Road, Yiwu, Zhejiang Province, China 322000 浙江省义乌市稠州北路699号金茂大厦 1211室, 322000 +86 579 5547176 www.connextionslogisitc.com

To take out an ad in CHa NA, contact KAMAN CHENG tel: +86 (21) 5102 1617/18 • email: kaman@chainamagazine.com

CROWN WORLDWIDE Crown Building, No. 59, Lane 729-75 Sui De Road, Shanghai 200331 上海市绥德路729弄75支弄59号 嘉柏大厦 邮编：200331 +86 21 6250 8820 www.crownworldwide.com DAJ N LOGISTICS 3000#South Lia-hua 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 6309 8336/3430 6999 www.dajin.com.cn DERET LOGISTIQUE 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，200080 +86 21 6307 5086 www.trans-access com cn

CHEP 40/F, Suites 8-10, 2 Grand Gateway, 3Hongqiao Road, Shanghai, 200030 上海市虹桥路3号港汇 二座40楼08-10室邮 编：200030 +86 21 6127 2488 www.chep.com DHL 18/F, Tomson Commercial Building, 710 Dong Fang Road, Shanghai 200122, China 上海市东方路710号汤臣金融大厦18楼邮编 200122 +86 21 5058 1111 www.dhl com

滇 Go Kunming Whe her you're going to Kunming on business or for leisure you'll need to know how to get around, where to stay and the top places for food, drinks and fun.

GoKunming is the only English-language website serving he needs of visitors to and residents of Kunming, China's 'Spring City'. Filled with useful listings, an insightful blog that is updated daily plus forums and classifieds, GoKunming makes it easy to get the most out of one of China's top second-tier cities.

www.GoKunming.com

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MAY/JUNE 2008

ELEE Elee Shanghai Offce 375#, Kefu Road, Nanxiang Town, Jiading District, Shanghai, China 中国上海嘉定区南翔镇科福路375号 +86 21 39124360 www.eleechina.oom EXPEDITORS Shanghai Branch 上海代表处 27/F, Tower A, City Center of Shang hai 100 Zun Yi Road Shanghai, China (200051) 上海市遵义路100号虹桥上海城A幢27楼 +86 21 5257 4698 www.expeditors.com FM LOGISTIC 2099 Xinqun Road,Pinghu EDZ, Zhejiang Province. 浙江省平湖经济开发区新群路2099号 +86 573 8527 3072 www.fmlogistic com

GEODIS W LSON 19/F, CITS Building, 1277 West Beijing Road, Shanghai 200040 +86 21 6279 2277 www geodiswilson com HAVI FOOD SERVICES 6 Xingsheng Jie, Beijing Economic & Technological Development Area, Beijing, 100176 100176北京经济技术开发区兴盛街6号 +86 010 6788 3335 HMG GROUP Suite B-E, 10F International Shipping & Finance Building,No.720, Pudong Avenue,Shanghai, China 中国上海浦东大道720号国际航运金 融大厦10楼B-E座 +86 21 5036 8000 www hmglog.com ID LOGISTICS Room 19D, Dong Tai Plaza, No 309 Tanggu lu,shanghai 上海市塘沽路309号19D +86 21 6306 7083 www id-logistics.com IDS LOGISTICS 8/F Tower Block, LiFung Plaza NO.2000 Yishan Road, shanghai 201103 上海市闵行区宜山路2000号利丰广场 主楼8楼，201103 +86 21 2416 4700 www idslogistics.com IPS L MITED 01-11 YouYou International Plaza 76 Pujian Road, Pudong Shanghai, China 200127 +86 21 6165 9288 www ipssupplychain com KERRY EAS LOGISTICS 北京市朝阳区东三环北路霄云路21 号大通大厦，100027 No 21,xiaoyun Road,North Dongsanhuan Road,Chaoyang District,Beijing,100027 +86 10 6461 8899 www kerryeas.com KUEHNE & NAGEL Block 1, 11-16F 1868 Gong He Xin Road Shanghai 200072, P R. China 共和新路1868号大宁国际商业广场 第一幢11-16楼, 邮政编码：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, China 上海市徐汇区零陵路899号飞洲国际广场26 楼F座 +86 21 5150 6699 www linfox.com 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, 200131 +86 21 5046 1666 www linkstarlogistics com LOG FASHION 375 Kefu Rd, Nanxiang Town, Jiading District, Shanghai, 201802, China +86 13917614568 www logisfashion.com www.chainaonline.com

CLASSIFIEDLISTINGS

Chief Operating Officer A leading manufacturer in the electronics industry with subsidiaries across Mainland China and Hong Kong. The company’s specialisation is the production of fuses, batteries, and power distribution systems.

Xiamen Role ◆ Generous Relocation Allowances ◆ Rapidly Growing Business Reporting directly to the President, in this newly created role you will provide overall leadership for managing the factory operations including administration, production process, quality, material planning, supplier management and other activities like business development and product development. In order to achieve the company’s objectives, you will control the production flow and operations, always making sure productivity and efficiency are operating at maximum capacity. Alongside this, it will be necessary to maintain excellent relationships with various PRC departments and ensure all domestic and international quality standards are met.

The successful candidate will be a bachelor/diploma holder preferably in a Production, Electronics or Operational Management field with a minimum of ten years solid experience in an electronics manufacturing managerial role. You will be proficient in PRC labour law, customs and taxation requirement, import and export regulations, preferably with IPO experience in China. This role is open to all candidates with a native level command of written and spoken English and Mandarin (Cantonese is a bonus but not essential). In return, the company is prepared to help the successful candidate in every way to relocate to Xiamen, including accommodation and a family allowance.

To apply for these positions, go to www.michaelpage.com.cn/apply quoting ref:H205240 or call Gareth Bibby on (+86 21) 3222 4758. Data collected will be used for recruitment purposes only. Shanghai Tian Cai Network Co. Ltd., under license from Michael Page International Group PLC.

LOGISTICS SERVICE PROVIDERS LOSCAM PACKING EQU PMENT LEASING Room 508, No. 707 ZhangYang Road, Pudong, SHANGHAI 200120 上海市浦东新区张扬路707号508室 200120 +86 21 6104 8156 www.loscam.com MAC SUPPLY CHAIN SOLUTIONS +94 1 1230 9221

SINOTRANS 7th Floor, Contract Logistics Division, Sinotrans Plaza A, A43, Xizhimen Beidajie, Beijing 100044 北京西直门北大街甲43号 金运大厦A座7层 合同物流事业部100044 +86 10 6229 5600 www.SinoTransOne.com

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MENLO Golden Eagle Mansion, 1518 Min Sheng Road, Tower A 13th Floor, Shanghai, P.R.China 中国上海浦东新区民生路1518号金鹰大 厦A座13楼 PANALP NA 33/F POS Plaza, 1600 Century Avenue, Shanghai 200122 上海浦东世纪大道1600号浦项商务广场 33楼, 邮编：200122 +86 21 6105 1500 www.panalpina com QUALITY CONTROL SERVICES Block A, No. 9 Lou Cun Si Shan Industrial Zone, Guang Ming New Economic Zone Bao‘An, Shenzhen 深圳市宝安区光明新区楼山工业区9号A区 +755 8222 0288 www.qcs.com SCHENKER Room 3802-3806, Raffles City (Office Tower) No.268 Xi Zang Zhong Road, Shanghai 200001, P.R.China 上海市黄浦区西藏中路268号来福士广场 3802-3806室邮编：200001 +86 21 6170 8888 www.schenker com cn SCHNEIDER LOGISTICS UC Tower,Suite 1605,No.500 Fu Shan Road,Shanghai,China 上海浦东福山路500号城建国际中心1605室 +86 21 5058 7970 www.schneider.com

LOGISTIC SERVICE PROVIDERS SCHOELLER ARCA SYSTEMS Schoeller Arca Systems 舒乐阿卡 Shanghai China 上海 中国 Unit 5/A Guangdong Development Bank Tower No. 555, Xu Jia Hui Road 广东发展银行大厦5楼A座 200023 +86 21 6390 1261/62 www.schoellerarcasystems.com SDV INTERNATIONAL LOGISTICS Room 2602 Ciro‘s Plaze 388 West Nanjing Road Shanghai 200003 南京西路388号仙乐斯广场2602室 上海 200003 +86 21 2308 0500 www.sdvchina.com SHENZHEN ST-ANDA LOGISTICS 18/F, Times Plaza, No. 1 Taizi Road, Shekou, Shenzhen, PRC 518067 深圳蛇口太子路1号新时代广场1801室 邮编518067 +86 755 2681 9188 www.st-anda com TOTAL LOGISTICS +44 (0)118 977 3027 www.total-logisitics eu.com TOLL AUTO LOGISTICS D1/E2, 31F, East Building, Hi-Tech King World, No. 668 Beijing East Road, Shanghai Postcode 200001 China 中国上海市北京东路668号 科技 京城东楼31楼D1/E2 邮编：200001 +86 21 5308 2266 www.tollgroup com

YRC LOGISTICS Room 1307-08 Lan Sheng Building No. 8, Huai Hai Road (M) Shanghai 200021, P.R.C. 上海淮海中路8号兰生大厦 1307-08室 邮编： 200021 +86 21 6137 7668 www.yrclogistics.com UPS 23F and 33F China Insurance Building, 166 Lujiazui Dong Road, Pudong, Shanghai, 200120 上海市浦东新区陆家嘴东路166号中国保 险大 厦23楼,200120 +86 21 3896 5599 www.UPS com WERNER GLOBAL LOGISTICS South 23/F Harbour Building 1 Fenghe Road, Shanghai, China 上海市浦东新区丰和路1号港务大厦南楼 23楼 +86 21 3887 9520 www.werner.com MAY/JUNE 2008

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CLASSIFIEDLISTINGS

CONSULTING FIRMS YRC LOGISTICS Room 1307-08 Lan Sheng Building No. 8, Huai Hai Road (M) Shanghai 200021, P.R.C. 上海淮海中路8号兰生大厦1307-08室 邮编： 200021 +86 21 6137 7668 www.yrclogistics.com

DRAGON SOURCING Suite 1502, Jin Tian Di International Mansions 998, Renmin Road Shanghai, 200021, P R.China 上海市人民路998号今天地国际大厦 1502室, 20002 +86 21 61413955 www.dragonsourcing.com

YATFAI LOGISTICS GROUP 39H, Fortune Building, 88 Fuhua San Road Futian District, Shenzhen, Guangdong Province, P.R.C. 广东省 深圳市 福田区 福华三路88号, 财富大厦 39楼 H座 +86 0755 3336 6898 www.yatfai.com

ESTABLISH Room 609, Tian An Centre No. 338 West Nanjing Road Shanghai 200003 上海南京西路338号天安中心609室 邮编 ：200003 +86 21 6359 1980/0486 www.establish.cn

CONSULTING FIRMS ACCENTURE Shanghai 上海 30F, Central Plaza, No. 381 Huaihai Road, Shanghai, 200020 上海市淮海中路381号中环广场30楼 邮编：200020 +86 21 2305 3333 www.accenture.cn ALLIED SUPPLY CHAIN MANAGEMENT SOLUTIONS 407, Building 2, Professional Development Center, Shanghai Institute of Foreign Trade, 620 Gubei Road, Shanghai, 200336 上海市古北路620号上海对外贸易学院学位 后培训基地2号楼407室, 200336 +86 21 6445 8640 www.ascms.com BAKER & McKENZIE 14/F, Hutchison House 10 Harcourt Road Hong Kong 香港夏悫道10号和记大厦14楼 +852 2846 1888 www.bakernet.com BARKAWI A 705, Dong fang Road, Eton Place, Pu dong New District, Shanghai, P.R. China 200120 东方路裕景国际商务广场A705室 +86 21 6859 9686 www.barkawi com CHAINALYTICS G9 Gamma Tower, Sigma Soft Tech Park, 7 White Field Main Road, Bangalore, Karnataka, India, 560066 +91 80 4125 4309 www.chainalytics.com DELOITTE CONSULT NG Room 2701-2704 Bund Center, 222 Yan An Road East, Shanghai 200002 上海市延安东路222号外滩中心 2701-2704室200002 +86 21 6141 8888 www.deloitte.com

HUDSON Unit 2302, 23/F Hongyi Plaza 288 Jiujiang Road Shanghai, China 200001 上海市九江路288号 宏伊国际广场23楼2302室 +86 21 2321 7888 www.hudson.com IBM GLOBAL BUSINESS SERVICE IBM 中国有限公司 北京市朝阳区工体北路甲 2号 盈科中心 IBM 大厦，25层 邮编：100027 +010 6361 8888 www.ibm.com/cn/zh/ INTEGRATED DECISION SYSTEMS CONSULTANCY No 511-1-302, Jingsong Wu Qu, Chaoyang District, Beijing, China 100021 中国北京100021 朝阳区劲松五区511-1-302 +86 134 6675 0455 www.idsc.com.sg JPMORGAN CHASE VASTERA INTERNATIONAL TRADE CONSULTING 23/F Citigroup Tower, 33 Huayuanshi Qiao Lu, Shanghai, 200120 Shanghai, China www.jpmorgan com/trade LLOYD ‘S REGISTER 20F Ocean Towers, 550 Yan An Dong Road, Shanghai 200001 上海市延安东路550号海洋大厦20楼， 邮编：2000012 +86 21 5158 5700 shanghai-eandt@lr org LOGISTICS RECRUITMENT 2B, Apollo Building No. 1440, Yan An Road © Shanghai 200040 上海市静安区延安中路1440号 阿波罗大厦2B 邮编： 200040 +86 21 6248 8606 www.logisticsrecruitment.com.cn

DEMAND MANAGEMENT SYSTEMS PO Box 6180, Norwest Business Park, Baulkham Hills BC NSW 2153 Sydney, 2153 Australia +612 9659 4555

LOWENDALMASAI 1505-1506 Hai Tong Tower, 689 Guangdong Road, Shanghai, 200001 上海市黄浦区广东路689号海通证券大厦 1505/1506室, 200001 +86 21 6341 1255 www.lowendalmasaichina cn

DESCARTES SYSTEMS 4106 China Development Bank Tower, No.500 Pudong Road (S), Shanghai, 200120, P R. China 中国上海浦东南路500号国家开发银行大厦 4106室 200120 +86 21 6109 5785 www.descartes.com

MANPOWER 36F, Xinmei Union Square, 999 Pudong Road (S), Shanghai, 200120, China 上海市浦东南路999号 新梅联合广场36楼邮编200120 +86 21 5878 2618 www.manpower.com.cn

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REAL ESTATE SERVICES MB SIM TECHNOLOGY Bldg. 8, 865 Changning Road, Shanghai 200050, P R. China 上海市长宁路865号8号楼5楼, 200050a +86 21 6240 5529 www.mbtech-group com MICHAEL PAGE INTERNATIONAL 601-603 Shanghai Kerry Centre 1515 Nanjing Road (West) Shanghai 200040, China 上海嘉里中心601- 603 南京西路1515号， 上海， 200040 +86 21 3222 4758 www.michaelpage com cn 7 ROCK 7/F Crystal Century Tower, 567 Weihai Lu, Shanghai 200041 上海市威海路567号晶彩世纪大厦7楼 200041 +86 21 6288 8766 www.sevenrock.com SUPPLY CHA N CONSULT NG Suite 404, 20 Donghu Road, Xuhui District, Shanghai, CHINA 200031 +86 21 5404 0818 www.supplychain-consulting.com TUV RHE NLAND 5-6/F AZIA Centre, 1233 Luijiazui Huan Lu, Shanghai,200120 上海市陆家嘴环路1233号汇亚大厦5/6楼, 200120 +86 21 6108 1188 www.chn.tuv.com

AMB PROPERTY CORPORATION Suite 2908, Plaza 66 II, 1366 Nanjing Road West, Shanghai 200040, China 中国上海南京西路1366号恒隆广场二座 2908单元 +86 21 6135 1688 www amb.com

BAOWAN INTERNATIONAL LOGISTIC +86 21 3379 4008 www.blogis.com.cn CB RICHARD ELLIS +86 21 2401 1200 www cbre.com.cn COLL ERS INTERNATIONAL PROPERTY CONSULTANS 16/F Hong Kong New World Tower, 300 Huaihai Zhong Road Shanghai, 200021, PRC 中国上海淮海中路300号 香港新世界大厦16楼 邮编 200021 +86 21 6141 3688 www colliers.com/china www.chainaonline.com

CLASSIFIEDLISTINGS

MagicBusCreative Grant-oh! Buchwald

Portrait photos • Event coverage • Product shots • Onsite/Facility photography

phone: +86 136 4165 6924 email: magicbuscreative@mac.com www.flickr.com/photos/gmartini ALDATA SOLUTIONS REAL ESTATE SERVICES GOODMAN GROUP 2107 - 2109, Shui On Plaza, 333, Huai Hai Road (M) Shanghai 200021 P.R.China 上海淮海中路333号瑞安广场2107-2109室 邮编：200021 +86 21 6133 2000 www.goodman.com GSE 27C Industry Building, 18 Cao Xi Bei Lu, Shanghai, 200030 上海市徐家汇漕溪北路18号实业大厦27C, 200030 +86 21 6427 9180 www.gsegroup.com JONES LANG LASALLE 25F, Plaza 66 Tower 2, 1366 Nanjing Road West, Shanghai 200040 上海市南京西路1366号恒隆广场2期25楼 200040 +86 21 6393 3333 www.joneslanglasalle com cn NEW CITY INVESTMENT MANAGEMENT Room 2602 Bank of Shanghai Tower, 168 Yin Chen Middle Road, Shanghai, China, 200120 上海银城中路168号上海银行大厦2602室, 200120 +86 21 3896 6388 www.newcitycorp com PROLOGIS 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, 200120 +86 21 6105 3999 www.prologis.com

Suite 805, Kerry Centre, 1515 Nanjing Road (W), Shanghai, 200040 上海市南京西路1515号嘉 里中心805室 200040 +86 21 5298 6622 www.gazeley.com www.chainaonline.com

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IT SOLUTIONS AND SOFTWARE 浦东软件园21号楼212-214室 +86 21 5080 5055/91 www.hmit.com.cn JDA SOFTWARE 2905 United Plaza, 1468 Nanjing Xi Road, Shanghai 200040 上海市南京西路1468号 中欣大厦2905室 200040 +86 21 6289 7979 www.jda com MANHATTAN Unit 2110, 21/F, Shui On Plaza, 333 Huaihai Zhong Lu, Shanghai, 200021 Shanghai, 200021 China 上海淮海中路333号瑞安广场21楼2110室 www.manh com

REAL ESTATE SERVICES

MAPLETREE LOGISTICS TRUST MANAGEMENT Suite 801, AZIA Center,1233 Lujiazui Road, Shanghai 200120 上海市浦东新区陆家嘴环路 1233号汇亚大厦 801室， 200120 +86 21 5840 0658 www.mapletreelogisticstrust. com

MODUSLINK SOFTWARE 9/99, Xiunan Jie, Xinxiu Estate, Shenzhen, Guangdong, 518002 广东省深圳市罗湖区新秀村秀南街99号第九 栋, 518002 +86 755 2511 1128 www.moduslink com REDPRAIRIE Cloud-9 Mansion 7F 711 No.1118, West Yan‘an Road Shanghai 200052, P R.China 中国上海市延安西路1118号 龙之梦大厦7楼711室 邮编：200052 www.RedPrairie.com

IT SOLUTIONS AND SOFTWARE 国 朝 国 贸 座 12层,邮编：100025 +86 10 6589 8888 www sap.com/china SEEBURGER 1409B Cimic Tower800 Shangcheng Rd. Shanghai, PRC, 200120 中国上海浦东新区商城路800号斯米克大厦 14层1409B 邮编：200120 +86 21 5835 4735 www seeburger.cn TRADECARD F1101-02, Block A, Hailrun Complex, No 6021 ShenZhen Blvd, ShenZhen.

P.R.C. (518040) 香港亚太贸易卡有限公司深圳代表处 深圳市福田区深南大道6021号喜年中心A座 1101-02室（518040） +86 755 8830 9030 www tradecard com UNISYS Unisys (China) Co., Ltd. 优利系统(中国)有限公司 Unit 601, Level 6, Tower E1, Oriental Plaza, Dongcheng District, Beijing 100738 P R.C 北京市东城区东方广场东一办公楼6层 601室 100738 +86 10 8518 3232 www unisys.com

SAP SOFTWARE SYSTEM 12th Floor,Tower 2, China Central Place, No.79 Jianguo Rd, Chaoyang

IT SOLUTIONS AND SOFTWARE THAILAND +66 1920 6907 www.aldata-solution com BARLOWORD OPT MUS 35/F UOB Plaza 1, 80 Raffles Place, Singapore, 48624 , 48624 Singapore +65 6248 4722 www.barloworldoptimus.com BRAVOSOLUTION BravoSolution China CO., Limited 19F-08, 129 Yan An Road West, Chinese Overseas Building Shanghai 200040 PR China 上海市静安区延安西路129号华侨大厦19楼 08室,200040 +86 21 6145 8500 www.bravosolution.com EMPTORIS Emptoris, Inc. PO Box 173 Clementi Central Post Office Singapore 911206 +65 6778 6395 www.emptoris com

To take out an ad in CHaINA, contact Kaman Cheng tel: +86 (21) 5102 1617/18 email: kaman@chainamagazine.com

MAY/JUNE 2008

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COMPANYINDEX

EVENTSCALENDAR

Adidas.....................................................................18 Admark China.........................................................45 AGILITY..................................................................55 AIG Investments.....................................................15 ALARIS......................................................................9 Alibaba.com............................................................23 Allianz.....................................................................15 AMD................................................................... 20,21 Andlinge & Company.............................................46 Anhui Conch Cement.............................................39 ANZ.........................................................................15 AOC BV...................................................................17 AT&T.......................................................................50 Atos consulting.......................................................20 AXA.........................................................................14 Banco do Brazil......................................................15 Bayern Munich.......................................................46 BDP International.....................................................8 Birkart Globistics....................................................55 BMW.................................................................. 17,21 Booz Allen..............................................................24 Buffalo milk............................................................14 Ceva logistic ..................................................... 10,26 Chaina.....................................................................49 Changhe Automobile.............................................39 Changhong.............................................................39 Chep................................................................... 28,64 Chery.......................................................................39 Coca cola bottlers...................................................28 COO . .....................................................................11 Dell..........................................................................20 Fisher Controls International.................................57 Ford.........................................................................16 Fullyear-Brother Enterprise Co..............................57 Gazeley.............................................................. 19,52 General Motors.................................................. 16,18 GETAC.....................................................................54 Global Supply Chain Council................. 12,24,43,44 Haier and Royalstar................................................39 Hefei Forklift Factory.............................................39 Hewitt Associate.....................................................44 Hewlett Packard.....................................................20 Hitachi.....................................................................39 Hobby-Lobby..........................................................57 HSBC.......................................................................15 Huawei....................................................................19 IBM..........................................................................19 Ingersoll Rand.........................................................45 JAC...........................................................................39 JC Penney,...............................................................57 Kawasaki Kisen Kaisha..........................................40 Knight Frank...........................................................35 Kodak......................................................................19 Kraft foods..............................................................11 Leroy Merlin............................................................19 LG............................................................................16 LowendalMasai.......................................................47 Lucent&kraft...........................................................50 M Macalline.............................................................19 Magic Bus Company..............................................61 Mapletree................................................................27 Meiling....................................................................39 Merrill Lynch & Co., Inc.........................................14 Messe Munchen international................................63 Metro.......................................................................19 Mico Bosch & Conti...............................................21 midea...................................................................6,39 Minmetals................................................................18 Mitsubishi................................................................15 Motorola..................................................................19 MSC Industrial Supply Co......................................55 Nike.........................................................................14 Ningbo....................................................................48 Nokia.......................................................................11 Parkson...................................................................19 Peugeot Citroen......................................................16 RBS Group..............................................................15 Rockwell Automation.............................................16 Sai Cheng Logistics.................................................51 Salton Inc................................................................57 Samsung........................................................ 11,21,22 Sanofi-Aventis.........................................................16 Schneider Electric...................................................45 Sinotrans.................................................................32 SourceMakeDeliver.................................................61 StyleMark Inc.,........................................................57 Swatch.....................................................................16 Tesco.......................................................................55 UFJ...........................................................................15 Volkswagen.............................................................16 Wal-Mart............................................................. 13,19 YAT FAI Logistics....................................................55 YRC Logistics..................................................... 15,55

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