2009 May-Jun Issue

RETAIL DISTRIBUTION Delivering to the masses

COLD CHAIN

CONTAINER HOMES

Sinodis delivers fresh

Sustainable housing

EXPRESS DELIVERY

WIND POWER

FedEx bets domestic

MAY/JUNE 2009

China’s energy future

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Move Forward

WESTERN DIGITAL HAS FREDERICK ANTONY. Facing a surge in worldwide demand for their hard-drives, Western Digital asked Agility’s Frederick Antony to ramp up inventory velocity. With little lead time, he planned and executed a substantial expansion of their Malaysian distribution center that increased capacity, improved pallet position, and added the efficiencies of advanced tracking software. In doubling their output, Frederick showed the high-tech leader that he shares their passion for storage and speed.

WESTERN DIGITAL HAS AGILITY.

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FROM THE EDITOR Researcher Carl Pan Event Manager Giselle Yang Photographers Grant-Oh! Buchwald Jackson Lowen Contributing Writers Duane Bolinger, Gary Bowerman, Patrick Daly, David Dayton, Chris Deans, Warwick Fahy, Jason Hemens, Tielman Nieuwoudt

Managing Editor & Publisher Russel Beron Editorial Advisor Max Henry Art Director How Xu Graphic Designer Acco Fang Finance Manager Jenny Kim Circulation Manager Carl Pan

Editorial Advisory Board Jeff Broadhurst, Vincent Chang, Chris Deans, Marnix Ettema, John D. Van Fleet, Jean Luc Laboucheix, JP Sexton, Aldo Spaanjaars, Yann Teste, Guy Tran

CHaINA Sponsorship For information on sponsorship opportunities with CHaINA Magazine, please contact: Russel Beron rberon@supplychain.cn DISTRIBUTION We distribute CHaINA free by direct mail to subscribers in Greater China 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.

For subscription inquiries, please contact: subs@chainamagazine.com.

Contact us to receive a free digital or print edition of the magazine.

CHaINA Magazine is distributed through selected locations in Shanghai, including hotels, restaurants, business centers, airport lounges and other key locations.

As we near the halfway mark of 2009, Shanghai‘s late Spring is heralding modest signs of recovery.

Crisis is a word we hope to bury except for the odd day in the distant future when we lapse into tales to our grandchildren about how “I lived through the great economic crisis of 2009.”

The stirring of the Chinese economy is evinced by commodity prices which show a slight upward curve, after dropping off the cliff several months ago. Stock markets are showing similar confidence, along with China manufacturing which expanded in April for the first time in nine months.

On this roller coaster ride, it might not be time for celebration yet, but it feels like the biggest battle is over and we can at least account for the casualties and begin to regroup. The decimated U.S. auto industry is one of the unfortunates which might spell opportunity for SAIC, GM’s stateowned JV partner.

Our look at China’s retail and distribution market confirms that the Chinese masses are still the great hope, luring wounded foreign retailers into a different minefield, the Chinese market. The challenge from a supply chain point of view is to figure out what the masses want and then be able to deliver it to them fast. In this vein, FedEx is winning business by going toe-to-toe on price with local “kuadi” or express providers.

Counterfeit and illegal supply chains are an interesting angle to the retail challenge. Even Microsoft has learned to price their products so that Chinese consumers can afford them and distribute them in ways that limit their risk. Our feature story suggests that taking on counterfeiters is as much about innovation of products and supply chains, as it is about IP protection. If that’s not enough to handle, there’s still the problem of getting Chinese consumers to loosen their grip on the savings mattress.

Comments and Feedback We welcome feedback and comments about our content or any issues relating to supply chain management or trade in China.

Please email any comments to: comment@supplychain.cn

Russel Beron Publisher and Managing Editor CHaINA Magazine

Chaina magazine’s sponsors:

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.

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MAY/JUNE 2009

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FEATURE STORIE

33

COMPANY PROFILE

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Eddy Chan, Head of FedEx China talks about FedEx’s plans for China

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SPECIAL FEATURE

A closer look at counterfeit supply chains in China

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EXECUTIVE PROFILE

10

Interview with Jean Pierre Chesse, Founder and CEO of Sinodis, a fast rising food importer and cold chain logistics service provider in China

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THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS

MAY/JUNE 2009

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CONTENTS

THE NUMBERS 8 Wind power rises in China COMPANY PROFILE 10 Interview with Jacques van Niekerk, Supply Chain Director, Holcim Cement

Retail and Distribution in China

46

INDUSTRY VOICES 16 Opinions on how to balance short term cost cutting with long term objectives SOFT SKILLS 17 Tips for employees to survive and thrive in the current economic climate

How to assess supplier health using financial metrics

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HOME GROWN 44 Profile of e-Future Information Technology, a Chinese supply chain software developer BOOK REVIEW 45 Business Leadership in China, by Frank Gallo EVENT UPDATE 46 Dr. Lei Lei, Rutgers Business Schools delivers talk on “Strategies for Managing Global Operations

20 Economic Indicators - Statistics and numbers to watch

48 Review of selected China Supply Chain Council workgroup lunches

24 Supply Chain Management - A roundup of supply chain news

MOVERS & SHAKERS 50 A review of executive movement

26 Chinese Media - A selection of articles from the Chinese Media

KNOW HOW 52 Six big ideas to cut costs and improve profitability

29 Vietnam Roundup - A selection of news relevant to operations in Veitnam

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SCM GADGETS 40 A use for surplus shipping containers: sustainable housing

NEWS ROUNDUP 18 The Big Picture - A roundup of news relevant to business operations in China

28 India Roundup - A selection of news relevant to operations in India

INSIDE VIEW

HR FOCUS 38 Recruiter, Michael Page International offers advice on maintaining staff morale in a downturn

SPONSORED FEATURE 30 Kuhne School of Logistics and Management in Hamburg, Germany, attracts Chinese professionals to its MBA in Logistics Management

PRODUCT RECALLS 54 Consumer product recalls in the U.S. FINAL WORD 56 Applying the logic of physics to supply chain management 58 CLASSIFIED LISTINGS 62 COMPANY INDEX 62 EVENTS CALENDAR

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China Shangdong Haiyang Wind Power Plant 3 in Northereastern China. Land-based wind farms such as this, as well as offshore wind farms are experiencing double digit growth, which is promising for a country so dependent on coal energy.

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MAY/JUNE 2009

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THENUMBERS

CHINA BLOWING IN THE WIND While the global crisis has focused attention away from the environment and green issues, the interest in wind power seems unaffected. Wind power both through both land and off-shore based wind farms is experiencing double digit growth in China.

3 12% 64% 20 million

- The ranking of wind power in China as a source of electricity, following thermal and hydro power.

- The amount of the world’s power that wind is expected to provide by 2020.

- The amount of growth that China’s windpower is expected to achieve in 2009 versus 2008.

kilowatts The amount of installed wind power capacity expected for China in 2009.

580 billion

RMB - The amount China will spend to expand its energy sector in 2009, including spending on solar, wind, nuclear and coal firing plants.

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9

EXECUTIVEPROFILE

All

the cheese in China, delivered fresh

Jean Pierre Chesse is the founder and CEO of Sinodis, a food importer and cold chain logistics service provider in China. CHaINA’s editor, Russel Beron spoke with Mr. Chesse about the company’s origins and future growth plans in China. : How long have you been in China?

Jean Pierre Chesse (JPC): 15 years. I came here when I was 23 to work for a French pharmaceutical company, Sanofi. They used to have a food business and I was in charge of launching food products in China. I did that for 3 years from 1993-1996 and learnt how to import and distribute product in China. We introduced processed cheese to the Chinese market.

What was the market like then?

JPC: It was the first time foreign cheese was introduced in China. There was no market. We were introducing something to people who didn’t want to buy it.

Do Chinese people like Cheese now?

JPC: It’s getting better now. 15 years ago it was a small business. So I worked there for 3 years and set up Sinodis in 1996. Sinodis now has been running 13 years and along the way, we’ve done all the mistakes as you can imagine.

What were the some of the biggest mistakes?

JPC: Well, mistakes like basically assuming that once you get the channel of import and distribution then you can sell everything. That was the wrong assumption. Management mistakes, like trying to grow too fast.

What was the next stage in your business?

JPC: JPC: Initially we represented French products only, then we contracting with Carrefour to import

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their own Carrefour brand products which we are still doing 10 years later. We then expanded our suppliers from different countries. We dealt with many crises, such as the dioxine crisis or mad cow disease in Europe. 2001 was a big year for us, when we expanded to food services including hotel, restaurant, bakery products and catering. That grew very quickly, compared with the retail business.

Why did they choose you?

JPC: They didn’t have a reliable company able to provide them with what they need. I always say that 60-70 percent of our business is about supply chain. It’s all about the ability to move the product from point A which is 10,000 kilometers away to point B, which is a receiving yard of a hotel or a supermarket, in a good condition with the perfect temperature and that is what we become very strong at.

What happened with your restructuring in 2003, what did you do?

JPC: We shortened people and we stopped the non-profitable part of our business. From 2004 to 2008, average growth per year was 40-45 percent. In 2008 we had no debt and a 5 year track record of massive growth and strong profit. More and more brands wanted to work with us and our distribution networks were expanding, it was very frustrating to develop only on auto financing and that’s why we accepted the offer from Edmond de Rothschild Private Equity China to become a minority investor.

The investment will allow us to boost our operations in the next few years.

Where is the money going?

JPC: the first thing we did was to open a 5,000 square meter distribution center in Shanghai. It is 100 percent operational and is already full. We have about 1,500 square meters of 15 degree, about 800 square meters of 5 degree and about 300 square meters of minus 18 degree. We also have 2,000 square meters of dry goods with packing facilities inside.

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EXECUTIVEPROFILE How important is a national network?

JPC: We realized through our work with supplying food to the Olympics that a lot of people value a national network, multi-temperature of food distribution, with temperatures including -18C, 5, 17 and Ambient. A lot of people value our supply chain and distribution system, especially given our volumes. Before we had 3 business units -- retail, food service and wholesale -- then we added a new business unit which we call food supply chain which is very similar to QSR (Quick Serve Restaurant) in the US. It gives us the ability to take care of the supply chain for major food and retail chains. We do the importation and we also own the goods.

by 10 times for about 3 months.

Have you ever thought about opening a retail store?

JPC: It is a different business, but we’d be happy to partner with someone to open a gourmet store, in fact we supply many gourmet stores in China. Down the road we’d be more looking at building and promoting our own brands.

Who are your customers?

JPC: We now supply all Carrefour stores in China, but Carrefour and other foreign retailers are only a part of our business. We have around 2,000 customers in 66 cities in China which include all the hotels chains, bakery chains like 85C, Paul, Christine and others. We also supply Lianhua, Lotus, Hualian and other Chinese supermarkets which need imported products.

Where do you see the biggest potential in your business sector?

JPC: We see massive growth in the distribution of the product made in China mainly by international companies. Basically all the big international players today who have been here for 5 years or more are looking for people like us to help them access the thousands of customers in food service.

How much lead time do you need for delivery?

JPC: Depending on the product and location, in most places, even Kunming, we are able to deliver on every Friday to their store. The order might be placed on Monday the week before, on Friday Jean Pierre Chesse founded food importer Sinodis in it leaves the country of origin, arriving in China on 1996. 10 years later with 2,000 customers and a cash injection from Edmond de Rothschild Private Equity Monday, clearing customs on Tuesday and arriving China, the company is primed for growth. in Kunming by Friday. To be able to do this, you need to carry a large range of quality imported products that arrived the same day in China from various countries. Is there a Chinese competitor that can do what SinoSuch unique multi-temperature supply chains allow us to dis does? offer freshly made products with a long remaining shelf JPC: Brands will not entrust somebody without very good life for our customers. logistics, and who don’t understand the market and brand building. You don’t want to put your brand into someone’s How did the milk scandal impact your business? hands who doesn’t really know the business. There are few JPC: We had a stock of 3 months of imported milk prod- companies who can do what we do. ucts at the time and that was consumed in 2-3 weeks.

We tried to control the inventory but it was absolutely im- Any impact from this global economic situation? possible. By the time we realized there was a crisis, we JPC: I think the main impact is for exporters, we are still started to put massive quantities of President milk on the strong in the retail side. We have such a range of customsea very quickly, that’s why the first milk that came back ers, from retail to supply chain and they are still doing to the shelf was President milk. Our sales volumes went up very well.

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COMPANYPROFILE

Vietnam

By Tielman Nieuwoudt, Principal The Supply Chain Lab, www.thesupplychainlab.com

Jacques Van Niekerk is the Supply Chain Director of Holcim (Vietnam) Ltd., a leading producer of cement and ready-mix concrete. Tielman Nieuwoudt spoke with him about the supply chain side of Holcim’s Vietnam operation.

TN: Can you give us an overview of your company in Vietnam?

JvN: Holcim (Vietnam) Ltd. is a leading producer of cement and ready-mix concrete. The company was registered in February 1994 as a joint-venture company between Holcim Ltd. and Vietnam Cement Industry Corporation (VICEM), a state owned enterprise of Vietnam.

Holcim Vietnam employs around 1,500 people at its five main sites. Our current focus is in South Vietnam and in particular Ho Chi Minh City and the Mekong Delta.

TN: With the current economic climate and with new capacity coming online, experts have warned of an oversupply in the Vietnam market. How do you think oversupply will affect you?

JvN: There is a concern about oversupply. However, globally there is an oversupply and the situation is not unique to Vietnam. Countries like the US used to be net importers of cement but are now net exporters. In Vietnam there is more capacity being built and this will put more pressure on prices. However, we are very positive about Vietnam’s economic prospects and continued foreign direct investment. The future of infrastructure projects is bright and this will have a positive impact on our business.

TN: Can you tell us more about your distribution strategy?

JvN: We currently have direct control over our bulk delivery.

We operate a fleet of bulk vehicles that we schedule and control to ensure improved efficiency and improved value for customers. Currently, bulk sales volumes represent about 35% of our total sales with bagged cement being the balance. The level of bulk sales is often used as an indicator of relative sophistication of a market. In Vietnam this ratio is steadily

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growing as the market develops. Compared with some other markets we have a lot of scope for growth. In the USA or Europe for example bulk sales represent 95% of volumes in many sub markets. We expect to see a growth in bulk sales and bulk delivery will form a key part of our distribution strategy in the future. For our bag business, customers are collecting directly from our facilities and it is definitely a part of our supply chain that we want to improve on. With better control and scheduling, we can reduce the bottlenecks at our facilities to improve cycle times and so improve customer service.

TN: How important are distributors to your business?

JvN: Distributors form an important part of our supply chain strategy. At the same time we have a need to get closer to our end consumer to better understand how we could add further value and our distributor network is one area we would like to focus on to help deliver improvement. We have several distributor programs and the key is to find distributors that know the market and add value to our business. This can sometimes be challenging. The market in Vietnam is highly fragmented and competitive and exclusive distributors are rare. It is not uncommon in Vietnam for a distributor to sell three different brands of cement.

TN: Can you give us an overview of the technology you are using in your supply chain?

JvN: Holcim uses SAP in all of the more than seventy countries where we operate. We are currently not integrated up to distributor level and it is definitely something we will address in the not too distant future.

TN: Transportation overloading is a big problem in Vietnam. How are you addressing this as a company?

JvN: Overloading is a huge problem in Vietnam and it is something that Holcim takes very seriously. We also want to move away from old technology tankers and we see a big potential for aluminum tankers with a bigger capacity.

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Photo courtesy: Rensis Ho

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COMPANYPROFILE

FedEx

eyes China’s colossal domestic express business In the last few months, FedEx has won a significant share of the domestic express market through competitive pricing and service. CHaINA’s Editor, Russel Beron spoke with Eddy Chan, Head of FedEx China, about the company’s history and plans in China. : What is your background?

Eddy Chan (EC): I was born and educated in Hong Kong, and FedEx was my first job, I joined the company in 1985 in Hong Kong as an Account Executive, basically I was a salesman. I grew with the company, moving to Taiwan, and then to Hong Kong, and Beijing for a couple of years.

In 2004, we moved the regional headquarter from Hong Kong to Shanghai.

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market opened to foreign companies and we took advantage of these changes to buy back the share from DTW on the international express side. We also bought the assets of DTW to run the domestic express service. In 2007, we became a wholly foreign owned enterprise and in March, 2007 we became the first international express company to formally launch domestic time definite service.

What is the history of FedEx in China?

EC: We have been in the China market since 1984. When we entered into the market, like a lot of foreign transportation companies, we appointed an agent to serve our customers here in China. In 1999, we formed a joint-venture in China with a company called DTW Group. DTW is a Tianjin based transportation company, and they were our agent before; we worked with each other very well.

Obviously you have talked about the positive side of FedEx’s relationship with DTW, but there were also reports of complications?

EC: You need to understand that a Joint venture is more or less like a marriage, where you need to work cooperatively for mutual benefit. Our common objective was to develop the business well, so our customers would benefit. We also had a clear division of labor. DTW knew the market well, so they helped build government relations and develop the market. FedEx brought operational and management strengths. Because the division of labor was very clear, and we had open communication with each other, conflict between the 2 parties was minimized.

How well did the Joint Venture work?

EC: In retrospect, it was a very good decision to form a JV with DTW. In 1998, before the JV, we had around 250 employees, and now we have around 7,000. In 1999, we were serving 144 cities in China, and now we are serving 230 cities. After China entered the WTO, the transportation

What’s the biggest challenge for FedEx in China?

EC: I’d say it is to find the right talent to work with our group. In China, there are a lot of people, but some of them may not understand western standards. We have created lots of programs to address this challenge. We had people from H.K., Taiwan, Singapore, Malaysia and

MAY/JUNE 2009

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COMPANYPROFILE the U.S. come as mentors to help our local team. Over 85 percent of the managers in China are local and are promoted from within.

What’s the biggest success for FedEx in China?

EC: Even though the operating environment here is very challenging, our service level in China is actually as good as in other developed countries. Another success is that we are very actively involved in CSR activities in China and have actively mobilized our employees to participate in those activities.

I imagine it has been a challenge to win Chinese customers in a market where courier costs are so low?

EC: Domestic customers are very demanding, I can’t say that they’re just focused on price, but they definitely know what they want. So you need to prove to your customers that the amount of money they spend on your service is justified.

How do you differentiate in China from TNT, UPS, DHL and other express companies?

EC: We believe that if we treat our people well, then our people will provide better service to the customer, who will buy our service and then we can earn more money to

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reinvest on our people. So we provide very good training, and a good environment for them to develop their career.

We also try and stay ahead of the competition. FedEx was the first international express company to serve China.

FedEx was also the first international express company to set up an Asia-Pacific center here. We are also the first international company to offer comprehensive time definite domestic service in China.

Is domestic time definite service the area you are targeting for biggest growth?

EC: Growth potential of that sector is huge, partly because we are small. Also, for domestic consumption, the growth rate is so fast. Because the Chinese government is promoting domestic consumption, this offers a lot of opportunities for us.

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INDUSTRYVOICES

H

ow can companies balance short-term cost cutting with the need to be ready when the economy recovers?

The first reaction most companies have made in the face of crisis is to bring out the knife to cut travel, cut employees, cut training, cut marketing and any other non-essential costs. To get an assessment of the efficacy of such measures, we asked industry professionals on our Linked-In community group their opinion on short term cost cutting.

Jason Lo Strategy & Marketing Director, North Asia Honeywell Building Solutions

Joe Zhou General Manager HomeFront International

Sharon Elshaug Creative Business and IT Solution Architect, Insightful Solutions

Saikrishna Bendapudi Vice President, Operations

Why not think about this more positively? -cutting costs will only enable you to preserve capital for investment for the future. If you’ve got a sound strategy to begin with, and the business economics are likely to recover, then you will need to invest in your core business sooner or later.

What we have seen in China is not an issue of burning more or less cash to stay afloat, but a complete shutdown to preserve funds and wait for a rebound. This is especially true of small and medium suppliers.

The key is to make the surviving suppliers leaner and stronger, securing their competitive advantage for the future.

Don’t forget to examine the process from your customer’s viewpoint - eliminate any nonvalue added steps or processes, and check your assumptions at the door. For those processes not considered strategic in nature, consolidate, eliminate and/or streamline those processes to maximize savings.

I believe cost cutting has more to do with inefficiencies with the system and is a continuous excercise, neither short term nor long term.

Cost reductions arising out of a different business climate should not be called ‘cost cutting,’ It is more appropriate to refer to them as a new cost structure to run a new business.

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SOFTSKILLS

Don’t just survive, start to thrive Despite the doom and gloom of a slowing economy, you can enhance your reputation and skills to become a key player

R

etrenchment is now a reality across China as companies’ prepare for slower growth. Assuming you want to keep your job, three practical tips will help get you through this rough patch.

Turn off the TV Win the mind game. Professional sports people are coached to block out all negative thoughts and focus only on success. You must do the same. Remove all negative reminders of how bad the world is. You don’t need the TV on to know that things are rough. For one week, avoid all news stories on TV, in newspapers and the internet.

Instead, read non-fiction books, take a walk, visit the gym or swimming pool. Most ancient wisdom believes that you become that what you think about most. So start creating a picture of the person you want to become.

Once you have control of your mental state, you are ready to look at ways to become a more valuable team member.

Understand and strengthen your key relationships A large IT company recently retrenched 3% of their China team – well below industry natural attrition rates. A friend was one of those “selected”, and when I asked him why, he said that he didn’t get on well with his manager. It’s common HR knowledge that people don’t leave companies, they leave managers. Well in down times, this works the other way. Managers first remove people they don’t like. Is this fair? To my mind, yes it is! Because if you think that your technical skills alone are enough to build a successful managerial career, then you need an icepack on your neck. Soft skills – which include the ability to build good relationships - are essential.

Build good working relationships: your manager, your department head, the HR manager and also your direct reports. Middle management are getting cut to save costs. So unless you are known as a high performing manager, you are in trouble. Become more attentive to the objectives of your manager. How do they like information to be communicated to them? How can you better

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align with their goals and motivations? Invest some time to understand more about your colleagues. This is not only good for your career, but you will enjoy your job more.

While building these connections, you can also skill up your toolkit.

Expand your comfort zone Even if your company has frozen training programs, you can still improve your personal skillset with low-cost no-cost methods.

One way is to become more active inside your company. Look and ask around for opportunities to support colleagues in areas you want to understand more. Offer to support on-going projects. Take colleagues to lunch and ask them about their work roles. This broadens your understanding for your company and industry and increases your personal visibility.

Focus on building up your soft skills. For communication, join public speaking organizations like Toastmasters, where you can master self-expression in front of a supportive audience. Presentation abilities cross over into your business life as a life-long skill. Look out for free and low cost evening seminars where invited experts share their knowledge and experience. Make sure you ask them questions. Look for on-line learning. Your company may have a learning database that you can use to upgrade your industry knowledge.

With podcasting so popular now, you can find good content in every subject. Search using your industry key words, chances are someone is already blogging and podcasting on it.

Today we looked at three ways to thrive in a rough recession.

Control the information you allow into your mind, find and strengthen key relationships and expand your comfort zone by learning new skills.

Warwick John Fahy coaches managers to higher performance across Asia. He leads interactive, engaging workshops that improve essential management skills. He is the author of The One Minute Presenter available at www.oneminutepresenter.com

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NEWSROUNDUP

The Big Picture A roundup of news relevant to operations in China shipping lines and customers handle their documentation and operations for shipments bound for China.

Policy Healthcare for the masses – coming soon?

The Chinese government is planning to provide universal health care by 2020.

Quality

Customs

Guangdong FDA finds carcinogen in hair dye

China: new rule for 24 hour advance manifest

The Guangdong Provincial Consumers’ Commission recently exposed five kinds of hair dye as containing harmful chemicals, and now Guangdong Provincial Food and Drug Administration has reported that six more hair dye products, made by five companies, have been found to contain m-Phenylenediamine. The main use of mPhenylenediamine is as an industrial dye.

It is widely known as a chemical that can cause gene mutations, cancer, or body malformation. It is banned for use in cosmetics.

China plans to impose new rules governing entry of cargo in which all cargo bound for China will be subject to the 24 hours advance manifest rule. In shipping terminology a manifest is a document that lists all cargo carried on a specific vessel. With the new regulation, carriers undertaking shipments to China must submit manifest details to Chinese customs 24 hours before a ship arrives at the port of loading anywhere in the world. The new regulation will have a significant impact on the way

The Chinese Central Government announced health care reform guidelines on April 8th that are scheduled to take place over the course of the next ten years, marking a huge step forward towards providing universal health care for the Chinese population. The government has been testing these guidelines over the last few years in Chengdu with great success.

Their primary goal is to provide universal and fair care and, as part of this most recent announcement, they invested an initial US$124 billion into the current health care system. This influx is intended to specifically target the needs of the rural, poor, unemployed, and migrant workers.

Foreign ban on China express mail China’s parliament has revised the nation’s postal law in a move that will ban foreign delivery companies from handling domestic express mail. The revised law was passed by the National’s People’s Congress on April 24 despite opposition from express delivery giants including DHL, FedEx, and UPS, the China Daily reported.

Toyota recalls over 250,000 Camry cars Toyota Motor Corp will recall 259,119 Camry cars made between 2006 and last year on the mainland because of problems with the brake system. The sedans were made by Toyota’s JV with Guangzhou Automotive Industry Corp between 15 May 2006 and 3 March 2008. The recall is the second-biggest on the mainland after Honda Motor’s recall of 528,000 units in 2007 due to power-steering flaws.

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NEWSROUNDUP

Foreign delivery companies with operations in China will still be permitted to deliver express packages domestically, as well as express letters internationally. The Conference of Asia Pacific Express Carriers (CAPEC), which represents the four global giants lobbied against the amendment.

The provision would ‘erode the competitiveness of foreign invested firms against their domestic counterparts in the wider express market’, said a CAPEC statement.

Express delivery is big business in China, accounting for about 43 per cent of the $14 billion ($19.6 billion) in revenue in the nation’s postal system last year, the report said.

Legal Ice arrives hot from China A man has been charged with smuggling from China a precursor chemical commonly used to make the illegal drug ice hidden inside photo frames. A package containing about half a kilogram of the ice precursor ephedrine, hidden inside photo frames, was intercepted by customs officers at the Australia Post Sydney Gateway facility last month. Customs and Border Protection spokesman Richard Janeczko said the package was sent from China to a Melbourne address.

China manufacturing recovery?

Manufacturing in China expanded in April -- the first time in nine months -- a leading independent index reported recently, confirming official data indicating that the key sector is stabilising.

The CLSA China Purchasing Managers Index, or PMI, a closely watched indicator in the world’s third-largest economy, rose sharply to 50.1 in April from 44.8 the previous month.A number above 50 means manufacturing expanded.

The independent reading supported the trend seen in the official PMI that saw the sector rise to 53.5 in April, up from 52.4 in March.Manufacturing accounts for more than 40 percent of the economy in China, which has been hit hard by evaporating demand for its products.

- Associated Press

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HR

China’s new policy protecting the domestic express market has big players such as TNT, FedEx, DHL and UPS concerned.

China’s Best Employers Hewitt Associates recently released a study which revealed the best employers in China based on a survey of over 38,000 individual employees representing the views and opinions of over 500,000 employees. The Hewitt Best Employers in China 2009 Study is one of the largest pieces of employee research ever conducted in China.

China’s

top 10

Employers

1 2 3 4 5 6 7 8 9 10

SAS Institute Greater China Shenzhen Catic Group McDonald’s (China) Wal-Mart (China) Johnson & Johnson Medical (China) Aviva-Cofco Life Yantai Wanhua Polyurethanes General Motors (China) Ernst & Young China Vanke

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ECONOMICINDICATORS

Commodity prices hit China & US Metals Price History

By economic slowdown

US Cents / Lb

500.00 450.00

C - Copper C- Aluminum

400.00

C - Zinc C - Steel Scrap

350.00

C - Hot Rolled

300.00

C- Cold Rolled C - Galvanized

250.00

C - Stainless steel

200.00

US -Copper

150.00

US - Zinc

US -Aluminum

US - Steel Scrap

100.00

US - Hot Rolled US - Cold Rolled

50.00

US - Galvanized

0.00 2009-2-1

2008-10-1

2008-6-1

2008-2-1

2007-10-1

2007-6-1

2007-2-1

2006-10-1

2006-6-1

2006-2-1

2005-10-1

2005-6-1

2005-2-1

2004-10-1

2004-6-1

US-304 Stainless CR

On April 1st, 2009, China changed the export tariff on steel products: Hot rolled: 0% export tariff (no change).

Cold rolled: 13% export tariff refund (changed from 5%).

Galvanized: 13% export tariff refund (changed from 5%).

Pre-paint: 13% export tariff refund (changed from 5%).

China adds more companies to Forbes list Forbes magazine has added three more Chinese firms to its list of the world’s 2,000 biggest companies, bringing the total to 91 for 2009. Industrial and Commercial Bank of China (ICBC), the world’s biggest bank by market value, has been ranked 12th, the highest for a Chinese company, while the country’s largest oil producer China National Petroleum Corp is ranked 14th on the list and China Construction Bank is 23rd. (Ranking)

Hard facts China peasants’ annual income is expected to grow 6% in China in 2009, lower than the growth in the previous year, points out the Rural Economy Green Book released by the Chinese Academy of Social Sciences.

China’s economy grew 6.1% year-on-year in the first three months of 2009, down from 6.8% in the fourth quarter of 2008, the Wall Street Journal reported. This is the slowest quarterly growth in 17 years.

5% is the 14 year high in U.S. personal savings, compared to 46% in China

Ranking of mainland companies Industrial and Commercial Bank of China

12

China National Petroleum Corp

14

China Construction Bank

23

Bank of China

30

China Petrochemical Corp

33

China Life Insurance

72

China Telecom

139

Ping An Insurance

141

Bank of Communications

143

China Merchants Bank

221

Source: Taichi Automotive Newsletter

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ECONOMICINDICATORS

The World’s top shipping companies

by Twenty Foot Equivalent Unit (TEU) container capacity APM-Maersk Mediterranean Shipping Co. CMA CGM Group Evergreen Line Hapag-Lloyd COSCO Container Lines APL CSCL NYK Hanjin/ Senator World Fleet TEU Capacity

World Fleet TEU Capacity 13,108,859

APL 473,170

CSCL 450,928

NYK 433,000

COSCO Container Lines 485,796

Evergreen Line 624,536

Hapag-Lloyd 488,135

APM-Maersk 2,031,886

CMA CGM Group 988,141

Mediterranean Shipping Co. 1,469,865

Hanjin/ Senator 378,282

A little car for a lot of people

For most people in India, owning a car was beyond their reach - that is, until Tata Motors introduced the new Tata Nano, launched commercially in March 2009.

50,000 -

The amount of bookings that Tata Motors of India received for their new Tata micro car within 5 days of its release.

$2,200 -

The US dollar base price of the new Tata Nano

65% -

The number of India consumers that can now afford to buy a car - since the Tata introduction.

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MAY/JUNE 2009

21

Delivering solutions.

Contact us today by e-mail at: Marketing.China@dbschenker.com

Our global network links rail, road, water, and air.

We always have the ideal solution. DB Schenker can take on any order for you, economically and efficiently, from simple transport services all the way to complex logistical procedures. With more than 90,000 employees in around 130 countries and at approximately 2,000 locations, whatever the customer requires, we can do it.

Try us out at www.dbschenker.com

NEWSROUNDUP

Supply Chain Management A roundup of supply chain news

Supply Chain China supply chain problems cost Hornby £2m

When the facilities reach their final expansion stage, about 200 engineers and technicians will be working in the center,

UK model toy maker, Hornby’s model toy sales in the UK and Europe have continued to be constrained by supply chain issues with its Chinese supplier. Hornby’s main Chinese supplier, Sanda Kan was purchased by a Hong Kong based company in January 2009 and since then the new owners have been restructuring and integrating the Sanda Kan operations, resulting in disruption to customer service.

Hornby believes the delay in shipments from China cost it around £2 million.

Sourcing Li & Fung, posts 21% net drop, sees no growth for retailers

R&D Continental opens new China R&D center Continental AG has expanded its presence in China with a new Technology Center in Jiading, which will develop electronic and hydraulic brake systems, motor management systems and electronic controls for the Chinese automotive market. Two of Continental business units—Chassis and Safety, and Powertrain—have invested an undisclosed amount in Jiading, near Shanghai.

est car manufacturer after Japan which holds the pole position.

Li & Fung, Managing Director William Fung, speaking at a conference.

which includes design offices, test labs for brakes, undercarriage, drive systems as well as workshops. By 2013, Continental aims to achieve 25 percent of its sales in the region. China recently surpassed the United States as the world’s second larg-

Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., said customers will have no growth in 2009, as the Hong Kong company posted its first profit decline in seven years. “We expect existing customers to have no growth,” Managing Director William Fung said after the company’s 2008 net income fell 21 percent to HK$2.42 billion ($312 million), missing analyst estimates. “We are budgeting very conservatively.”

Li & Fung’s growth this year will be driven by acquisitions and outsourcing deals as clients report business is down as much as 20 percent, he said. The Hong Kong-based company has said sales may be boosted $1 billion by the purchase of Liz Claiborne Inc.’s sourcing business, whose brands include Kate Spade and Juicy Couture.

- Stephanie Wong, Bloomberg

Manufacturing Whirlpool closes Shanghai washing machine plant

Appliance maker, Whirlpool is optimizing its washing machine manufacturing operations in China to save costs.

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Whirlpool Corp is closing its washing machine manufacturing facility in Shanghai, China, eliminating 600 jobs, as the appliance maker consolidates its Chinese operations. Washing machine production will be moved to the Hisense-Whirlpool joint venture manufacturing plant in ZheJiang Province, where 900 new jobs will be created by the end of 2009, the company said.

The move will be beneficial because of the greater scale and size of the ZheJiang facility, which will optimize the use of resources and provide cost savings. “This consolidation, like other changes we’ve made as part of our global operating strategy, are difficult but necessary, to en-

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NEWSROUNDUP sure that Whirlpool Corporation maintains its leadership position in today’s changing global marketplace,” said Paulo F.M.O. Periquito, president of Whirlpool International.

- Reuters

Delphi to sell suspension, brakes units to China Delphi Corp. will sell its remaining suspension and brakes businesses to China’s newly founded Beijing West Industries Co. Ltd. as part of the U.S. auto-parts supplier’s restructuring efforts. Beijing West will acquire equipment, property and intellectual property in the deal. Two Chinese companies and the Beijing municipality have recently formed Beijing West Industries Co. Ltd. to own and run the Delphi businesses.

Logistics Air China plans to own cargo unit Air China plans to buy a 24% stake in its cargo unit, Air China Cargo, for USD105.1m. Air China, together with its indirect interest through China National Aviation, now holds a 76% stake in Air China Cargo. Upon completion of the deal, Air China will wholly own Air China Cargo, whose operations include general cargo services, mail and express delivery services.

Deutsche Bahn delays weekly China express

Agility opens new APEC headquarters and Logistics hub in Singapore

Deutsche Bahn (DB) Schenker has deAgility has announced the establishment layed the launch of its weekly Trans Euof an Asia Pacific headquarters in Singarope Express (TEE) container rail service pore and unveiled an additional state-oflinking South China and Russia with Westthe art Regional Distribution Centre (RDC ern Europe due to the global economic there, in order to strengthen its presence downturn. in Asia and provide a platform for further Following a test run late last year carrygrowth in the region. The new 14,500 sq. ing 50 containers of Fujitsu Siemens comm five storey bonded facility at Changi puter peripherals from Xiangtang in China North has three floors designed for an via Mongolia and Russia to Hamburg via Poland, the company said it would launch its regular service in February.

Meanwhile DB International, a wholly owned subsidiary of DB Mobility Logistics, has won a contract to construct a 162 mile freight line to carry coal from Ukhaa Khudag in the south of Mongolia to the Chinese border at (Left) Lim Siong Guan, Chairman, Singapore Gashuun Sukhait. Total Economic Development Board, (Right) Tarek Sultan, cost of the project is esChairman and Managing Director of Agility at timated at $800 million the opening ceremony of Agility’s new Regional Distribution Centre in Singapore on April 22, 2009. and construction work is scheduled to begin before ambient temperature warehouse with two the end of this year with first trains running levels for warehousing and a conventional in 2011. Mongolia is an important transit racking system and can hold a total of country between China and Russia and is 6,500 pallet positions. also assuming an increasingly significant role for rail freight traffic between Asia and Kerry Properties to build 3 loEurope said the company.

gistics parks

Kerry Properties, a Hong Kong-based property investment and development company, has earmarked HK$180 million to build logistics parks in Chengdu, Chongqing and Kunshan, according to the vice chairman of the firm’s logistics unit. Kerry Properties chose the locations based on where the most goods are produced. The three parks, covering potential floor area of 700,000 square feet in total, will be completed in 2010. Reportedly, the Hong Kong-listed enterprise earned HK$3.05 billion in net profit and HK$13.12 in operating revenue last year.

Four shipping companies awarded US$850,000 Impacted by the downturn, DB Schenker is delaying its container rail service linking China, Russia and Europe.

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China - COSCO and Maersk are two of the four shipping firms to receive a

MAY/JUNE 2009

25

NEWSROUNDUP combined RMB5.5 million (approximately US$850,000) from the Guangzhou Municipality to encourage the continuous development of Nansha port. The monetary award is expected to help cushion the impact of the financial crisis on the liners.

As general contractor, Swisslog will be in charge of the design and realization of the new site located in Hangzhou, some 175 km southwest of Shanghai. The logistics for the cut tobacco production process will cover the transport and storage of the tobacco leaves as well as their blending as required per brand. It will also include two high-bay warehouses accommodating over 10 000 pallet locations.

Taicang Bonded Logistics Centre begins operations

Swisslog awarded major order by cigarette manufacturer in China Hangzhou Cigarette Factory, a leading cigarette manufacturer in China, has commissioned Swisslog to design and implement a new facility featuring highly automated production process logistics.

The new facility will feature a flexible, automated cut tobacco production process, replacing an older process.

Eastern China’s Taicang Bonded Logistics Centre has commenced operation after combined acceptance trials conducted

by Chinese authorities. The logistics centre in Jiangsu province features ocean container logistics, coupled with four main functions such as international sourcing, international distribution, worldwide transferring and food warehousing. It can meet the bonded logistics needs for an annual capacity of one million TEU or 20 million tonnes of groceries. As a special customs supervised area, the centre enjoys tax rebates and a bonded preference policy. At present, eight large warehousing logistics

firms both domestic and foreign have set up offices there.

Retail Metro to introduce electronics store Metro announced that the company will introduce Media Markt, an electronics store brand operated by Metro Group, into the Chinese market in 2010. The German group has signed an MoU with the Chinese Foxconn Technology Group to set up a JV, which will operate the retail stores in mainland China. The first Media Markt electronics store in China will be opened in Shanghai. No financial details have been released.

Multinational retail giants on an expansion spree in China Despite a continuous drop in China’s overall foreign direct investment (FDI) in the past four months, multinational retail giants aren’t showing any signs of slowing their expansion in the country. Wal-Mart, the US retail giant that entered China in 1996, is set to open a further 23 stores

A roundup of logistics related news Air China reaps 981 million profit in Q1 of 2009

SOEs get incentives to buy ships made in China

Zhengzhou plans to be an International Logistics Center

Zhongyuang Sun, Securities Daily

http://www.21shipping.com

Dahe.cn

For the first quarter of 2009, Air China not only avoided a deficit but also hoarded a 980 Billion RMB surplus, although profits dropped 5.7 percent. An official from Air China said that thanks to travel over the Spring Festival holiday, the air transportation business was doing well, especially the domestic market which showed a double-digit increase. The outlook for international traveling is less promising with passenger volume down in the first quarter.

China’s Development & Reform Commission is building a plan to revitalize the shipbuilding industry. The Commission will give big shipping SOEs substantial incentives if companies purchase new ships from Chinese shipyards which are suffering from a decline in overseas orders. A report by Morgan Stanly points out that many Chinese shipyards received no shipbuilding orders since October 2008.

Chuangcai Zhang from the Economic & Trade Office of Henan Development & Reform Commission said at a seminar on Logistics Development in Central China on 11th, April that Roland Berger Strategy Consultants and A.T. Kearney Management Consultants are designing “the strategy and the lay-out of the Zhengzhou International Logistics Center.” According to the Development & Reform Commission’s objective, in 3-5 years, Zhengzhou will be a key link in China’s international logistics network.

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MAY/JUNE 2009

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NEWSROUNDUP by the end of the first quarter of this year, taking its total up to 140. It opened 19 stores in 2008 on top of the 30 it opened in 2007.

Carrefour said it would “keep the same speed” of opening new stores this year.

The French hypermarket chain that first came to China in 1995 opened 23 stores last year and now has a total of 135 outlets. 7-Eleven, the world’s largest convenience store chain, will open three to four stores concurrently in Shanghai at the end of March or the beginning of April. It is

the first time that 7-Eleven is entering the Shanghai market and it reportedly plans to open 100 outlets there within the next three years.

- China Daily

IT Chinese B2B site Tootoo.com closes Chinese e-commerce giant Alibaba.com has one less competitor to worry about as Ninetowns Internet Technology Group

Company Limited is terminating its own B2B online sourcing website Tootoo.com.

Ninetowns says the discontinuation of the B2B business is not expected to have a material financial impact on Ninetowns’ other business solutions. Tootoo.com was originally developed as a B2B search and service provider for suppliers and buyers engaged in international trade and was not fully commercialized as of the end of 2008.

360buy.com launches logistics unit 360buy.com, a Chinese retail e-commerce business company announced that it established a logistics subsidiary in Shanghai to improve distribution quality and efficiency. 360buy.com invested RMB 20 million in the logistics subsidiary, which will distribute orders in eastern China and Shanghai, areas that account for 40% of the company’s total orders. To enhance its distribution network, which covers 200 Chinese cities, the company is also building 20 distribution stations in cities such as Tianjin, Wuhan, Jinan, Xian and Chongqing.

from the Chinese Media China Logistics Corp invests 500 million RMB in Urumqi Logistics Zone

CHINT and Schneider Electric solve patent infringement suit

Xiaoling Li, Xinhua Net

Yiling Li/Hao Yang, 21 Century Business Herald

China Logistics Corp is planning to invest 500 million RMB in the Urumqi Economic & Technological Development Zone to set up a logistics park. According to the plan, the 500 investment will take up 118 with fixed assets valued at over 280 million RMB. The expected revenue will reach 1.2 billion RMB after the completion of the first phase, and the whole investment is expected to generate 3 billion in revenue when the entire park is in operation.

Low-voltage electric power leaders finally agreed to solve their patent infringement dispute peacefully out of court. According to the agreement, Schneider Electric Low Voltage (Tianjin) Co., Ltd. (SELV) will compensate CHINT 157.5 million RBM while CHINT will cease to pursue all cases against Schneider Electric in regard of Intellectual Property infringement. CHINT is a leading Chinese player in the low voltage electrical power industry.

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Compiled by Carl Pan

Mr. Cunhui Nan, Chairman of the Board & Chief Executive Officer of CHINT Group.

MAY/JUNE 2009

27

NEWSROUNDUP

India A roundup of news relevant to operations in India Retailers trim supply chains as demand, sales dip in India Stung by poor consumer demand and falling sales, Indian retail chains are tightening their supply chain and logistics. Major players like Future Group, RPG Retail and Shopper’s Stop have kicked off multiple initiatives like automating processes, working closely with vendors to bring down waste and implementing automatic just-in-time stock replenishment systems, and are seeking ways to reduce costs on warehousing and transportation.

India’s largest retailer, Future Group, has shut down around 20 smaller warehouses to consolidate into bigger ones. It is partnering with vendors in the garments and general merchandise segments to reduce inventory holding and distribution points. The company has also initiated talks with transport operators to configure trucks and route networks to optimise the process.

“Through all these initiatives, we have managed to reduce costs associated with the supply chain by 0.5-4 percent of total sales across retail formats.” said Anshuman Singh, CEO of Future Logistics, a group company that handles supply chain for all stores. Shopper’s Stop CEO and executive director Govind Shrikhande said the company is exploring options for joint planning with vendors to improve supply chain. “A tight supply chain, no doubt, helps to improve cash flows in tough times like now,” he said.

- The Economic Times

Ratan Tata pictured on the right. Tata Motors, a leading Indian Industrial giant, bought Jaguar Land Rover in 2008.

Jaguar Land Rover (JLR) to step up auto component sourcing from India Jaguar Land Rover, which is now owned

by Tata Motors, is firming up plans to enhance its global supplier base in India, as it struggles to cope with a sharp slump in demand for luxury cars and sport utility vehicles. According to sources, there will be an increasing number of Made-in-India components in Jaguar Land Rover products.

Despite stiff competition from countries like China and Mexico, India is increasingly becoming a sourcing base for auto makers seeking completely built-up units (CBUs) as well as outsourcing of components. Global automobile majors like Hyundai, Ford, Skoda, Suzuki, and Mahindra have made India a manufacturing base for particular models of cars. At the same time, other multinationals like Toyota, GM, Fiat, Volkswagen, Renault and Daimler are making India a hub for components.

India needs to cut down logistics cost

Union Minister of State for Food and Public Distribution Akhilesh Prasad Singh

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MAY/JUNE 2009

India needs to focus on setting up world class infrastructure facilities to drastically cut down logistics and transport costs for enjoying better domestic and foreign market for its goods, Union Minister of State for Food and Public Distribution Akhilesh Prasad Singh said. “India today has one of the highest costs on logistics that extends

up to 14 per cent of production cost and we must bring it down to the world average of 6-7 per cent to be able to compete effectively in the global market,” Singh said.

Logistics companies in a slow mode The impact of sluggish growth in the domestic economy, coupled with a visible slowdown in India’s exports (which declined 7.9 percent year on year) has resulted in a marked fall in growth reported by seven leading logistic companies. The companies -- Container Corporation, Allcargo, Gateway Distriparks, GATI, Transport Corporation of India, Blue Dart and Aegis Logistics -- reported a growth of just 4.5 percent year on year in their net sales in the December 2008 quarter, as compared to a 14.4 percent year on year growth in the trailing four quarters ended December 08.

Chennai terminal to start operations by end-April A second private container terminal at India’s Chennai port will start operations at the end of April. The Chennai International Terminals Pvt Ltd (CITPL), a joint venture between Port of Singapore Authority (PSA) and Sical Logistics, will start operations with a quay length of 400 metres, according to K Suresh, chairman of Chennai Port Trust.

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NEWSROUNDUP

Vietnam A roundup of news relevant to operations in Vietnam Foreign investment to Vietnam declines The global recession has taken a toll on foreign investment and tourism to Vietnam in the first four months of the year. Foreign investment pledges fell 72 percent to $6.4 billion as of April 20, the General Statistics Office said in a statement.

The investment pledges include $2.5 billion in 145 new projects and $3.9 billion for increased investments in 23 existing projects.South Korea topped the list of foreign investors for new projects in the first four months with pledges of $957 million, followed by Hong Kong with $531 million and Singapore with $255 million. Foreign investors pledged a record $64 billion in 2008, a year after Vietnam joined the World Trade Organization.

Cavico Vietnam signs copper exploration agreement in Laos Cavico Vietnam, a leading infrastructure development company in Vietnam and subsidiary of Cavico Corp.,announced in April 2009 that it has entered into an agreement with the Laos Ministry of Planning and Investment to explore and exploit copper, gold, and other ores in Muang Hom district, Vientiane province, Laos.

The Muang Hom district is a mining re-

gion and has been evaluated as a potential reserve for copper and other metal ores.

According to the agreement, Cavico has been provided an approval to explore and exploit copper and other ores on 500 square kilometers of land in Namkhoun village, Vientiance. Cavico will spend the next six years and about $4.0 million to conduct exploration, research, and technical studies.

Vietnam reports four-month trade surplus of $800 mln Vietnam on Friday estimated it had recorded a trade surplus of 800 million U.S. dollars for the first four months of the year as imports dived due to lower demand amid the global downturn. The figure compares with a record 11.1 billion dollar deficit for the same period last year before the financial crisis fully struck.

The country spent 17.84 billion dollars on imports between January and April, down by 41 percent year-on-year, while exports were almost steady at 18.64 billion dollars, said the General Statistics Office (GSO). However, the four-month figure is down from the 1.5 billion dollar surplus recorded in the first quarter of 2009. Vietnam last year posted a record trade deficit of 18 billion dollars.

Last year, Vietnam’s economy expanded by 6.18 percent, its lowest level in almost a decade.Prime Minister Nguyen Tan Dung said in April month that the economy will pick up and could achieve between five and 5.5 percent growth this year. First-

Vietnam Prime Minister Nguyen Tan Dun is hopeful about an economic recovery later this year.

quarter growth was 3.1 percent, the lowest on record.

Bank sees positive signals and challenges in Vietnam Britain’s Standard Chartered Bank finds positive signals emitting from Vietnam, despite the perils of the contracting world economy. But the bank, which will start operating a wholly owned Vietnam subsidiary in June – the second after that of HSBC – also identifies medium-term challenges.

The assessment in a just-published report titled, “Vietnam, what a difference a year makes,” praises the Vietnam Government’s management of moynetary policies so as to limit the impact of the global financial crisis. The several positive signals generated from the economy include the switch from trade deficit to trade surplus; the return of exports to growth in February and March after three months of contraction, falling inflation and steady retail sales. But the report warns that Vietnam will have to improve its infrastructure to meet investor expectations.

Cavico Vietnam will be increasing its mining operations in Laos.

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MAY/JUNE 2009

29

SPONSOREDFEATURE

S

upercharged career woman in a slow-motion world By graduating with an MBA in Logistics Management from the Kühne School in Hamburg, Germany, Sophonia Siu Man Tsang has laid the foundation stone for an international career.

It was a bit of a culture

the work undertaken there would be of high quality and in shock, leaving the turbu- accordance with international standards. lent, fast-living world of “Our aim is to prepare young professionals from comHong Kong and landing in a panies that control logistics processes for management quiet campus in the North responsibilities,” said Martina Heinrich, the Kühne School’s German city of Hamburg, Head of Recruitment and Student Affairs, explaining the population 1.7 million. On goal of the one-year program that is held entirely in Engvisiting her future business lish. The course, which lasts four terms, combines modschool for the first time in ules on logistics and management subjects with training in summer 2007, Sophonia interpersonal abilities such as intercultural communication, Siu Man Tsang was amazed conflict management and negotiating skills. Participants at the slow pace of people round off the year with a three-month Master’s thesis.

Different culture, different food – Ms Tsang in Germany in Hamburg and at shop Tsang’s expectations were not disappointed. “At the opening times. Everyone Kühne School you get a good mix of theory and practice, moved noticeably more slowly than in Hong Kong. Away both in terms of general management and of logistics subfrom the campus, she found that even food stores in the jects,” she said, summing up her year in Germany. The KühNorth German city close early in the evening and that it is ne School signs lecturers and professors from well-known practically impossible to shop on Sundays. In the stores, universities around the world to teach on its programs. it was not always possible to get by in English because some salespeople The Kühne School of Logistics and Management in Hamburg spoke only German.

Tsang, 27, had left Hong Kong to join The Kühne School of Logistics and Management was founded in 2003 as a one-year Master of Business Admina joint venture by the Hamburg University of Technology and the Kühne istration (MBA) program at the Kühne Foundation, based in Schindellegi, Switzerland.

School of Logistics and Management.

In addition to the one-year full-time program Here in far-off Germany she wanted the Kühne School offers a two-year part-time to learn more about how logistics proin-service MBA program and two Master’s processes and companies are managed. grams in International Industrial Engineering She had previously spent several years and in Logistics, Infrastructure and Mobility. working in Hong Kong for the Swiss The business school is also building up a reshipping and logistics group Kühne & search center and holds expert forums and Nagel, which operates worldwide. Iniin-service training for logistics experts. To tially in sales and marketing, she subqualify for admission, candidates must pass sequently became a shipping trainee in the Graduate Management Admission Test operational cargo traffic. Now she had (GMAT) and the Test of English as a Foreign arrived in a different world, armed with Language (TOEFL). Candidates may apply for a scholarship from the Kühne School. a Kühne School scholarship.

Tsang’s German boss in Hong Kong had told her that Hamburg was Germany’s leading port. Prior to applying, she had surmised that Courses are also taught by professors of the Hamburg since her employer Kühne & Nagel had not only lent its University of Technology (TUHH), on whose campus the name to the Kühne School but also backed it financially, Kühne School is located, and by practitioners from busi-

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SPONSOREDFEATURE

Containers from China in the port of Hamburg

ness enterprises. “The curriculum is very crowded, so time management is a challenge,” Tsang says, looking back. “Often we had classes from 9 a.m. to 5 p.m. on Mondays to Fridays, and exams at the weekend.” On top of that there were excursions, for example to industrial and trading companies and the Hamburg container port.

Tsang especially liked the program’s international orientation. Her 16 fellow students were from ten different Asian, European and American countries.

That entailed intercultural communication and intercultural learning on a daily basis, not only in the seminar room but also privately. She shared her apartment with a Slovenian man, a Korean woman and a Frenchman. Tsang is still benefiting from the experience of getting on with people from different countries and cultures. After obtaining her MBA in the late summer of 2008 she found an interesting job with the American pharmaceutical company Mylan in Zurich, Switzerland, where she is now a supply chain analyst. She and her colleagues are involved in improving the group’s global logistics processes and she is happy to be working on the customer’s side now. “The theoretical models I learned at the Kühne School help me in my everyday work here,” Tsang said. “My new employer is very pleased with my integrated view of processes. Another reason why he employed me was my international and intercultural experience, including my experience in Hamburg.” This ambitious young lady’s future expectations make it clear that her first job after the MBA program is only the start of an international career. “It should be possible to achieve a supervisor’s post in two years and in five years a manager’s post,” she said.

The Kühne School of Logistics and Management is offering young professionals in China a chance to qualify as

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Hamburg – Trade and Logistics Hub for China in Europe Hamburg and its port is the hub of China’s trade with Europe. Twinned with Shanghai, this city of 1.7 million people has a long tradition of ties with China. The first Chinese trading vessel arrived in the port of Hamburg from Canton back in 1731. Now, around 400 Chinese companies have located in Northern Europe’s leading logistics metropolis. Many have their German or European headquarters here.

The city has Europe’s second-largest container port, its largest rail traffic junction, and one of its most modern airports. Hamburg is also the number one location for ship financing and transport law. It is the seat of the International Maritime Court and the international Logistics Court of Arbitration, and has around 100 consulates. The city has profited especially from growing trade with China since the 1990s.

From Hamburg, Chinese companies have good connections with Central and Eastern European countries. The biennial Hamburg summit “China meets Europe” is further evidence of the importance of relations between Hamburg and China. In 2006 and 2008 it brought politicians and entrepreneurs such as Wen Jiabao, Zang Dejiang, Xie Qihua, Wong Wai Shing and Zhu Yanfeng to the city on the Elbe River.

Hamburg is also a base for aerospace companies Airbus and Lufthansa, each of which employs more than 10,000 people in the city.

For further information, visit: http://www.hamburg-economy.de/index_cn.html and www.hamburg.de logistics managers. Suitably qualified university graduates with more than one year’s work experience who apply for the full-time MBA program starting in October 2009 can finance up to 100% of their tuition fees of € 19,800 through a scholarship.

To find out more, visit www.kuehneschool.de or e-mail studylogistics@kuehneschool.de.

MAY/JUNE 2009

31

Photographer Kin Hui Creative Publicis Worldwide/Hong Kong

When you’re starving, anything looks appetising. Asia may have the world’s fastest growing economies, but it also has more hungry children than the rest of the world combined. Please help the UN World Food Programme in its battle against child hunger in Asia. To learn more about WFP, donate or to become a corporate partner, go to www.wfp.org. Give a hungry child a future.

FEATURESTORY

Counterfeit Supply Chains

By Gary Bowerman, with Russel Beron

“We should enable IPR holders to get enough compensation, which should deprive the infringer of any benefit and make the consequences for their actions dire,” Xi Xiaoming, Vice President of China’s Supreme People’s Court

“We don’t want to ignore counterfeiting, but for foreign companies …

I’m afraid they should also pay some cost due to the realities of China,” Gao Feng, Head of China’s Anti-Counterfeiting Unit.

Counterfeit products cost brand name manufacturers billions of dollars every year.

These products are fueled by sophisticated supply chains that rival those of “real” products. This article takes a look at some of those illegal supply chains and what companies are doing to combat them. “iPhone, Very Cheap. One thousand kuai.” The hawker approached me at a Shanghai metro station and stuffed a makeshift flier in my hand featuring pictures of 24 leading mobile phone models priced from RMB299-3488. Asked the time lag for delivering an order of one hundred iPhones, he replied instantly: “Tomorrow.” www.chainaonline.com

MARCH/APRIL MAY/JUNE 2009

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FEATURESTORY

Apple’s iPhone is not yet officially available in China, due to drawn-out negotiations between the U.S. company and domestic cellular carriers China Mobile and China Unicom. But Illegal ‘cracked’ models have been available for several months, with ads for “original unlocked iPhones” found on the Internet. It is perhaps the highest profile current example of counterfeit product supply, with bona fide handsets smuggled effortlessly into China and sold on street corners and at electronics markets nationwide.

The issue of legitimate products being illegally supplied in China stands beside the more fabled problem of counterfeit goods – which affects virtually every industry sector in China, from antiques to air conditioners, car parts to cleaning fluids, pharmaceuticals to foodstuffs and luxury brands to the latest Hollywood movies. One investigations team even unearthed a consignment of 750,000 replica Polish hacksaw blades, the brand holder of which had never previously manufactured nor even sourced its legitimate products in China.

Even cash is counterfeit king. In January, a Shanghai court jailed a man for using RMB5,500 in fake 100-yuan bank notes. The defendant reportedly paid RMB10 yuan for each note from a vendor near Shanghai Railway Station. A Chinese television station also reported that a bundle of fake 100-yuan notes worth RMB 10,000 can be purchased online for just RMB1,500.

Combating this all-encompassing supply of illegal goods – and their easy availability through online and offline sources – has become a global priority. China leads the field in fake goods shipped into the United States – accounting for 81 percent of the total value of IPR seizures – and in 2008, U.S. Customs reported a 40 per cent year-on-year rise in confiscated Chinese counterfeit products. India ranks second with just six percent.

The evolution of the fake Experts concur that domestic and international distribution networks of fake goods have become more sophisticated and integrated since China entered the WTO in 2001. The constant flow of new products into China and the diversification of product sourcing by foreign companies have provided Chinese manufacturers with significant opportunities to develop advanced production and ‘reverse engineering’ capacities, and establish procurement and supply chains at home and abroad.

As one analyst notes, “Chinese counterfeiting is now a recognised part of globalisation.”

Widespread counterfeiting is not solely a Chinese problem, brand holders face escalating problems worldwide, notably in

Clever counterfeiters have trading companies that outsource all aspects of production.

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Canadian singer Celine Dion,

the Middle East and escorted by her bodyguard, visits a lane in Shanghai April Eastern Europe. But 2008.

China’s status as a global production centre makes it a central player. Take, for example, a bottle of fake branded perfume. As Misha Glenny writes in his book, McMafia, a discernible chain linked the production of the counterfeit bottle in China, with the perfume factory in Russia and the label production plant in Turkey. The completed product then returned to China for packaging, before being shipped and sold in the UK. The blame for this seemingly unchecked level of counterfeit supply is often placed at the door of China’s immature legal system, although the increased speed, flexibility and ingenuity of fake goods suppliers is undeniable. Counterfeit manufacturers have fine-tuned their ability to quickly transport illegal goods, often producing bulk orders at several different factories, storing inventory in a network of warehouses, labeling and packaging at other offsite locations and shipping immediately after the production order is completed.

Sophisticated illegal traders rarely even come into contact with the products they are supplying, says Douglas Clark, Partner at Lovells law firm in Shanghai. “Clever counterfeiters have trading companies that outsource all aspects of production, and these outsourced suppliers then transfer the goods to freight forwarders for shipping. The only thing the trading company touches is the money.” Consequently, targeting the cash trail can be the only way of bringing an infringement case to trial.

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FEATURESTORY

Breaking the chain As a general trend, the last few years have seen brand holders expanded or develop in-house resources in China dedicated to anti-counterfeiting. Companies that are frequently infringed target counterfeit manufacturing plants in order to close down the supply chain at source. The window for achieving this is, however, increasingly short.

One of the most infringed areas is the auto industry, with some auto and auto parts companies conducting hundreds of cases per year in China. Given that global counterfeiting of car parts is estimated to cost the industry around USD16 billion annually, this may be a drop in the ocean.

The illegal car parts are usually routine replacement items like oil, fuel and air filters, brake pads and sparkplugs, but factories in China have increasingly been found to produce less-obvious, more technically complex parts in large numbers. “These operations are increasingly well organized. The counterfeiters have learned a lot from experience,” says Ewen Turner, Manager Investigations, Asia Pacific for GM Global Security.

The counterfeit car parts manufacturers are mostly centralized in China’s traditional auto/auto parts producing regions, notably Guangdong, Fujian, Jiangsu and Zhejiang provinces – to take advantage of established supply chains. An emerging trend, mirroring other areas of manufacturing in China, is a gradual move inland. Legitimate manufacturers are not the only ones seeking to take advantage of lower wages, land prices and new supplier net-

works in central and western China, and counterfeit production is now diversifying away from the eastern coastal belt.

Warehouses of illegal China-made car parts have even been traced to Dubai and Saudi Arabia, while Chinese Customs has also seized car parts destined for Benin, which functions as a transshipment or entry port for West African trade.

The counterfeiting of auto products is now so entrenched that the Automotive Industry Working Group of the Quality Brands Protection Committee, “which includes representatives from Bosch, BMW, Bridgestone, Denso, Ford, Gates, Mahle, Peugeot-Citroen, Volkswagen and ZF,” organized a joint IPR Protection Booth at the Automechanika Shanghai exhibition last December. The booth presented showcases of genuine and fake parts and distributed leaflets with the message “Cherish your life - say a clear NO! - to fake parts!” while showing

Legitimate manufacturers are not the only ones seeking to take advantage of lower wages, land prices and new supplier networks in central and western China.

10

ways to fight piracy in China

F

rom an article by Henry Blodget -- a former golden boy tech stock analyst now barred from the securities industry for alleged wrong doing in the internet bubble.

We figured his unorthodox background might offer some value.

1

First, recognize that the value (or at least life span) of intellectual property may be less in the future than it has been in the past.

2

Crank up the litigators, making it painful for pirates to fake your products and thus encouraging them to rip off someone else.

3

Redesign business processes to make it more difficult to steal stuff, and consider what you do lose a cost of doing business.

4

Pay for your own enforcement raids.

www.chainaonline.com

5 6 7 8 9 10

Don’t do China joint-ventures, which function as a siphon tube through which local entrepreneurs suck out ideas, technology, and products.

Design your products to have shorter life cycles, thus leaving pirates stuck with warehouses full of outdated stuff.

Cut prices, making piracy less profitable.

Give away technology in hopes of establishing a standard that you can control.

Offer local pricing: Don’t force people who make $1,000 a year to pay $250 for an office suite.

Shift to a service/support model, and give your products away for free.

MAY/JUNE 2009

35

FEATURESTORY

$100

billion to $200 billion –The rough annual cost of counterfeiting in the electronic industry, representing nearly 10% of all electronic equipment sold worldwide

$18.2 billion

– The estimated amount the worldwide motion picture industry loses annually because of piracy

1000 %

- The markup of a DVD made in Malaysia for 70 cents and sold on the streets of London for $9. The profit margin is 3 times higher than the mark-up for Iranian heroin, representing a strong draw for organized crime into the trade.

#1

– The spot China took in ten out of the top 15 supply-chain risk categories in a recent AMR Research quarterly supply-chain survey, making it by far the riskiest geography to operate in. “China is still plagued by product quality failures and safety issues, “ writes AMR analyst Noha Tohamy in their recent survey on global supply chain risk.

Fake DVD’s, CD’s, games and software are for sale on high streets and back alley’s across China

a DVD presentation on IPR protection.

The QBPC Automotive IWG said the cooperative project aimed to “increase public awareness of the potential serious risks and damage caused by coun– The number of conterfeited auto parts, sumers aged between 18 and 45 who promote cooperation are fully prepared to buy fake luxury between companies, goods and accessories (based on a and adopt effective PricewaterhouseCoopers survey). measures to actively assist the Chinese government in eradicating counterfeiting from all areas of the industry, including production, storage, distribution and export.”

1 in 3

Inadequate government support Despite a raft of new IPR legislation in recent years, China’s legal system still struggles to enforce anti-counterfeiting laws. Although large companies work closely with Chinese Customs and administrative agencies to identify illegal production plants, the majority of cases simply result in an administrative fine and destruction of the infringing products. “Even if you win compensation in court, it rarely bears any relation to the damages your company

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has incurred,” says Holger Clasing, General Manager of Barkawi management consultancy in Shanghai. “And if the counterfeit manufacturer does get closed down, it can just set up operations somewhere else.”

Two companies that recently resorted to the law courts are Nike and Louis Vuitton. Nike sued two Chinese companies for illegally copying one of its logos and using a copied silhouette of former basketball star Michael Jordan. The attorney for the defendants called the case “a misunderstanding,” and claimed that the companies “didn’t know the Nike logo is similar to that on our products.”

Louis Vuitton’s case is even more bizarre – with the lawsuit dragging in the name of Canadian singer Celine Dion. LV is suing a Taiwanese trader for selling fake merchandise in Shanghai, with his clients allegedly including the Canadian chanteuse during her 2008 visit to Shanghai. Official records show the trader had been previously cautioned for similar counterfeit goods offences in 2002 and 2004.

Another vulnerability of companies in China is collusion from their own staff in procuring counterfeit or sub-standard goods.

Bruno Lhopiteau, General Manager of maintenance consultancy Siveco China, says that while purchasing systems for components used in production processes are usually in place, “this is almost never the case for maintenance parts.” Often, “a strong disconnect exists between the administrative (such as purchasing and stock) and technical aspects (including specifications, needs forecasting, and the reliability of parts and vendors), which leaves companies vulnerable to staff buying parts from non-authorised

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FEATURESTORY

Viewpoint Willi Vett, Lawyer, BEITEN BURKHARDT International Law Firm : What is your and Beiten Burkhardt’s expertise in the areas of counterfeiting, product piracy and illegal supply chains?

Willi Vett (WV): Our BEITEN BURKHARDT China Practice is active in China since more than 15 years. We have a designated IP team within our China Practice which is focusing on various areas of IP rights, including enforcement.

sources,” Lhopiteau says.”

He cites the example of a pharmaceutical plant in China, which was legally required to maintain purified air at its production areas. The air filters were changed regularly to meet strict product certification standards, but closer inspection of the replacement procedures revealed an anomaly. Instead of buying brand new replacement filters, a company technical supervisor, security guard and purchasing manager had teamed up to clean the old filters themselves with hot water.

The company insiders then made a deal with the original supplier to repackage the old filters in new boxes and sell them back to the pharmaceutical company – with generous kickbacks enjoyed by all involved. “The situation had gone unnoticed for some time, because it was very well organized,” says Lhopiteau. “No one got hurt and, actually, the replacement filters worked well once they had been cleaned and resupplied. It was only when we looked carefully at all the maintenance purchasing procedures that this fraud was exposed.”

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There is much criticism over Chinese government policy towards IP protection and enforcement. Is the government not proactive enough? Are things going to change?

WV: When criticizing the Chinese government on IP protection, I believe that one has to keep two matters in mind. On the one hand China has generally made tremendous efforts over the past 20 years to introduce a legal system for IP rights which is now for the most part in conformity with the WTO rules. On the other hand, the enforcement of the IP legal system on the local government level is still lacking Local governments are often less active than IP rights holders could wish for, while the central government is proactive in providing a better environment for IP rights holders. However, there are critical voices accusing the central government of merely paying lip service.

Where do you see the biggest problem areas in terms of IP infringement?

WV: Probably every single industry faces problems with IP rights infringement.

Any fake products affecting consumer safety are an obvious problem. This applies for example to the automotive and pharmaceutical industry but also toys, as the recent Barbie scandal has shown. Where fake goods enter the supply chain the end-producer might face severe liabilities from end-customers on the basis of the Chinese Product Liability law.

What steps can companies take to protect their IP, especially if they are looking at domestic sale and distribution in China?

WV: The first important step for a company is to register their basic intellectual property rights, in particular trademarks and domain names. Even if a company does not intend to spend resources on enforcing them, at least no other party can register the their IP. We see a lot of cases where companies are forced to go through extensive procedures to revoke registrations of intellectual property rights that should belong to such company, but were registered by a third party in order to “legalise” its counterfeiting activities or to blackmail the foreign owner.

Equally important for manufacturers and companies sourcing spare parts in China is to have a good supply chain management in place that minimises the risk of fakes entering the supply chain from the first item to the customer. We have seen cases where customers bought originals and then complained of quality issues by returning fakes to the vendor. A number of organisational and technical tools are available to assist in supply chain management.

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37

HRFOCUS

Maintaining staff morale in a downturn

By Jason Hemens, Corporate Communications Manager at Michael Page International.

2009 is proving to be a challenging year for businesses around the world. While China’s economy is fairing better than its Western counterparts, the reduced demand for Chinese exports has impacted local companies in sectors such as manufacturing and supply chain.

As we have seen in previous business cycles, when revenues decline staffing costs are one of the first areas to come under the microscope. Companies that are forced to cut staff are now facing the challenge of maintaining the morale of their remaining employees. The people left typically have the business critical skills so it is important to keep them engaged and motivated. Here are some suggestions on how to maintain the morale of your staff in a challenging business environment.

Show Honest Leadership Employees need leadership and direction during periods of organisational change. If job cuts have occurred, the reasons behind the decision should be explained in person to the remaining staff.

Once the job losses have been openly discussed, you can articulate a clear vision for the company, acknowledging the central role the remaining employees play in reaching those objectives.

People appreciate and respond to honesty and a genuine call for collective effort during difficult times. So don’t sugarcoat news – be as transparent as possible and you will earn the respect of your staff.

your HR department if they have the capacity to conduct internal surveys to take the pulse of your organisation.

Communicate Regularly At the management level, talk regularly with your team members about the direction of the company, the strategic decisions being made and the role each person in achieving these objectives.

As a manager it is essential that you communicate with your staff both individually and collectively.

Translating broad organisation goals into practical job activities is an important technique to keep your staff engaged. People need to feel connected and relevant to the broader strategy. To remain focused they need to feel there’s light at the end of the tunnel.

In the current climate, employees are less likely to be rewarded with bonuses and other financial incentives. But recognition does not have to cost anything. It can be as simple as acknowledging someone in a team meeting or saying thank you via email. Some managers make a point of walking the floor and stopping by a person’s desk to recognise their efforts. A kind word can go a long way.

Show Appreciation Managers shouldn’t fall into the trap of thinking people who have retained their jobs should be appreciative and simply ‘get on with it’. While the remaining employees will no doubt value their ongoing employment, that in itself is not enough to keep them motivated and engaged. No matter what the business conditions, employees still need to feel their efforts are recognised and appreciated.

Keeping your high performers engaged and motivated is even more important when business conditions are tough. These are the people that will get you through the challenging times and position your company for growth when the market turns.

The other point to remember is that communication should be a two-way process. You need to give your staff an opportunity to share their thoughts, concerns and ideas as part of the process.

Use your discretion - these discussions can take place during team meetings or in person. You could also consider involving

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Develop Careers One of the best ways to keep your employees focused is by giving them ongoing opportunities for career development. If your company has had to reduce staff, think of the ways in which you can assign some of the additional workload to your remaining team members. If you provide them with opportunities to increase their responsibiltity in areas that further their career you will keep them engaged. Remember to assist this career development with supportive initiatives such as internal training and mentoring programs.

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For more information: www. supplychains.com Contact: info@supplychain.cn

SCMGADGETS

The bathroom in T.E.D. is small and compact, just as the kitchen. A low flow toilet and easy access plumbing make this space as user friendly and economical as possible.

Storage was one of the biggest complaints people have about relief housing. Although families homes have been destroyed, they save a large amount of their belongings. T.E.D comes with a closet with boxes which can be moved as storage, side tables, chairs, etc. They enable the dweller a place to put their stuff. A lock also comes with each T.E.D. Which keeps priceless material possessions safe.

A new way of building houses is being practiced in the United States. Homes are built using shipping containers.

This unique and low cost housing is perfect for people with limited budget, or even those who have enough, but want to have unique and elegant housing. Each container has the ability to hold two families, and can easily be extended by pulling its compartments and tents.

The dining room in T.E.D. is meant to allow users to gather as a family and discuss their progression ahead. There is a panorama window allowing a lot of light to enter the dwelling, as well as a skylight. For further storage, there is more room under the benches for possessions. At night, the table lowers to form a double bed and can be closed over with a sheet for privacy.

From designer Craig Mackiewicz

If you have an opinion on this concept, email us at: comment@supplychain.cn.

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SCMGADGETS

The kitchen in T.E.D. has been designed as compacted as possible. The mini fridge and stove save on both room and energy. This is especially important in a shelter running off of solar power. The kitchen sink backs the sink in the bathroom reducing the amount of piping and plumbing.

<The T.E.D.â&#x20AC;&#x2122;s tent is an extension of the main living space of the container. Itâ&#x20AC;&#x2122;s purpose is to provide a sleeping area for the users as well as a place to converse and play games. It is a multiuse area and nearly doubles the original living space of the shelter.

The last extension of the shipping container is a bunked bedroom. This increase the amount of people able to live within the space. If it is not used, than it can become another storage space. The bunks can be broken down, placed into the tent, and that space can tum into an office.

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MAY/JUNE 2009

41

INSIDEVIEW

China Supply Chain trends in the economic downturn

By Duane Bolinger, BBK Shanghai

ditional financial stress on firms in the supply chain.

Over the last several years, BBK Ltd., a leading international business advisory firm has reviewed the financial This article focuses on the key findings of a survey statements of thousands of private and public suppliers that BBK, a leading business advisory firm, did throughout the world to ascertain their financial health. To determine how the economic downturn has impacted supamong 100 Chinese suppliers, to assess their pliers in China, BBK reviewed the data from approximately financial health based on two key financial metrics: 100 Chinese suppliers and focused on two significant fitotal liability to equity and current ratio. nancial metrics, both of which deteriorated in 2008. (Chart I) In 2008, the ratio of total liabilities to equity increased Supplier viability could be much more important than to 2.0 from 1.4 in the prior year. This increase indicates contract performance this year and most likely next year. that Chinese firms, relative to their owner’s investment, Most industries are destined to experience significant sup- took on more liabilities such as borrowings or extended plier failures resulting from the tightening of credit markets trade payables. This trend is important to note since it globally, declining demand in most industries and produc- is more difficult for companies with high leverage to action capacity at tier 2 or tier 3 being idled or removed. cess additional capital which could be needed to weather The same consolidation and restructuring that is taking a downturn. place elsewhere in the world will certainly happen here in The current ratio represents a company’s current asChina and the pressure is on local manufacturing compa- sets (such as cash, accounts receivable, inventory or nies to be one of the survivors. prepaid accounts) divided by its current liabilities (such Chinese firms are facing challenges stemming from as accounts payable, debt payments due within the year negative macroeconomic trends. GDP growth in China or tax liabilities). In 2008, the current ratio of Chinese slowed to 6.8% in the fourth quarfirms deteriorated to 1.4 from 1.6 Chart I - Chinese Manufacturers ter of 2008.

The World Trade in the prior year. It is worth notFinancial Metrics Organization data shows that after ing that a current ratio of less than two years of double digit growth, 1.0 implies that a company does Chinese exports grew only 8.5% in not have enough current assets to 0.6 0.2 2008. Even more worrisome, Chicover its near-term payment oblina’s National Bureau of Statistics gations. A company who’s current Total Liabilities shows that exports declined 17% ratio declines close to this level to Equity and profits declined 37% in the first represents a higher risk of distress 1.4 1.6 2.0 1.4 Current Ratio two months of 2009 compared to since business changes, such as a 2007 2008 the same period in 2008. Furthercustomer requiring longer payment more, access to capital, which is essential for business terms, suppliers demanding quicker payments, or declingrowth, has tightened due to the credit crisis. All of these ing sales place additional strains on a company’s liquidity. factors translate into lower orders, declining sales and ad- Of the Chinese firms which were reviewed in this study,

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INSIDEVIEW in 2008, 16% had a current ratio of less than 1.0. While the two financial metrics illustrated here are not sufficient to fully evaluate an individual supplier’s health, the noticeable degradation over this sampling of suppliers sends a signal that the global downturn has impacted the financial health of Chinese suppliers and could threaten their ability to maintain a reliable supply.

A distressed supplier, which runs out of cash and can no longer maintain product shipments, presents unique challenges to purchasing managers. One multinational OEM who was dependent on continuity of supply from a distressed Chinese supplier had to face such a situation.

The supplier’s sales were heavily dependent on exports.

It had high debt levels, experienced a substantial drop in sales, and was exposed to rising raw material costs. Consequently, it generated large operating losses, violated its bank covenants and did not generate enough cash to service its debt. Although the firm’s current ratio of 1.4 was near the average of Chinese suppliers, its high inventory levels could not be sold due to the sharp decline in demand. The banks exercised their security interest in all of the supplier’s assets, including its inventory, and stopped all customer shipments. The banks recognized the OEM’s dependence on the supplier and demanded “hostage” payments above the contract price to release shipments.

Although the OEM only needed a portion of the supplier’s inventory it was forced to pay premiums for shipments

that support the domestic Chinese market. But export dependence is not a singular indication of risk. A robust supply risk management process ranks each supplier’s health and takes into account the typical warning signs of distress such as those shown in Chart II. For those suppliers that are deemed “high risk”, an action plan to mitigate the risk needs to be tailored to the specific situation. Risk mitigation tactics often include regular monitoring, building an inventory safety stock, identifying alternative suppliers, and working with the troubled supplier to develop and implement operational and financial improvements.

Chart II - Warning Signs of a Distressed Supplier Financial Metrics

Other Warning Signs

High Debt Leverage Low Profit Margins Extending Trade Payables Declining Sales

Late Product Deliveries Reliance on Expedited Shipping Requesting Customers for favorable non-contractual terms Requires waiver from lenders for covenant violations ts suppliers stop deliveries do to non payment

For suppliers, it is essential to Chart III - Inventory Management evaluate your firm’s health and Inventory take proactive measures in order Region Turns1 to survive the economic downChina 3.1 turn. Cash Flow is more critical Korea 13.4 now than ever. Many Chinese Japan 9.7 firms have opportunities to impleUS / Europe 12.0 ment operational measures such Annual Sales / Inventory as inventory reduction, scrap reduction, improvements to yield and first-time-through performance. For instance, statistics reported by BBK show that inventory turns at Chinese suppliers significantly lag the performance of its peers in other countries (Chart III). Reducing inventory levels frees up cash and improves a firm’s liquidity which is most crucial in this environment.

For many firms this also reduces its need for bank borrowings and their associated interest expense. In addition to operational improvements, it is crucial to actively monitor and right-size your cost structure (including manpower, and overhead expenses) to keep in line with sales levels.

All of these measures translate into improved financial health and strengthen a firm’s competitive position.

Insuring supply continuity will require companies to allocate resources for identifying supply chain risk and being prepared to provide assistance either operationally or financially. While each distressed supplier may present unique challenges, the benefit of averting a crisis remains the same; it protects the bottom line from the unpredictable expense of a supply interruption.

1

Case Study: Component Parts Manufacturer Description:

Manufacturer of precision metal products for export to N.A. (Export business nearly 100%)

Annual Sales

RMB 60 million

Ownership

50 / 50 Joint Venture between North American and Chinese partners

Debt Capital

Two prominent Chinese commercial banks (Approx RMB 175 million)

Situation

Unable to repay banks High Debt Levels Rising raw material prices Substantial sales decline Substantial operating losses In violation of bank covenants

Outcome

Banks demanded that customers pay premium price to release inventory.

Customers re-sourced business to other suppliers.

needed while it developed a replacement supplier.

As many companies rethink how to structure their Chinese operations into their overall global supply chain strategy, most conclude that a comprehensive Supply Risk Management process that proactively monitors and validates the financial and operational viability of a supply base is essential. The earlier the problem is identified, the more time a purchasing manager has to avoid costly production interruptions by working with its supplier to find a solution or to develop an alternative supplier. In the present environment, most purchasing managers recognize that suppliers with heavy dependence on export sales are impacted more severely by the downturn than those

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Duane Bolinger is Managing Director of BBK Shanghai. He has over 25 years of experience working with suppliers, primarily in the automotive Industry.

MAY/JUNE 2009

43

HOMEGROWN

Retail has an e-Future Adam Yan, Co-founder and CEO, e-Future Technology Inc.

e-Future Information Technology, Inc. is a Chinese upstart you probably haven’t heard of. Founded in 1997 by Adam Yan and listed on NASDAQ in 2006, the company now competes with the likes of SAP and Oracle and boasts an impressive list of big name clients in China. CHaINA spoke with founder Adam Yan about the company’s prospects and the future of the industry.

: What is e-Future?

Adam Yan (AY): Four of us co-founded e-Future in Haikou, Hainan in 1997. We develop and sell Enterprise Resource Planning (ERP) software to manufacturers, distributors, wholesalers, logistics companies and retailers in China’s supply chain front market.

What does it mean to be at the front-end of the supply chain?

AY: A critical problem in the retail business is that there are tens and thousands of customers. Being at the front-end of the supply chain, we help retailers understand customers better. For example, if we liken the whole customer demography to an ECG (electrocardiogram), we can use the ECG to assess problems in the whole supply chain. We often compare a store to a person and commodities to cells, so the ECG of Mrs. Wang as a customer is her shopping frequency. If Mrs. Wang’s frequency changes from once every day to once every 3 days, then we need to find out why. The reason could be the price, the freshness of the food, the way goods are displayed or some other supply chain factor.

In light of the current business environment, how well is your company positioned to be competitive?

AY: Our clients are mainly in the retail industry, so the impact of the economic slowdown is relatively minor; also the Chinese Government understands the importance of the retail business. Last year, retail revenue grew by 21.6 percent, which was 36 percent of GDP. Based on this, I think our business will get better and better.

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Now you have clients such as the Parkson Group (China) and Beijing Wangfujing Department Store Group. Is the plan to serve more Chinese domestic companies?

AY: We are trying to find a balance. We’ve put great emphasis on penetrating the high-end market in the last ten years; our clients mainly included some large international customers such as B&Q, Parkson, and top-100 retailers in China such as L’Oreal. We drafted a “Spring Plan” in 2008 to promote our presence in Tier 2 and Tier 3 cities in China in the next 3 years. We believe that Tier 2 and Tier 3 cities are the future of the Chinese retail industry.

Could you tell us more about the “Software-as-aService application” on which you collaborated with IBM? AY: In March 2008, eFuture and IBM entered into a strategic partnership to launch a Software-as-a-Service platform (http://www.bfuture.com.cn) for the retail distribution industry in China. So far, this initiative has brought 2,000 of Wangfujing Group’s suppliers onto the platform, allowing them to exchange business information, arrange payments online and access purchase orders, returns, payment status, inventory levels and analysis of sales data. These services were dealt by fax and email in the past, but now suppliers and retailers directly can utilize this e-platform at a reasonable cost.

Have you had any infringement on your company’s intellectual property rights?

AY: We have had some minor violations in the market, but we don’t worry about this since the software requires real-time compliance and it must respond to the customers instantly. Often times our clients and retailers request amendments. So we don’t worry about piracy, because our software can’t be copied and sold on the market in the way application software such as Microsoft Office can.

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B I

usiness Leadership in China

would recommend Frank Gallo’s book, Business Leadership in China, to any new to China manager in an MNC. The book is just what Gallo claims it is: “a starting point for further research into constructing a business model that blends both foreign and Chinese leadership techniques.”

With 8 years of experience in China, both good and bad, Gallo gives many examples to support his advice. Most impressive is that Gallo has Chinese managers with foreign degrees talk about Chinese culture to a foreign audience.

Although the book does turn into a politically correct look at only one and a half cultures, not really two. Gallo is very deferential to China and Chinese culture but not nearly as forgiving to foreign cultures. Throughout the book he is more than willing to use terms like “rash,” “haphazard,” “over confident” and “aggressive” to describe foreign business leaders. However, even in the chapter on honesty,

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BOOKREVIEW

Reviewed by David Dayton

he won’t say that any practices in China are dishonest.

What’s surprising is that this book came out of a class that was teaching foreign business practices to Chinese MBA students.

Yet the final product is much more about how foreigners need to adapt to Chinese culture than it was about the blending of two cultures. This is a common approach in much of the business literature on China; usually justified by “China has a 5,000 year history” or “China is a huge market.” These points are relevant, but don’t justify a lack of analysis of Chinese processes or an unwillingness to look at the need for Chinese to adopt international business standards.

David Dayton is the owner and manager of SRI. He has nearly twenty years experience working in and with Asia and leads Silk Road International from their Shenzhen, China office. He can be reached at david@silkroadintl.net.

MAY/JUNE 2009

45

SPECIALFEATURE

W

ith consumer spending down and the list of global retailers suffering or dying from the “crisis” plague growing, China is still viewed as an oasis of consumer spending, if only in the potential. How to unlock the tight fists of Chinese consumers – personal savings are estimated at 40%, compared to 5% in the U.S. – is another issue companies are grappling with.

China’s retail environment is a mine-field of its own, as retailers such as B&Q have discovered. Having the market is not enough, failure to cater to the right tastes and spending habits, navigating regulations and managing distribution have all been stumbling blocks for foreign retailers in tapping China’s retail hope.

Adapting to the Chinese market is essential and often this means adjusting to different approaches to business processes and a complex distribution structure. Lelio Gavazza, Chief Executive Officer of Sharmoon EZ Garments, a Joint venture with Italian retailer, Ermenegildo Zegna, noted that “Chinese manufacturers did not understand the need for planning.” It has taken time to shift the mindset and convince stakeholders that new processes are necessary.

For logistics service provider, FM Logistic which does a lot of retail distribution and transportation in China, a key challenge has been winning bids for business where the focus is often on price and does not take into account the ability to deliver quality service. “The market is changing, though,” says Aymeric Chandavoine, Logistics Director for FM Logistic China, “When customers realize that low prices often come with lower quality and service, they do a better assessment of their logistics providers.”

Cold Chain logistics is another ongoing challenge which is improving, but still results in 20-30% of fruit and vegetable wastage in China, says Derek Abel, Supply Chain Director for Tesco China. Like other retailers such as Metro, Tesco has centralized distribution and brought in strict quality controls to regulate pesticide usage and other health and quality concerns.

Tier two, three and smaller cities are apparently grow-

Retail and distribution in China:

big opportunity, big risk At the China Supply Chain Council’s Retail and Distribution Summit on April 15, Companies such as adidas, Metro Best-Buy, Tesco, FM Logistic, Amway and Yum Brands all talked about the challenges they face in distributing product in China. These challenges vary from insufficient cold chain storage and transportation infrastructure to immature IT systems to manage the flow of goods, coupled with the difficulty of a fragmented logistics market spread over a vast geography.

Aldo Spaanjaars, Vice President, Operations, adidas China spoke about the complexity of managing distribution to over 5,000 stores in 500 cities in China. For them, a key success factor is having data transparency. “I’m a true believer in technology, I want to know where our products are and I want to see data integration,” said Spaanjaars. This critical concern was also addressed by Tony Li, Warehouse and Transportation Manager at Amway, which successfully adapted its business model to China by shifting away from direct sales to having retail distribution outlets.

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ing strong and haven’t heard much about a recession.

Major retailers like Suning, Gome and others are broadening their presence in rural China, riding on government initiatives to stimulate consumer spending. Suning has already opened 4,500 licensed retail stores in the vast rural areas over the last 13 months. If the big opportunity in retail is China, then the silver lining in China is outside the big cities - as long as they can be served.

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EVENTUPDATE

Integrated Logis�c Solu�ons for China 㓐ড়⠽⌕᳡ࡵଚ Dajin Logis�cs is a leading Chinese logis�cs service provider with a broad network in Tier 1, 2 and 3 ci�es and extensive experience serving both foreign and local clients.

Local knowledge applied to interna�onal standards Wide China network coverage Tailor-made supply chain solu�ons Warehousing, road, rail and barge transporta�on Project logis�cs, dangerous goods, cold logis�cs Interna�onal Freight Forwarding Sophis�cated IT systems Address: 3000 South Lianhua Road, Minhang District, Shanghai, China, 201109 Phone: 8621-34306999 Fax: 8621-34305794 Contact person: Sarah Zhang Email: sarah.zhang@dajin.com.cn

www.dajin.com.cn

A

How to operate on a global playing field

s the current economic situation attests, globalization has tied the world together in a symbiotic way where fortunes and hazards are shared. Running a business in this global context requires a strong focus on operations and supply chain.

Given the growing importance of China to global supply chains, Dr. Lei Lei, Professor & Chair, Department of Supply Chain Management & Marketing Sciences, Rutgers Business School, gave a talk in Shanghai on “Strategies for Managing Global Operations.” The talk was attended by a group of visiting Rutger’s MBA students along with industry professionals and former students.

Based on several case studies of successful global corporation, Lei emphasized several strategies that companies need to apply to succeed operationally in a global context. These include: Delivering the right quality/quantity, at the right time, with the best service and price; Creating value to the customers while improving the profit margin, revenue, cost, and asset utilization; Improving the velocity without sacrificing quality or service levels.

Lei emphasized that companies need to be efficient and responsive to the market with a high level of service. At the same time they need to be innovative with their products, working with suppliers collaboratively rather than just squeezing them on price. In this environment, Lei noted, visibility across the supply chain through good IT systems is essential in forecasting and reducing inventory. Achieving supply chain excellence requires a delicate balance of all these factors, made possible by effective collaboration.

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MAY/JUNE 2009

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EVENTUPDATE

March and April were busy months for Supply Chain Council lunch workgroups, with Executives from Maersk Logistics, Bosch, Delphi and FedEx speaking to lunch workgroups on the latest developments and issues they are facing.

The inside view on Maersk Logistics

An electronic approach to collaboration

Steffen Schiottz-Christensen, Managing Director, Maersk Logistics

Thomas Fendt, Purchasing Engineer , Bosch (China) Investment

“One of the biggest challenges,” said Steffen Schiottz-Christensen, “is getting Chinese consumers to spend.” At a March 3PL Lunch, he talked about some of the issues facing Maersk Logistics in China including a drop in exports, a reduction in freight volumes and some of their restructuring challenges. He was appointed as CEO and Managing Director of Maersk Logistics / Damco North Asia in 2008.

Maersk Logistics currently employs approximately 3,000 associates with an additional 2,000 people engaged in Maersk Logistics Joint Ventures. There is also opportunity at the moment, noted Schiottz-Christensen. “It is a safe bet to start considering M&A activity, if you have the money.”

Thomas Fendt of Bosch China spoke at a workgroup geared for IT vendors, system integrators and end-users to network and discuss ideas on how to advance supply chain, IT solutions for the China market. The focus of Fendt’s discussion was Bosch’s collaboration with Software-asa-Service (SaaS) provider, SupplyOn which was rolled out in Chinese plants starting in 2007.

SupplyOn’s solution has helped Bosch to reduce paper, create greater efficiency and standardize and eliminate parallel processes. This has helped to increase transparency and reliability in Bosch’s supply chain in China.

Delphi goes on a lean diet Dr. Jeffrey Richards, Logistics Director, Delphi Asia Pacific Dr. Jeffrey Richards is currently the Logistics Director for Delphi Asia Pacific. He has complete logistics responsibility for more than 30 manufacturing locations and 40 warehouses located throughout the region. Delphi centrally sources and manages all logistics activities in addition to designing and implementation their own lean logistics network. At the Council’s lean workgroup, Richards spoke about how Delphi has revolutionized their supply chain by implementing lean strategies which have resulted in a reduction of logistics costs as a percentage of sales to 0.48%. These changes included shifting the supply chain from push to pull, employing electronic tools to facilitate collaboration across the supply chain and implementing fixed transportation scheduling.

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The human face of FedEx Kuan-Thye Sean, Managing Director Human Resources Service, China & APAC HR Services Center, FedEx Express To an audience of 3PL professionals, Kuan-Thye Sean talked about the establishment of FedEx’s Human Resource Service Center (HRSC) in Wuhan along with its challenges and best practices.

She also gave an overview of some the issues the company faced in integrating employees from FedEx’s Joint Venture with DTW. First joining FedEx twelve years ago as Personnel Manager for Singapore & Indonesia, she relocated to Shanghai in July 2006 as part of the merger and acquisition team to launch FedEx domestic service in China. She led close to 80 HR professionals to set up FedEx’s first HR Services Center in Asia and ensured a smooth transition of close to 2,300 new hires located across 63 cities in China.

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Earthquake Swine flu Supplier bankruptcy Ship piracy Internet breakdown Strikes Typhoon Product recall Fake parts Coup d'etat Warehouse pilferage Commodity prices Exchange rates

They can all knock out your supply chains.

Are you prepared?

Attend the Supply Chain Risk Summit on June 17 in Shanghai to find out...

Summit 2009

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MOVERS&SHAKERS

Are you a member of the Council?

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

McDonald’s appoints new CEO for China McDonald’s has announced that it is appointing Kenneth Chan from Singapore as its new CEO for China. Prior to this appointment, he was regional manager for Malaysia, Taiwan, and South Korea as well as managing director for McDonald’s Singapore.

In previous positions, Chan was engaged in the promotion of McDonald’s delivery service, its 24-hour restaurants, its coffee products, brand building, and business development. He is replacing Jeffrey Schwartz, who continued to work in McDonald’s until April 1, 2009. Chan has 12 years working experience in McDonald’s.

Asetek appoints Alex Tang to lead Supply Chain team Asetek has appointed Electronics Industry veteran Alex Tang as Vice President of Supply Chain to lead its worldwide manufacturing effort. Mr. Tang brings extensive knowledge of OEM and EMS manufacturing, outsourcing, materials and supplier management to the company. Tang also brings expertise in contract negotiation and quality control. Over the past 15 years he has served in a variety of manufacturing operations and supply chain positions with companies including Solectron, SanDisk, and Trimble Navigation. Alex holds an MBA in Marketing from Santa Clara University as well as a Bachelors Degree in Business Administration from University of Oregon.

Agility appoints new Managing Director in the Philippines Agility has appointed Colin Ricardo as Managing Director for the Philippines. Ricardo has a wealth of experience in senior management positions with leading regional logistics companies in Australia, Indonesia, Hong Kong, Korea, Philippines, Taiwan, and Thailand. Ricardo joins Agility from the Aboitiz Group in the Philippines, where he headed their logistics company 2GO. Previously he worked for TNT and DKSN, among others, in various Asia Pacific countries. With a staff of more than 900, including contract labour, Agility Philippines has been in operation since 1979.

Join hundreds of senior executives like yourself who have come to rely on the Council for their supply chain management needs over the past 5 years.

Apply or renew your membership today!

Email: mship@supplychain.cn or call: +86 (21) 51021617/18

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2009

KNOWHOW

Six Big Ideas

I

n an economy experiencing the type of growth China has over the past decade, the primary focus of business becomes managing growth and increasing market share. Best-practices are often sacrificed for expediency, resulting in extra cost and risk. Although gross profit may be increasing, profit margins definitely are not. Eventually growth comes to an end, whether by competition or economic conditions, and companies scramble for cost containment. This edition of ‘Supply Chain 101 - Back to the Basics.’ a regular CHaINA column, outlines six non-capital intensive ideas you can consider to get control of your costs and quickly improve profitability.

1

- Align the Organization In the frantic scramble to eliminate cost, one of the most critical responsibilities of Senior Management is to map out a sustainable strategic plan. But merely having a plan is not enough.

Not only must it be understood throughout the entire organization, rewards mechanisms must be quickly installed to reinforce it and ensure alignment throughout the value chain. Internal and external functional entities must be aware of their respective roles and how each relates to the others. Communication should be copious and corrective action swift and precise.

- Process Mapping W. Edwards Demming said, “A bad process will beat a good person every time”. The first step is to clearly understand the desired end state. Then mapping a process can be as simple as diagramming an operation by observation; interviewing, no matter how sincere, is never accurate. Often merely creating the diagram will reveal some wasted steps. The final step is to thoughtfully compare the diagram with the desired end state, eliminate superfluous steps and modify the process to close the gaps.

- Partner with Suppliers Suppliers should be considered esteemed upstream partners of the value chain. Quickly renegotiate supplier contracts to reflect the new economic realities. Offset IP risks with frequent visits, close relationships, collaborative forecasting and mutual planning. Capture vendor’s loyalty by tying their success to yours.

New cost savings must be shared with upstream partners as you are both investing in mutual survival.

- Manage Inventory Think about inventory in new ways. Categorize inventory based on its application then consider how to deal with entire categories. Review EOQ calculations based on the new economic realities. Inventory is a function of time and information: cutting lead times or getting more accurate information has a direct impact in inventory balances. True kanban will slash WIP. Re-think

2

3

4

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kanban container/lot sizes. Stress manufacturing processes to reveal bottlenecks and islands of WIP. Partnering with suppliers will reduce RM and components. Start cycle counting. Rationalize/optimize transportation networks and pipeline inventories.

Apply Lean ideas to DRP (Distribution Resource Planning).

- Rationalize Customers Perform a Pareto analysis on your customers based on net profitability. Total cost-to-serve must be thoughtfully allocated in an equitable manner. A careful analysis of ‘C’ customers will reveal net losers which should be shed from your customer portfolio: let your competitors deal with the high-maintenance, costly customers.

- Apply Lean Manufacturing Principles The principles of Lean Manufacturing are universal. The first step in any Lean initiative should be to know the customer and clearly and unequivocally understand what s/he values. This is the fulcrum of any profitable business transaction. Without it, you cannot know what is a value-add and what is waste.

5 6

Step 7

- Moving Forward Stephen R Covey calls it “Sharpen the Saw”.

Womak and Jones call it “Managing towards Perfection”. The Japanese call it ‘kaizen’. Total Quality Management calls it “Continuous Process Improvement”. Consultants refer to it as “Sustainability”. Whatever you choose to call it, success in dynamic business environments requires continuous, relentless analysis and thoughtful, never-ending course correction.

Chris R Deans CPA, CPIM has been in Supply Chain Management over 20 years. He has crafted SC strategy and managed large-scale operations for several Fortune 100 companies and FEMA. Currently performing Lean consulting in Asia, Chris also teaches Supply Chain Management for Webster University’s EMBA program and is a published author.

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DON’T MISS OUT! List your company in the most comprehensive directory of supply chain & logistics related services in Asia

VENDORS’ DIRECTORY

•Logistics Services •Professional Services •Real Estate Services

Q3/Q4 Edition to be published in August 2009 Deadline for listing, July 15, 2009

•IT & Software Solutions •Equipment Providers

A comprehensive bi-lingual listing of vendors, service and equipment providers, consultants and IT solutions providers for the supply chain and logistics industry  Companies are listed according to their specific service offering  In-depth company profiles including contact details and full description of services and solutions  Free and complete online access at www.supplychains.com

FM Logistic

弗玛仓储（太仓）有限公司  Corporate HQ 公司总部 Phalsbourg, France 法国

法尔斯堡

 stab ished in China 在中国成立 20 4 年  Lega status in China 企业性质 WOFE 外商独资企业  China head office 中国代表处总部 3 Guangzhou West Roa , Taicang ED , Jiangsu Pr vince 江苏省太仓市经济开发区广州西 路 号  +86 (51 ) 8889 8601  +86 (51 ) 8889 86 4  www.fm ogi tic.com

 Key Contacts Ayme ic Chandavoine  +86 (51 ) 8889 8607  +86 (512) 8 89 86 4  achand voin @fm ogi tic.cn To y Wu 吴重宁  +86 (51 ) 8889 8609  +86 (51 ) 8889 86 4  wu@fm ogi tic.cn

Who should list in the VENDORS’ DIRECTORY? Any company that provides services, solutions, equipment in the field of supply chain and logistics and procurement should be listed.

How much does a company listing cost?

A 12-month company listing costs only US$ 750 (or US$ 450 for Council members).

Because the directory is re-printed every 6 months, we give companies the opportunity to update their profile online, meaning your company information will always be up-todate.

 Highlights • Global ea er with years f expe ience in China • Direct wnership f assets give clie ts more co trol • Sophi ticated transpo tation and warehouse T y tem a use f GPS equal greater re iabi i y • The powe f focus – we excel in wa ehousing and di tribution • Speciali ed in transport tion and di trib ti n for m jor g obal FMCG and etail clie ts in China • 携全球物流多年经验的领导 • 自有运输团队和仓库给客户带来 更大的 便利 • 先进的运输以及仓储 T系统和全球定 位系统 的运用具有更大的可靠性

 Comp ny Introdu tion With 40 ye rs f logi tics eadership, FM Logi tic has been in China fo n w, bringing from its five years E ropean home base its p oven model f focus port ti n and wa ehousing, on transp us dire t wnership f trucks and warehouse clie ts i the mainland. , to I April 2009, FM wi l open a new wareh use in hanghai’s Taicang ater in the yea wi l open di tri t, and an the , i Ya jia , achieving space and an eve wider 10 ,000 square meters of ange f se vice options.

FM Logi tic ffer the gold tandard in co t-pe o mance, bringing a new qua ity and time iness evel f to warehousing and di t ib tio . Call us to learn more. 携40多年的欧洲物流业 先地位和已被证 储设施 弗玛物流已经为中国大陆地区的 明的先进的运输和仓储模式 加上在中国自建的车队和仓 客户提供 五年的优质物 服务 2009年4月，FM将在上海附 近的太仓开始我们的物流操作， 随后还将在北 附近燕郊建立大 有仓库。 0万平方米的仓库面积提供 型自 广阔的服务空间。 FM中国为物流业的成本效率树 立 很好的标准 将仓储和配送服 务的质量和时效性提高到一 水平 请联系我们以获取更多的信息 新的

 Services nd Solutions • Domestic oad transpo t tion • Warehousing • Di tribution • Sup ly chain manageme t optimiz tion • Transpor ion manageme t y tems and logi tic s f ware deve opme t

• 国内公路运输 • 仓储 • 配送 • 供应链管理 • FM i，FM专门的软件开发部门， 为供应链 管理提供完全 的 T技术支持，目 标是物流及 信息流的持续改进

• 专注 我们的优势—仓储和配送 • 在中国从事主要的全球快速消费 品和零售业 的运输和配送

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Our FM-owned aci t es open s nce 2008 of er sta e-of the art wa ehousing solu ions

LOGISTIC S SERVICES

Who relies on the 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 Asia. These are the people that decide which supply chain and logistics service providers to use.

How is the 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 Asia who request a copy (companies are only asked to cover the mailing cost). The Directory will also 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 Asia, please contact:  +86 (21) 51021617 or 51021618

 directory@supplychain.cn

 www.supplychains.com

PRODUCTRECALLS

DANGER! The U.S. Consumer Product Safety Commission (CPSC) 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.

Senseo One-Cup Coffeemakers recalled The U.S. Consumer Product Safety Commission (CPSC), in cooperation with Philips Consumer Lifestyle, of Stamford, Conn., recently announced a voluntary recall of about 155,000 units of Philips Senseo One-Cup Coffeemakers because of a burn hazard to consumers. Manufactured in China and Poland, the coffeemakers were sold at Wal-Mart, Target and Safeway stores and online at Amazon.com between July 2006 through March 2009 for between $60 and $140.

Women’s shoes recalled by Wal-Mart Wal-Mart announced a voluntary recall of 200,000 pairs of women shoes manufactured by Joyfair Footwear of Taipei, Taiwan. A fall hazard is posed to consumers as heels on the shoes can easily detach.

Manufactured in China, the shoes were sold exclusively at Wal-Mart stores in the U.S. from June 2008 through December 2008 for about $13.

Best Buy announces recall of Insignia 26-Inch FlatPanel LCD Televisions In cooperation with Best Buy, the CPSC announced a voluntary recall of 13,300 units of Insignia 26-inch flat-panel LCD model IS-LCDTV26 televisions. The television power supply can fail, posing a fire and burn hazard to consumers.

Manufactured in China, the product was sold exclusively at Best Buy stores and online from August 2005 through June 2006 for about $800.

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Clothing Irons recalled by Conair Corporation Conair Corporation, of Stamford, Connecticut in cooperation with the U.S. CPSC announced a voluntary recall of 45,000 clothing irons.

The irons can overheat, posing a fire hazard to consumers. They were sold at department and retail stores nationwide from October 2008 through March 2009 for about $50, the irons were manufactured in China.

Evenflo recalls Envision™ High Chairs Evenflo Company Inc., of Miamisburg, Ohio announced a voluntary recall of about 643,000 units of Evenflo Envision™ High Chairs due to fall and choking hazards. So far Evenflo has received 320 reports of seatbacks detaching or reclining unexpectedly. Manufactured in China, the product was sold at Juvenile product and mass merchandise stores nationwide for between $80 and $110.

Fitness Balls Recalled by EB Brands In cooperation with EB Brands, of Yonkers, New York, the U.S. CPSC announced a voluntary recall of 3 million Bally Total Fitness, Everlast, Valeo and Body Fit Fitness Balls on.

Made in China, the balls posed hazard of unexpectedly burst while in use, causing the user to fall to the floor. The fitness balls were sold at department stores and fitness retailers from May 2000 to February 2009 for between $15 and $30.

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Asia’s leading air cargo event is back in 2009

AsiaWorld-Expo, Hong Kong September 8-10, 2009

Part of the world’s only regional B-to-B event for commercial aviation and civil aerospace on China’s doorstep.

The well-attended tea breaks, buffet lunches and cocktail parties are back on the exhibition floor.

Unique networking opportunities with the world’s leading airlines, airports, IT providers, equipment manufacturers and many others.

And, of course, the two-day Conference with speakers and delegates from Asia, the Middle East, Europe and the USA. Mornings only.

Co-located with Asian Aerospace 2009 - www.airfreightasia.com

Supply Chain Physics

By Patrick Daly, Alba Logistics

You may well wonder what could be the possible connection between the world of natural Physics and the world of Supply Chain Management. Well, there is a fascinating new field of study called Social Physics that is actively examining the application of the laws of natural Physics to the affairs of human beings. Philip Ball’s recent book “Critical Mass - How One Thing Leads to Another” gives a fascinating insight into the subject matter and discusses the science in some detail (Philip Ball, Arrow Books, ISBN 9780099457862).

As Ball explains, one of the most curious of the phenomena that occur in natural Physics is what is known as a Phase Transition. This happens when, for example, water freezes to ice or boils to vapour. These phase transitions for water happen at what are called critical points in temperature. For water, as we all know, the critical points are 0 degrees centigrade for the solid to liquid transition and 100 degrees centigrade for the liquid to gas transition.

“So what?” you may be saying to yourself. “I am a Supply Chain Manager or a Logistics Manager, or a Company Director or whatever, what relevance do phase transitions in natural Physics have for me”. Well the answer is - quite a lot in fact - read on and I will explain.

You see, the really curious thing about water freezing is that close to the critical point of 0 degrees centigrade, a very small change in temperature can cause the whole system to shift very quickly and completely from one state or phase to another. In effect it is either entirely liquid or entirely solid ice - there is nothing in between and the change from one to another happens all at once in response to an imperceptibly small change in temperature.

Similarly today, under the strain of recession many businesses and indeed entire supply chains are moving into regions where the organisational “temperature” is getting perilously close to its own particular critical point.

And what would natural physics tell us about the conditions close a critical point? It would tell us that very small changes in this organisational temperature could cause a dramatic and sudden phase transition.

The concerning thing is that this would be a phase transition between survival and prosperity on the one hand and failure and ruin on the other. Close to the critical point small changes in the organisational temperature in the wrong direction will now have big effects shifting an organisation from liquid and flowing to frozen rock solid in the blinking of an eye.

Understandable as it may be given the current economic environment, the tendency to batten down the hatches, suspend all change and action, cut investment across the board and become introspective and defensive could be fatal at this time. This approach, in my opinion, will lead to a small but significant cooling in organisational temperature that, close to the

The tendency to batten down the hatches, suspend all change and action, cut investment across the board and become introspective and defensive could be fatal at this time.

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FINALWORD

critical threshold as we are, could cause things to freeze up catastrophically.

On the other hand, if the current challenges are viewed as a call to action to create a sense of urgency, if they can be a catalyst to get things done now to make operations more efficient and productive, more effective in delivering value to the customer and more focused on bolstering cash flow, this will maintain the organizational temperature above the critical point. This energy will keep things flowing, guarantee liquidity and prepare the business well to emerge stronger than ever from the tough times ahead.

Those businesses and those supply chains that do successfully stay above the critical point and learn to thrive in the face of challenge will emerge leaner, fitter and stronger than at any time in the past. To be among them, the time to act is now, it is a time to be bold, a time to look for opportunities, a time for conviction, for leadership and for action.

Here are some of the things that you can do to keep your organisational temperature above the critical point: Use the recession as an accelerant for action and pull forward planned restructuring

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Seek out multiple opportunities for productivity improvement Drive innovation harder and faster Streamline processes, removing non value added activities and excess inventories Improve focus on measurement systems and key performance indices Focus Cap-Ex investments on initiatives with short-term paybacks in the 12-month range Maximize flexibility and protect cash flow Donâ&#x20AC;&#x2122;t lose site of longer-term investment plans for future growth And remember, you cannot cut your way back to success; you are going to have to innovate and be creative to thrive and prosper in the face of challenge.

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CLASSIFIEDLISTINGS

LOGISTICS SERVICES

19/F Broadway Centre, 93 Kwai Fuk Road, Kwai Chung, NT, Hong Kong, China

香港新界葵涌葵福路93号 百汇中心19楼 +852 2211 8668 www.agilitylogistics.com ALLW NGS 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

B-1F XingHong Science & Technology Industrial Park, Feng Huang Gang Village, Xi Xiang, BaoAn District Shenzhen 200231

深圳宝安区，宝安西乡前 进二路凤凰岗村星宏 科技园，邮编200231 +86 (755) 3386 1666 www.arvatoservices.com.cn 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 LOGWIN AIR + OCEAN CH NA LTD. 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 CHINDEX INTERNATIONAL 2F, Tower B, China Arts&Crafts Building, 103 Jixiangli, Chaoyangmenwai,

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LOGISTICS SERVICES

19/F, Jiang Nan Shipyard Building 600 Luban Road, Shanghai 200023

上海鲁班路600号 江南造船大厦19楼 +86 21 5302 9988 www.cevalogisitics.com 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

3000 South Lianhua Road, Prologis Logistics Park, Minhang, Shanghai, 201109

莲花南路3000号，普洛斯 闵行物流园区内。 邮编：201109 +86 21 6309 8336 +86 21 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 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

LOGISTICS SERVICES HAVI FOOD SERVICES 6 Xingsheng Jie, Beijing Economic & Technological Development Area, Beijing, 100176 北京经济技术开发区兴盛街6号，100176 +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 LIMITED 01-11 YouYou International Plaza 76 Pujian Road, Pudong Shanghai, China 200127 +86 21 6165 9288 www.ipssupplychain.com KERRY EAS LOGISTICS No.21,xiaoyun Road,North Dongsanhuan Road,Chaoyang District,Beijing,100027 北京市朝阳区东三环北路霄云路21 号大通大厦，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 L NFOX 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

DSV LOGISTICS 38F, 1 Grand Gateway 1 Hongqiao Road Shanghai 200030 +86 (21) 5406 9800 www.dsv com www.dsv com cn

L NKSTAR 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

ELEE 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

LOGIFASHION 375 Kefu Rd, Nanxiang Town, Jiading District, Shanghai, 201802, China +86 13917614568 www.logisfashion.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

MAERSK LOGISTICS 24/F, Tian An Centre, No. 338 Nanjing Road, Shanghai, 200003 中国上海黄浦区南京西路338号天安中心24 楼 200003 +86 （21）23062666 www.maersk-logistics com

LOGISTICS SERVICES 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 +86 21 6160 1190 www menloworld.com PTL 1603, Kun Yang Plaza, No. 798 Zhao Jia Bang Rd, Shanghai, China 200030 上海市肇家浜路798号坤阳国际商务广场 1603室邮编200030 +86 (21) 6445 3190 www ptl-group.com RUNBOW LOGISTICS Office #207, Building 39 No. 2688 Yindu Road 201108 Shanghai, China +86 (21) 5443 1002 www runbow-logiitics com

Room 3802-3806, Raffles City (Office Tower) No.268 Xi Zang Zhong Road, Shanghai 200001

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 SDV PRC INTERNATIONAL 20F, East Building, New Hualian Mansion, 755 Middle Huai Hai Road Shanghai 200020 上海市淮海中路755号新华联大厦东楼20 楼，邮编200020 +86 (21) 3395 0600 www sdvchina.com

7th Floor, 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 SHENZHEN ST-ANDA LOGISTICS 18/F, Times Plaza, No. 1 Taizi Road, Shekou, Shenzhen, PRC 518067

www.chainaonline.com

CLASSIFIEDLISTINGS

VP of Engineering Our client is a leading global automotive design consultancy and is expanding due to increased focus and demand for their services in the Asia Pacific market place.

Location Shanghai As part of the senior management team in Shanghai, you will be responsible for the growth and development of skills of the engineering team in China. You will work closely with senior engineering staff across all the business sites and represent them in technical selling. The key responsibilities are to: ◆ Take responsibility for commercial and technical delivery of projects, work packages and the implementation of associated processes ◆ Coordinate local IT infrastructure and business management functions in line with policies ◆ Work closely with senior engineering function group leaders to ensure consistency of engineering quality and delivery ◆ Define and manage the implementation of Quality and H&S standards ◆ Maintain senior customer relationships

The successful candidate must have a high level of selfmotivation and be an enthusiastic team leader, with the drive and determination to succeed. You will be degree qualified in Engineering, have experience in the automotive industry and sound knowledge of Powertrain and engine design is essential.

You will also be highly resilient and be able to cope with a rapidly changing environment and demanding client requirements. The successful candidate will also have: ◆ Proven people development and mentoring skills ◆ Experience in building and leading a technical, multidisciplined team ◆ A proven ability in successfully delivering projects within tight deadlines ◆ Chinese language skills and cultural knowledge is essential

To apply for this position, please go to www.michaelpage.com.cn/apply quoting reference number H349130 or call Josh Hollway on (+86 21) 3222 4758 for further details. Data collected will be used for recruitment purposes only. Shanghai Tian Cai Network Co. Ltd., under license from Michael Page International Group PLC.

LOGISTICS SERVICES 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 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 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23楼 +86 21 3887 9520 www.werner.com YATFAI LOGISTICS (HOLDING) LIMITED 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

www.chainaonline.com

LOGISTICS SERVICES +86 0755 3336 6898 www.yatfai.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 PROFESSIONAL SERVICES

PROFESSIONAL SERVICES BAKER & MCKENZIE Suite 3401 China World Tower 2 China World Trade Center, Jianguomenwai Dajie Beijing 100004, PRC +86 10 6535 3800 www.bakernet.com BARKAWI A 705, Dong fang Road, Eton Place, Pu dong New District, Shanghai 200120 上海东方路裕景国际商务广场A705室 +86 21 6859 9686 www.barkawi.com

ACCENTURE 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

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ARAIA SUPPLY MANAGEMENT CONSULTANTS Suite 1709, No. 93 Huai Hai Zhong Road Shanghai 200021 Republic of China 中国上海市淮海中路93号大上海时代广场办 公楼1709室, 200021 +86 21 6391 8356 +86 139 16217254 www.araia.com ARVATO SERVICES 20F, Cloud Nine Tower, 1018 Changning Road, Shanghai 200042 上海市长宁路1018号-龙之梦大厦-20层， 邮编200042 +86 (21) 6161 1866 www.arvatoservices.com.cn

17F Lippo Plaza, 222 Middle Huaihai Road, Shanghai,

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CLASSIFIEDLISTINGS

PROFESSIONAL SERVICES 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 DEMAND MANAGEMENT SYSTEMS PO Box 6180, Norwest Business Park, Baulkham Hills BC NSW 2153 Sydney, 2153 Australia +612 9659 4555 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 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 ET2C NTERNATIONAL NC 13F, East Tower, King World Hi-Tech Building, 668 Beijing East Road, Shanghai 200001 上海北京东路668号科技京城西楼13F 200001 +86 21 5308 1220 www.et2cint 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

PROFESSIONAL SERVICES 1168 West Nanjing Road Shanghai 200041 上海市南京西路1168号中兴泰富广场3208 室，邮编200041 +86 (21) 6256 7333 www.kornferryasia.com 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 www.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 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 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 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 上海南京西路1515号嘉里中心601- 603 邮编200040 +86 21 3222 4758 www.michaelpage com cn

IVIE ASIA Room 1507, You You International Plaza, No. 76 Pu Jian Road, Pu Dong New District Shanghai, China 200127 中国上海市浦东新区浦建路76号由由国际 广场1507单元，邮编200127 +86 (21) 6165 9100 www.ivieinc com KORN/FERRY INTERNATIONAL Suite 3208, CITIC Square

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7 ROCK INVESTMENT ADVISORY 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

REAL ESTATE SERVICES 邮编200040 +86 21 2208 0213 www dtz.com/cn 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

SUPPLY CHA N CONSULT NG Suite 404, 20 Donghu Road, Xuhui District, Shanghai, CHINA 200031 上海市徐汇区东湖路20号404室 +86 21 5404 0818 www.supplychain-consulting.com TRACTUS ASIA Suite B, 22nd Floor Zhaofeng Universe Building 1800 Zhongshan West Road Shanghai 200235 上海中山西路1800号 兆丰环球大厦22楼B座，邮编200235 +86 (21) 6440 0990 www.tractus-asia 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 REAL ESTATE SERVICES 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

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 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

388 Tie Li Road Bao Shan District Shanghai 201900

上海铁力路388号

BM GLOBAL BUS NESS SERVICE 北京市朝阳区工体北路甲 2号 盈科中心 BM大厦，25层 邮编：100027 +86 10 6361 8888 www.ibm com/cn/zh/ NTEGRATED 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

PROFESSIONAL SERVICES 2705-06室 Tel: +86 21 6386 8700 Fax: +86 21 6386 8712 www.resourcesglobal.com

+86 21 3379 4008 www.blogis.com.cn 11/F PricewaterhouseCoopers Center, 202 Hu Bin Road, Shanghai 200021, China

中国上海市湖滨路202号普 华永道中心11楼 +86-21-2323-8888 www.pwccn.com RESOURCES GLOBAL ENTERPRISE CONSULT NG (BEIJ NG) CO., LTD SHANGHAI BRANCH COMPANY Room 2705-06, Lippo Plaza, 222 Huaihai Middle Rd, Lu wan District, Shanghai, 200020 上海市卢湾区淮海中路222号力宝广场

CB RICHARD ELLIS Suite 3201 K Wah Center 1010 Middle Huaihai Road Shanghai 200031 上海淮海中路1010号嘉华中心3201室 200031 +86 21 2401 1200 www.cbre.com.cn COLLIERS NTERNATIONAL 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 DTZ 42-43F,Plaza 66, Tower 2, 1366 Nanjing Road West, Shanghai 200040, China 中国上海南京西路1366号恒隆2期42-43楼

500 Zhangyang Road, Level 14 Unit A-D, Times Square Office Tower Shanghai 200122

上海市浦东新区张杨路500 号华润时代广场办公楼14 楼ABCD单元 200122 www.mapletree.com.sg KNIGHT FRANK Rm 1208 Evergo Tower, 1325 Middle Huaihai Road, Xuhui District, Shanghai 200031 中国上海市徐汇区，淮海中路1325号，爱美 高大厦1208室，200031 +86 21 6445 9968 www knightfrank com PROLOGIS water Port Business Plaza, Luchaogang, Nanhui, Shanghai 201308 上海南汇芦潮港上海深水港商务广场B座10 楼，201308

www.chainaonline.com

CLASSIFIEDLISTINGS

MagicBusCreative Grant-oh! Buchwald

EQUIPMENT PROVIDERS

EQUIPMENT PROVIDERS

北京经济开发区中和街13号，邮编100176 3/f, Qing Shui Wan Hotel Wing Office Building, 1309 Kaixuan Rd (N) Shanghai 200063

上海市凯旋北路1309号清水湾大酒店综合楼 3楼，邮编200063 www.hoermann.cn LOSCAM PACK NG EQUIPMENT 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

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

40/F, Suites 8-10, 2 Grand Gateway, 3Hongqiao Road, Shanghai, 200030

phone: +86 136 4165 6924 email: magicbuscreative@mac.com www.flickr.com/photos/gmartini

REAL ESTATE SERVICES +86 (21) 6528 1992 www.shtslp com TONGSHENG LOGISTICS PARK 10th Floor, Unit B, Shanghai Deepwater Port Business Plaza, Luchaogang, Nanhui, Shanghai 201308 上海南汇芦潮港上海深水港商务广场B座10 楼，邮编201308 +86 (21) 6828 1992 www.shtslp com YUPEI GROUP Yupei Building, 2500 Jinchang Road, Shanghai 200331 上海市普陀区金昌路2500号宇培大厦， 邮编200331 +86 (21) 6627 7577 www.yupeigroup com IT & SOFTWARE SOLUTIONS APPRISE SOFTWARE 6009 Changjiang Science Building No. 40 Nanchang Road Nanjing, China 210037 中国江苏省南京市南昌路40号长江科技园大 厦6009室，邮编：210037 +86 (25) 8345 5308 www.apprise com BARLOWORD OPTIMUS 35/F UOB Plaza 1, 80 Raffles Place, Singapore 048624 +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 CORE SOLUTIONS Unit 509, Core E, Cyberport 3 100 Cyberport Road, Hong Kong +852 2378 6300 +852 2575 5613 www.coresolutions.com 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 EMPTORIS Emptoris, Inc. PO Box 173, Clementi

www.chainaonline.com

IT & SOFTWARE SOLUTIONS Central Post Office, Singapore 911206 +65 6778 6395 www.emptoris.com NFOR 15 F Raffles City Office Tower 268 Xizang Zhong Road Shanghai 200001 上海市西藏中路268号来福士广场15楼 +86 21 5359 9666 www.infor.com

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

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 MANHATTAN ASSOCIATES SOFTWARE 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 REDPRA R E 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 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) 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 EQUIPMENT PROVIDERS BPS GLOBAL GROUP Unit 3104,Tower 1 Kerry Everbright City 218 West Tian Mu Road 200070 Shanghai, 上海市闸北区天目西路218号嘉里不夜城第 一座3104室 邮编200070 +86 21 6317 8830 www.bps-group.net HORMANN BEIJING DOOR PRODUCTION 13 Zhong He Street, BDA, Beijing 100176

LXE Room 03B,5/F Office Tower Huaihai Road(C) 200031 Shanghai, China 上海市淮海中路1045号淮海国际广场办公楼 0503室 +86 (21) 6124 9688 - 866/862 www.lxe com 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 徐家汇路555号,广东发展银行大厦5楼A 座 200023 +86 21 6390 1261/62 www.schoellerarcasystems com

THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS

Key Account Manager CHaINA Magazine, part of the Global Supply Chain Council, www.supplychain.cn, is looking for a Key Account Manager to handle sales for the variety of media products we offer to a diverse set of clients.

Entering our third year, CHaINA Magazine is a trade publication focused on supply chain and logistics in China and other developing markets in the Asian region.

Job Duties: With major responsibilities involving selling both print advertising space in the magazine and banner ads in our electronic media, the position will involve promoting and selling conference sponsorship package, directory listings and other account management activities.

Requirements: Knowledge of advertising, trade publications or trade show industry is advantageous At least two years of sales or business development experience recommended Good communication skills in both English and Mandarin Business contacts in Shanghai useful Individual should be: able to work independently, highly motivated, goal oriented and have an ability to build relationships with clients over the long term Compensation: Base plus commission Contact Russel Beron: rberon@supplychain.cn

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61

COMPANYINDEX

360buy.com ������������������������������� 27 7-Eleven ������������������������������������ 27 85C ��������������������������������������������� 11 A.T. Kearney Management Consultants ������������������������������� 26 Adidas ��������������������������������������� 46 Aegis Logistics �������������������������� 28 Agility ����������������������������������� 25, 50 Air China ������������������������������ 25,26 Alba Logistics ���������������������������� 44 Allcargo ������������������������������������� 28 Amway �������������������������������������� 46 Apple ����������������������������������������� 34 Asetek ��������������������������������������� 50 AVIVA-COFCO Life ������������������ 19 B&Q ������������������������������������� 46, 44 Bank of China ��������������������������� 20 Bank of Communications ��������� 20 Barkawi ������������������������������������� 36 BBK ������������������������������������������� 42 Beijing West Industries ������������� 25 Best-Buy ����������������������������� 46, 54 Blue Dart ����������������������������������� 28 Bosch ���������������������������������������� 48 Carrefour ������������������������������ 10,27 Cavico Vietnam ������������������������� 29 China Construction Bank ��������� 20 China Life Insurance ���������������� 20 China Logistics Corp ��������������� 27, China Merchants Bank ������������� 20 China Mobile ����������������������������� 34 China National Petroleum �������� 20 China Petrochemical ���������������� 20 China Telecom �������������������������� 20 China Unicom ��������������������������� 34 China Vanke ������������������������������ 19 Chinese Foxconn Technology Group ���������������������������������������� 26 CHINT ��������������������������������������� 27 Christine ������������������������������������� 11 CITPL ���������������������������������������� 28 Container Corporation �������������� 28 Continental AG �������������������������� 24 COSCO ������������������������������������� 26 Daimler �������������������������������������� 28 Dajin Logistics ��������������������������� 47 DB Schenker ����������������������������� 25 Delphi ���������������������������������� 25, 48 DHL ������������������������������������� 15, 18 DTW Group ��������������������������� 14,48 EB Brands ��������������������������������� 54 e-Future ������������������������������������ 44 Envision™ ��������������������������������� 54 Ernst & Young ��������������������������� 19 FedEx ����������������������������������� 14,48 Fiat �������������������������������������������� 28 FM Logis ics ������������������������������ 46 Ford ������������������������������������������� 28 Fujitsu Siemens ������������������������ 25 Future Group ���������������������������� 28 Gateway Distriparks ����������������� 28 GATI ������������������������������������������ 28 General Motors ������������������������� 19 GM ��������������������������������������� 28, 35 Guangzhou Automotive Industry Corp ������������������������������������������ 18 Hangzhou Cigarette Factory ���� 26 Hewitt Associates ��������������������� 19 Holcim (Vietnam) ����������������������� 11 Honda Motor ����������������������������� 18 Hornby’s ������������������������������������ 24 HSBC ���������������������������������������� 29

62

EVENTSCALENDAR

Hyundai ������������������������������������� 28 IBM �������������������������������������������� 44 Industrial and Commercial Bank of China ����������������������������������������� 20 JDA �������������������������������������������� 44 Johnson & Johnson Medical (China) �������������������������������������� 19 Joyfair Footwear ����������������������� 54 Kerry Properties ������������������������ 25 Kühne & Nagel �������������������������� 30 L’Oreal ��������������������������������������� 44 Li & Fung ����������������������������������� 24 Liz Claiborne ����������������������������� 24 Louis Vuitton ����������������������������� 36 Lovells ��������������������������������������� 34 Maersk �������������������������� 21, 25, 48 Mahindra ����������������������������������� 28 McDonald ���������������������������������� 50 McDonald’s (China) ������������ 19, 50 Media Markt ������������������������������ 26 Metro ����������������������������������� 26, 46 Michael Page International ������� 38 Morgan Stanly ��������������������������� 26 Nike ������������������������������������������� 36 Ninetowns Internet Technology Group Company Limited ���������� 27 Parkson ������������������������������������� 44 Paul �������������������������������������������� 11 Philips ���������������������������������������� 54 Ping An Insurance �������������������� 20 President milk ���������������������������� 11 Renault �������������������������������������� 28 Roland Berger Strategy Consultants ������������������������������� 26 RPG Retail �������������������������������� 28 Sanda Kan �������������������������������� 24 SanDisk ������������������������������������� 50 SAP �������������������������������������� 12, 44 SAS Institute ����������������������������� 19 Schneider Electric Low Voltage (Tianjin) ������������������������������������� 27 Sharmoon EZ ���������������������������� 46 Shenzhen Catic Group �������������� 19 Shopper’s Stop ������������������������� 28 Sical Logistics ��������������������������� 28 Sinodis �������������������������������������� 10 Siveco China ����������������������������� 36 Skoda ���������������������������������������� 28 Solectron ����������������������������������� 50 Standard Chartered Bank �������� 29 Suning ��������������������������������������� 46 Suzuki ��������������������������������������� 28 Swisslog ������������������������������������ 26 Taichi Automotive Newsletter ��� 20 Target ���������������������������������������� 24 Tata Motors �������������������������� 21,28 Tesco ����������������������������������������� 46 TNT �������������������������������� 15,18, 50 Toastmasters ���������������������������� 17 Tootoo.com ������������������������������� 27 Toyota Motor Corp ��������������� 18,28 Transport Corporation �������������� 28 Trimble Navigation �������������������� 50 UPS ������������������������������������� 15, 18 Volkswagen ������������������������������� 28 Wal-Mart ������������������ 19, 24, 27, 54 Wal-Mart Stores �������������� 19,24,27 Whirlpool Corporation ��������������� 25 Yantal Wanhua Polyurethanes �� 19 Yum ������������������������������������������� 46

MAY/JUNE 2009

2009 MAY

7

THU

2009 MAY

13 WED

2009 MAY

13 15 WED-FRI

Using Lean Principles to Cut Costs Luncheon

Shanghai Venue:

Osteria Restaurant Organizer:

2009 MAY

7

The Council

THU

Sourcing Leaders Luncheon

2009

Luncheon

Shanghai Venue:

Osteria Restaurant Organizer:

The Council

China International Logistics Technology and Services Expo Roadshow

Suzhou Venue:

Suzhou International Expo Center

MAY

13 WED

2009 MAY

15 FRI

Organizer:

Managing Disruption: Gaining Advantage Through Disasters Seminar

Shanghai Venue:

Sofitel Hyland Hotel Organizer:

European Chamber Credit Crisis & Corporate Credit Risk Management Seminars

Shanghai Venue:

Sofitel Hyland Hotel Organizer:

European Chamber 3PLs Luncheon with Dominic Gates, GM, IDS China Workgroup

Shanghai Venue:

to be confirmed Organizer:

The Council

Suzhou Government

2009 MAY

19 TUE

2009 MAY

20 22 WED-FRI

eSourcing: Is China Ready?

Committee Meeting

Shanghai Venue:

The Executive Centre Organizer:

Britcham

China (Guangzhou) International Logistics Expo Roadshow

Guangzhou Venue:

Guangzhou Jinhan Exhibition Centre Organizer:

CCPIT

2009 MAY

23 25 SAT-MON 2009

JUN.

4

5 THU-FRI

Shenzhen Material Handling Exhibition Roadshow

Shenzhen Venue:

Shenzhen Convention & Exhibition Center Organizer:

LSCMA

2nd Chemicals & Oil Transportation and Storage Exhibition Roadshow

Shanghai Venue:

Shanghai Mart Organizer:

ICIS

2009 MAY

20 WED

2009 MAY

21 THU

2009 MAY

28 THU

2009

JUN.

17 WED

Private Equity & Logistics Forum Forum

Shanghai Venue:

Renaissance Zhongshan Park Organizer:

The Council RMB Trade Settlement Pilot Workgroup Workgroup

Shanghai Venue:

to be confirmed Organizer:

The Council India Private Equity & Logistics Forum, Mumbai Forum

Mumbai Venue:

to be confirmed Organizer:

The Council 2nd Supply Chain Risk China Summit Summit

Shanghai Venue:

to be confirmed Organizer:

The Council

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