2010 Nov-Dec Issue

A Long Road “慢慢” 征程 Page 24

Shifting Gear 开足马力 Page 56

Farming Out Pharma 制药外包 Page 38

November/December 2010

THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS 一本为全球供应链管理人士倾力打造的专业杂志

B2C Logistics Amazon.cn Working partnerships with the top four 3PLs in the country

Yihaodian.com 60% of purchases delivered by own-logistics

Taobao.com Invests in 32 new distribution centers across China

Dangdang.com Pours money into strategic DCs in Beijing, Shanghai, Guangzhou and Chengdu

360buy.com 24 carefully located distribution centers and growing

Publisher: China Supply Chain Council Ltd. (Hong Kong) CHaINA Magazine is a FREE bi-monthly publication for the members of the Council. There is no charge for members and qualified readers to receive subscriptions in China. For your free subscription, extra copies or address changes, please email subs@supplychain.cn 出版商：China Supply Chain Council Ltd. (香港) CHaINA杂志是为Council会员准备的免费杂志。我们协会会员 和高质量的读者都可以免费订阅。为了及时收到我们的杂 志，额外订阅或地址变更请发邮件至subs@supplychain.cn

Office and Team: Publisher Max Henry Chief Editor Monica Liau Editor Kevin Foehner Associate Editor Samuele Gabbio Junior Editor & Translator Sharon Lu

Art Director How Xu Graphic Designer Cherry Chen Photographers Jimmy Kim Contributing Writers Axel Erhard, Barry Chen, Saurabh Tejwani, Bruce Tompkins, Chou Vishal Bhandari Jingyao, David Henshall, Hank Lim, Mike Wise,

CHaINA Magazine is the only bilingual supply chain and logistics magazine in Asia with a strong focus on Greater China. In every issue, we write about the news, trends and best practices that will help manufacturers, retailers and distributors make better business decisions with their sourcing, production, logistics from, to or within Asia.

CHaINA是亚洲地区唯一一本专注于中国的供应链和物流行 业的双语杂志。在每一期，我们通过刊登新闻，行业动向 和实践经验来帮助制造企业、零售商和发行商进行亚洲内 外的采购、生产和物流形式的选择。

Distribution: 10,000 copies on print (6 times a year) CHaINA Magazine is offered FREE of charge by direct post mail to qualified readers in Greater China who are involved in all aspects of supply chain management. It is also distributed through selected locations in major Chinese cities, including hotels, restaurants, service offices/apartments, business centers, airport lounges and other key locations. 发行量：一年六期，一万本 CHaINA杂志通过直接向中国各供应链管理的专业读者发送 邮件来提供免费的阅读机会。同样也分发到中国的主要城 市并在酒店、服务楼，商务中心，机场大厅或其他中心地 带免费赠阅。

Target Readers Our target readers are R&D, sourcing, procurement, manufacturing, logistics, warehousing, transportation, retail, distribution and operations managers, directors, vice presidents and decision makers. A majority of our readers are end-users shippers, mainly foreign-invested and local manufacturers and retailers. 目标读者 我们的目标读者有来自采购、制造、物流、仓储、运输、 零售和分销的运营经理、总监、副总裁、或总裁。大部分 读者是物流的需求者，外资或国内的制造企业和零售商。

THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS

It seems that the talks surrounding recent supply chain gatherings have all centered on a common theme – competition. How do you make sure your company emerges from the stewing muck of companies mired within this vast and utterly endless market?

If you’re in B2C, it could mean investing heavily in logistics platforms – whether it be Monica Liau your own (as Taobao is rumored to be doing) Chief Editor or in independent, up and coming companies.

CHaINA Magazine Perhaps it’ll come from broad experience. Getting ahead might also be something seemingly simple, like buying top notch trucks to keep up with the Joneses.

The possibilities are endless, but at the end of the day, it all comes down to the supply chain. No one knows this better than Kevin Foehner, the new editor for this supply chain magazine, who waits – pen in hand - ready to hear what you readers are going to do next. It’s with great pleasure that I pass the CHaINA magazine torch over to him, and with great regret that I bid this magazine adieu. Thank you for all your help and contributions - this magazine thrives on reader interaction and I hope you’ll be as good to him as you’ve been to me. 最近有关供应链的话题都围绕“竞争”这个老生常谈的话题。在如 今风云变幻的市场，如何让您的公司在来势汹涌的竞争洪流中立定脚跟 并脱颖而出？ 如果你来自B2C领域，那您不会错过最近对物流平台的投资潮，无论 是覆盖物流平台抑或自建物流，相关方案可谓前赴后继。经验丰富可能 稍占上风；胜人一筹也许不费工夫，比如买下顶级货车招摇过市。 机会无穷无尽，但是归根到底，我们都要回到供应链——Kevin Foehner会 对 此 话 题 进 行 深 入 分 析 — — 他 也 将 接 替 我 的 工 作 执 笔 CHaINA。我很遗憾，要同CHaINA说再见了。非常感谢各位长期以来对 我的支持和帮助，没有各位的宽容和鼓励，这本杂志不可能有所成长。 衷心希望各位能爱屋及乌，继续支持Kevin，别因我的离开而离开。

Subscription for Overseas Readers To be able to read CHaINA from outside of Cina, you can subscribe to the iPad version on iTunes.

Stories Ideas, Comments & Feedback If you have an idea for a story, interview or case study, please contact the editor. We welcome feedback and comments about our content or any issues relating to your operations. Please send your email to editor@supplychain.cn 反馈和意见 如果您有任何新闻故事、采访或实践案 例，请与我们主编联系。如果您就杂志 内容或亚洲供应链管理有任何的意见、 建议或新鲜资讯，请发邮件至 editor@ supplychain.cn与我们取得联系。

www.supplychains.com

DISCLAIMER Editorial and advertising are independent and do not necessarily reflect the views of the Council, the board, its members or the staff. While every efforts has been made to ensure accuracy, the publisher is not responsible for any errors. Views expressed by writers or contributors in this magazine are not necessarily those of the publisher. The publisher is not responsible for product claims and representations. @ Copyright China Supply Chain Council Ltd. (Hong Kong). All rights reserved The contents of the magazine may not be reprinted in whole or in part without the permission of the publisher.

No part of this publication may be reproduced without written consent of the copyright holder. CHaINA is a registered trademark of the Global Supply Chain Council.

November/December

3

CONTENTS

november / december 2010

FEATURES

24 30 32

A Long Road “慢慢”征程 The meandering path of Chinese trucking 中国货运之风雨未来

Stepping Out 条条大路通物流 The path less traveled to the supply chain industry 玩供应 取捷径

Can B2C Click with Logistics?

B2C vs 物流？ A different look at what’s happening in B2C B2C另眼观

38

Farming Out Pharma

42

Modernizing and Reinventing

4

November/December 2010

制药外包 A western perspective on pharmaceuticals in China 中国制药之西方视角

与时俱进 科技创新 Infrastructural investment on the Yangtze 浅谈长江基建投资

www.supplychains.com

THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS

First Playing Chicken China’s blocking U.S. chickens, calls fowl play 08 Re-view Paul’s gone, Foxconn recovers and containers are cool 10 News Roundup Price fixing, false charges, and Marks&Spencer 13 Want it? Got it M&A is hot: find out who’s in and who’s out 14 English Media Missed It What you didn’t know the media’s talking about 06

Columns 16 Green Signals 绿色信号 Eco-friendly China Mobile 17 Sustaining Growth 向前看 Corporate practices to keep on growing

Profiles John Paterson - IBM CPO, VP of Global Supply 20 Yann Teste Investing in the right supplier 18

28

SPONSORED FEATURE

FOCUS Insurance 46 At Your Own Risk? 后果自负？ Outlining logistics insurance

www.supplychains.com

Best Practices VICS Is Here The association sees potential on the mainland M&A 50 Come Together 联合出击 A look at Chinese logistics’ consolidation 48

Supply Chain Smoke and Mirrors 反观中国烟草垄断 China’s competition goes up in smoke IPO 54 Update on International Procurement 52

展望全球采购

Focus on IPO trends Automotive 56 Shifting Gear 开足马力 Automotive looking to improve odds 59

Movers & Shakers

EVENTS Best Practices 60 Smartening Up 求贤树人 Practices to improve your workforce’s performances 61 VoCollect Voices in your warehouse 62 CLASSIFIED 65 COMPANY

LISTINGS

INDEX / EVENTS CALENDAR

Final WORD India 66 Not a Game “火”的不仅是赛场 New Dehli struggles to get Commonwealth Games in shape

November/December

5

Supermarket in Yichang City, Hubei Imaginechina

6

November/December 2010

www.supplychains.com

FIRST

Playing Chicken In the most recent U.S–China spat, Beijing has won a WTO fight and imposed a 4 to 30.3% anti-subsidy tariff on chicken products imported from the U.S. China further smacked U.S. poultry with a duty of as much as 105.4% over the next five years on U.S. broiler chicken products, citing a “causal relationship” between U.S. companies dumping at below-market prices and losses in the Chinese poultry industry.

The tariffs apply to chicken parts and whole birds, but not to live chickens or cooked products such as chicken sausage.

Included are chicken feet, which most Americans throw away but are widely consumed in China.

305,600 tons

The amount of U.S. chicken products imported into China in the first half of 2009 according to the Chinese Commerce Ministry

89%

Percentage of China’s total chicken product imports coming from the U.S.

RMB1.09 billion Losses suffered by the Chinese poultry industry in the first half of 2009, nearly as much as their losses for all of 2008

US$114.5 billion China’s trade surplus with the US in the first half of 2010

www.supplychains.com

November/December

7

First

Follow-up

“ How many companies

“Sour Dough”

A defiant Terry Gou, Foxconn Technology target was cut from 50% to 15% as demand

F

ollowing an unflattering exposé on the international Paul Bakery franchise in Shanghai, CHaINA magazine was sent several threatening emails by CEO Harold Levillair. While he spoke vehemently, he refused to answer any of our questions about the accusations.

In early August, all six of the Paul shops in Shanghai closed down without warning or notice. Rumors swirl around the departure, as customers had noticed a decline in quality. Accusations are also flying from Levillair.

Quoted by SmartShang-

Cargo Crisis

L

hai, he blames Frenchbased parent company Holder Group for not investing enough capital.

Mrs. Levillair purportedly noted that as long as Holder Group refuses to invest money, the Levillair group will cease investing their own.

For now, negations are going full steam and Shanghai headquarters are vacated. The stores are boarded up and old bread is molding in bakery windows. The franchise may be dead in the water. asdfas xxxxdfas

8

November/December 2010

C

ast edition, we had a group of experts speculate as to who was causing the cargo space crunch and price hikes… and why. While some retailers continue to panic, several sources believe that the “peak season” has already occurred; thus means space is opening back up and volumes are going back down.

Reuters cites sources saying that cargo volume should continue to decline throughout the next few months, as the sum-

mer crunch came from retailers who were nervous about getting their Christmas shipments in.

October, usually the peak season, should be better than July was.

In terms of pricing, Wei Jiafu, chairman of China Cosco Holdings Co., told interviewers at the World Economic Forum that this will be a good year for shipping companies in terms of profit margins, and believes commodity freight rates will continue to rise. A.P. Moeller-Maersk doesn’t share Cosco’s optimism: they believe demand will actually decrease throughout the 4th quarter.

Container Living

an container living come to China? While high end houses and high-rises have already graced the skyline of many Chinese cities, container buildings are slowly making their way into more practical purposes – aside from low rent housing. A recent article from People’s Daily featured a new “Haolifang” supermarket –

an 80sqft store made inside of a shipping container. The Haolifang concept (which literally translates to “good cube”) was dreamed up by founder Chen Jianhua, who was inspired by new governmental policies

aimed at stimulating domestic demand. Chen says these cubes not only largely reduce the costs of construction, but also help to stimulate commerce in rural regions.

The cube, based in Yunlong village outside of Hangzhou, is one of the 200 Haolifang supermarkets founded in May of 2009.

www.supplychains.com

First

“

have grown this big and still grow 30%?

Group Chairman, in response to the announcement that Foxconn’s long-term growth for Apple Inc. iPhones and iPads failed to offset slowing computer sales.

Thin Ice - Foxconn and Apple

A

fter the suicides earlier this year, Foxconn installed anti-jumping nets on all of the employee dormitories at their facilities in Shenzhen, and as a precautionary measure, on many of the buildings at their inland plants as well (including their plant in Langfang, Hebei province).

Hon Hai also plans on investing in more facilities further inland, including location like Chengdu, Wuhan and Zhengzhou—

We Want to Hear From You!

We invite you to share your thoughts and opinions about this article by sending an e-mail to editor@supplychain.cn . We will publish selected readers’ comments in future issues of CHaINA Magazine. Correspondence may be edited for clarity or for length.

www.supplychains.com

which will provide a cheaper labor force than the (now more expensive) coastal facilities. Wages there could be as low as two thirds of those in the coastal provinces.

Foxconn Chairman Terry Gou doesn’t want to be responsible for the worker’s lives outside of the factory anymore. Instead of providing facilities, he wants to enlist the government to build factory towns for those purposes, shedding the blame for anything drastic that may happen in the future. Mr. Gou has taken other measures to prevent further tragedies from taking place, like hiring more counselors and installing a high-tech computer system that monitors those who call for help.

November/December

9

First

News Roundup Green

Short and Sweet

Going Green Walmart to give suppliers a green push

u The Government of Singapore Investment Corp. plans to list some of its logistics assets via an initial public offering with a goal of raising US $3 billion, starting with Global Logistics Properties (GLP).

Clean by Design’s Best Practices Walmart and H&M, have Percentage teamed up with Natural Practice Payback Resources Resources Defense CounSaved Period cil (NCRD) – a New YorkReuse cooling water : Energy: 1.6-1.8% Water: 2-5% < 1 month from singeing based charity group – and Water: 2% from air compressor system their Chinese textile suppliWater: 1% from preshrink ers to reduce water, energy, and chemical use in their Energy: 3% 5 months Prescreen coal supply chains.

Textile manufacturing Insulate pipes, Energy: < 1 month consumes and pollutes as 0.01-0.5% valves and flanges much as 200 tons of water per ton of fabric, and proRecover heat from Energy: 1% 8 months duces considerable CO2 smokestacks emissions. The NDRC says that if 100 small- to medium-sized textile mills implemented rec- meters and turning off hoses when not in ommended improvements, China would use, to more complicated but extremely save more than 16 million metric tons of efficient practices such as reuse of rinse water annually, enough to provide 12.4 water. million people drinking water for a year.

A case study with the Redbud textile Both Walmart and H&M will undertake factory in Changshu (a Walmart supplier) pilot efforts at key mills before bringing showed that, through adoption of sevthe project to scale in their supply chain. eral NRDC best practices and an upfront So far trial implementations at textile investment of US$72,000, the factory plants have shown that the best practices is accruing savings at an annual rate of can cut approximately 25% of water and US$840,000. Other retailers and brands 30% of fuel use. Investments will pay for collaborating with NRDC in the Clean themselves in eight years. Practices range by Design effort include Gap, Levi, Nike, from the simple installation of electricity Marks and Spencer, and Li&Fung.

u Supply chain company YCH Group has begun a US $40 million project as part of a joint venture with Xiamen Port Development. A larger Xiamen port area will be formed after merging the administration of the existing Xiamen and Zhangzhou ports on Xiamen Bay in southeast Fujian province.

UPS has launched a new ad campaign in the US, UK, and China using the slogan “We Logistics,” promoting its ability to help manage supply chain and logistics. UPS will also open its first Asian healthcare supply chain facility in Singapore in 2011 as it expands into the logistics business.

u

Equipment

Toyota forklifts still No. 1

u Taiwan is working on a potential agreement with the mainland to become a more proficient logistics hub for the Asia Pacific region. The plan would commit US $3.19 billion to logistics development between 2010 and 2013

10

November/December 2010

Top 10 forklift suppliers (in terms of 2009 sales revenue) Toyota

US$

4.6 bn

KION

4.1 bn

Jungheinrich Crown Equipment NACCO Industries Mitsubishi/Caterpillar

2.3 bn 1.6 bn 1.5 bn 920 mn

Komatsu

750 mn

Anhui Forklift Group

668 mn

Nissan

624 mn

TCM

593 mn

Toyota Industries Corporation (TICO) has once again been named the world’s number one materials handling equipment company based on its worldwide 2009 financial year forklift truck revenue of US$ 4.6 billion. TICO’s nearest rival Kion Group produced a 2009 revenue of $US 4.1 billion while Ju n g h e i n r i c h reached $US 2.3 billion.

www.supplychains.com

First

Vietnam

Scandals

In order to meet the demands of foreign investors as they begin to open more manufacturing factories in the area, Mapletree Investment is building a US$70 million center in Northern Vietnam about 18 km from Hanoi. As more and more international businesses begin to invest in the area, the lack of a major logistics center has become increasingly problematic, and foreign investors such as Canon, Panasonic, Samsung Electronics, and Foxconn have been facing logistics shortages.

Officers from the UK Office of Fair Trading raided the Mercedes-Benz truck manufacturer offices in England and arrested Ian Jones, managing director of the Daimler subsidiary’s commercial truck unit, in connection with “a broad-ranging investigation into the pricing of trucks.” In addition to Mercedes-Benz, the OFT has requested information from Sweden’s Scania and Volvo, Germany’s MAN, Italian automaker Fiat’s Iveco and Renault. The UK government agency has not yet revealed the extent of the alleged price-fixing probe.

Meanwhile, airlines have also been feeling the heat.

Maria Christina Ullings, a senior vice president for Martinair Holland N.V, was indicted by the grand jury of Atlanta, Georgia (USA). Prosecutors say she plotted to fix fuel surcharges and other prices for international air shipments between January 2001 and February 2006.

Ullings could face ten years in prison and a US$1 million fine. Some 17 airlines and eight executives have been charged in the United States Justice Department’s ongoing investigation. More than US$1.6 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time.

New logistics center in Northern Vietnam

Shipping

Hong Kong shippers feel they’ve been falsely charged In a recent survey, the Hong Kong Shipper’s Council (HKSC) found that many shippers not only say they have been charged for damages they were not liable for, but also report that the frequency and costs of these charges have been increasing.

HKSC says the number of complaints about unfair charges has tripled this year as compared to last. Sunny Ho, director of HKSC, points to two possible causes: more damaged containers in circulation due to equipment shortages, or lines cutting back on customer service, which makes it harder to resolve disputes. www.supplychains.com

Pulling out Due to a projected flat peak season and falling freight rates, shipping lines are planning to pull more ships from the Asia-Europe trade.

According to a report

by International Freighting Weekly (IFW) shipping companies may plan withdrawals as early as October. The lines are hoping that by cutting capacity now, rates will remain buoyant until after Chinese New Year.

Despite the reduction in supply, ship lay-ups are thankfully not expected to reach the record highs of 2009. Carriers are reportedly opting to idle vessels for one of two roundtrips instead. This will enable the lines to quickly deploy these vessels if demand is higher than expected.

Shipping

Pearl River tributary coping with growth Cargo volume along the Xijiang River, a major waterway connecting southwestern China to the Pearl River Delta, has been experiencing serious congestion bottlenecks as China put more effort into the develop-

ment of the western regions. A new plan involves adding 77 million tons to the cargo handling capacity of the major river ports along the tributary by 2012, which will bring their total capacity to 100,000 tons.

Price fixing accusations

US$1.6 bn

of fines imposed on airlines November/December

11

First M&S Reliance India to open 15 stores in 2 years

duty. M&S India currently runs 18 stores throughout India and aims to increase the count to 50 by 2013.

Logistics

Sourcing

Decathlon and Damco in Vietnam

Marks & Spencer Reliance India (M&S India), a joint venture between Mukesh Ambani-run Reliance Retail and UK-based retailer Marks and Spencer (M&A), will increase their domestic sourcing from 40% to 70% over the next two years to save on import costs and bring down the average prices of goods. Upon first entering the market 10 years ago, M&S India imported all its goods and paid a whopping 45% import

Damco was appointed to consolidate Decathlon’s export shipments to Europe over the next two years.

Cargo consolidation will be managed at Damco’s container freight station in South Vietnam, 22 km from Ho Chi Minh Port. A second agreement sees Damco handling Decathlon’s domestic raw material transportation from South to North Vietnam for a year.

Marks & Spencer India to source locally

12

November/December 2010

News Roundup Risk

Diageo eyes ethics According to drinks giant Diageo, vendors’ ethical standards pose the greatest supply chain risks. Launching sustainable and ethical procurement targets to be met by 2011, Diageo said it aimed to ensure that 700 of its “potentially high risk suppliers” were assured through the Supplier Ethical Data Exchange. It is also commissioning 50 audits for their highest risk suppliers. According to the Diageo Corporate Citizenship Report 2010, their highestprofile risks associated with its supply chain are those surrounding non-compliance with social and ethical standards.

www.supplychains.com

First

Want it? Got it

US$5m

E-commerce Focus Technology, creator of Made-in-China.com, announced recently that it plans to acquire Transworld Information Corporation, a Taiwan-based e-commerce company, for US$ 5 million. TTnet.net and TTnet.com, and its English/Chinese-language Trade Yellow Pages were the main targets of the acquisition. Focus will look to further invest RMB 15 million into Made-In-China. com to support the Trade Yellow Pages operations.

Raw Materials

US$422m Jinchuan Group has completed the acquisition of Continental Minerals, a Vancouver based copper-gold exploration group. The deal is valued at roughly US$422 million, and is yet another Chinese investment into Canadian-developed assets and natural resources.

Why stop at milk? We want our cookies, too!

F&B Bright Dairy, China’s third largest dairy maker, had its US$ 82 million bid for 51% of milk processor Synlait approved by the Overseas Investment Office.

Bright Dairy is owned

by Bright Food Group, whose principal shareholder is the Shanghai municipal government.

Synlait said it plans to use its new investor’s distribution channels to put dual Synlait-Bright Dairy branded high-quality infant and whole milk powders into China.

US$3.16bn

Bright Food group has also put in a bid for United Biscuit, one of UK’s most famous snacks and cookies makers. The potential deal is valued at US$ 3.16 billion. The bid for United follows a deal gone sour with Campbell Soup.

Technology

Sourcing

Automotive

Accenture has acquired the sourcing services and business process outsourcing (BPO) assets of Ariba which include Ariba’s category expertise, sourcing process expertise, and strategic sourcing execution resources. Approximately 160 Ariba employees, or roughly 10% of the company’s total workforce, are expected to join Accenture upon the closing of the transaction.

Wonder Auto Technology purchased 100% equity of Jinheng BVI, a whollyowned subsidiary of Jinheng Holdings which is a leading manufacturer of airbags and seat belts in China, at a price of HK$ 1,130 million. Jinheng BVI claims over 10% of the overall automotive airbag product market in mainland China and has an annual capacity of over 2 million units.

US$51m

www.supplychains.com

US$3.6bn Pro Logistics India has entered into a US$ 3.6 billion joint venture with Germany-based logistics giant Rhenus, part of Rethman AG & Co. The JV will allow Pro Logistics a presence in Europe, and Rhenus will add 32 business operations in Asia.

November/December

13

First

What the English Media Missed Aigou.com launches new e-commerce solution and open B2C platform

14

November/December 2010

China Mobile is to establish an end-user company and adopt a centralized procurement strategy in order to expand their economic scale, improve the quality of TD-SCDMA mobile phones and lower component costs. Supply chain professionals say the move will be beneficial to the whole supply chain industry if it can boost sales volume of TDSCDMA mobile phones ...closer to your needs!

Yuefuhua switches to port logistics Fuhua Group Services, the first off-site listed company in Zhuhai and a leading company in the reformation of state-owned enterprises in the city based in the Zhuhai Special Economic Zone changed its name to Zhuhaigang and has switched its business to port logistics from compound material manufacturing.

Its goal is to become a leading port logistics operator, an integrated logistics real estate developer, and an electric power investing company.

Taiwan Industrial Park in Guangxi Fangchenggang of Guangxi Province concluded and signed framework agreement for a Taiwan Good Goods Industrial Park Project with Taiwan Good Goods Association.

With a site of over 4500 acres, the project will cost a total of RMB 5 billion and will include construction of a processing base for electronics and grain oil, logistics support, service areas, etc.

Chigo & International Copper Association build global supply chain Chigo Air-Conditioning formally signed a strategic cooperation agreement with the International Copper Association at its Annual Global Supplier Conference on September 3rd. The two sides will cooperate in projects that promote industry consolidation, energy saving, and emission reduction. Chigo will also promote copper “bacteria inhibiting filters” electric appliances, while International Copper Association will aid with technology development and Chigo’s global procurement of copper material and accessories via its collaboration with copper manufacturers around the world. c Is

As the B2C e-commerce industry has been experiencing problems in turning a profit, Aigou.com, a B2C website focusing on the needs of pets (especially dogs), has recently switched its focus to a B2C open platform and integrated its media platforms, distribution, and logistics. It has also brought in a complete e-commerce solution called “Great Warehouse of Beloved Dogs”.

According to Zhou Handong, CEO of Aigou. com, the warehouse is “a key solution centering on brand promotion”. It is a long-term open B2C platform and integrates all divisions in their pet industry. The warehouse will help manufacturers, agents, retailers, and member users gain profits through integration of brands and e-platforms, and shared distribution centers.

In turn, Aigou.com will get benefits on price, brand marketing and promotion services. Aigou.com has already launched a financing plan, potentially millions of Renminbi, to fund the second round of updates at the end of this year.

Aigou.com is expected to introduce 10 brands to its seven categories, based on its platform resources and capacity.

Three thousand stores on Taobao will be covered, expecting a sales volume of RMB 3000 to 5000 per month.

China Mobile adopts centralized procurement

op

pe

r gr

een?

www.supplychains.com

First

干杯！ Ganbei !

Herbal product companies raise safety standards

Hetao Wine to update their manufacturing techniques

Chinese herbal product companies in Anguo, Hebei have been attracting international attention.

Widely considered the “Hometown of Chinese Herbal Medicines”, local herbal product companies in Anguo, such as Qinong and Meiwei (both of which specialize in Chinese patent drug processing), have taken on the Good Agricultural Practice (GAP) safety standards as the new conditions for planting standard and have been focusing on biological engineering technologies. These safety standards are going to be used to launch the relatively domestically focused companies into global market. The platform is also supposed to implement good manufacturing practices in the development of new medicines.

The Hetao Wine Industry Group, one of China’s largest spirits manufacturers in China that specialize in baijiu and Mongolian milk liquor, will also be investing in technical improvement projects at their plant in Bayanzhuer, Inner Mongolia, which are aimed at adjusting and optimizing their product structure.

They are also working to automate their manufacturing process without emissions. Hetao Wine Industry Group production capacity is at 10 million liters of finished wine. They earn a sales income of RMB 3 billion and profits of RMB 1.5 billion.

Largest glass manufacturing center in Yunnan kicks off The largest center of glass building materials in Yunnan, called the ASEAN International Glass EcoIndustrial Park, kicked off construction in Anning. A total of RMB 1.97 billion has been invested in the project and is expected to become a processing and distribution center for manufacturing compound materials.

www.supplychains.com

“Town of Granite” to build materials sourcing base in Hunan Ding Zi town in Hunan Province, also known as the “Town of Granite”, is to build the largest base for building materials in Hunan. The project includes large-scale mining, processing and marketing of local granite that amount to a capacity of 3.7 billion cubic meters. With a site of over 1500 acres, the project is expected to reach RMB 15 billion in annual sales and RMB 1 billion in taxation.

More than 50 licensors of building materials from Guangdong and Fujian signed on to establish manufacturing bases at the ceremony.

Ningbo Bonded Zone to focus on wine distribution Wine imported through the Ningbo Bonded Zone amounted to 2.57 million liters from January to August of this year, which means an increase of 57.4 from 2009 and accounts for 69.9% of the total amount of imported wine through Ningbo ports. Ningbo Bonded Zone is slated to become a regional distribution center for imported wine.

Huaihua to invest RMB 20.8 billion in 53 logistics projects Several logistics projects, including a tobacco logistics center, a corporation square at the railway station, the automotive logistics industry city of West China, and the Jiahui logistics distribution center, are under construction in Huaihua, Hunan province as part of the city’s 53 business and logistics projects plan. With the total investment of RMB 20.8 billion, the government aims to create a logistics net which serves the needs of both the city and greater China.

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First

Columns

Green Signals China Mobile is going green

S

Chou Jingyao is the Project Manager of SynTao, a consulting company that focuses on CSR, social responsibility investment and sustainability solutions.

upporters of CSR and environmental sustainability are rapidly increasing in number in China, and major companies will have to respond to the trend.

Implementation of eco-friendly practices in the supply chain will have to find a place in the agenda of many corporations determined to save face with their green customers. By aligning their own capabilities and resources with sustainable practices, they can at once reduce environmental impact and improve company image.

China Mobile is one domestic giant that sees a business opportunity in addressing climate change head on. To take a sustainable approach in strengthening the corporation, it decided to call on its suppliers. The communication company has signed a green action plan entitled “Strategic Cooperation Memorandum” with 53 global suppliers, including IBM and Huawei.

The agreement is supposed to prompt green supply collaborated with eight air conditioning manufacchain focus, specifically on equipment sourcing. turers to research and develop “energy efficient airIn addition, China Mobile is collaborating with mo- conditioners” which can reduce consumption by 35bile phone manufacturers like Nokia and Motorola to 45%. According to the current plan, China Mobile is launch an environmental protecexpected to save 800 million kWh, tion plan entitled “Green Box.” equivalent to 679,000 tons of CO2 This initiative focuses on recycling emissions. The practice puts presIn 2010 mobile phones and their accessosure on suppliers and prompts the ries. The technology-based joint development of technological innoChina Mobile development and initiation of envation. vironmental protection should Furthermore, the green supply was the only promote a solid win-win foundachain management of China Mobile mainland tion for enterprises and the whole has been accredited worldwide. In supply chain.

2010 it obtained high praise as the company to This distinctive supply chain only Mainland Chinese company to management feature is helping be named to the Dow Jones Sustainbe named to mobilize its suppliers to better suit ability Index (DJSI) with regards the needs of China Mobile’s own to supply chain management in the the Dow Jones operations – in terms of both encommunications industry. This sets Sustainability vironmental protection and brand a great example for other large-scale equity goals. This dual feature was enterprises in China who will soon Index demonstrated when the company be pressured to follow suit.

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First

Columns

Sustaining Growth

S

through

Corporate Practices

David Henshall is the founder of Purchasing Practice (www.purchasingpractice.com), a niche consultancy specializing in procurement. Contact him at dhenshall@purchasingpractice.com

Supply management professionals in China have the task to build what will probably become the largest supply chain on earth, and in doing so are responsible for sustaining much of the global economic vitality. The market competition is more and more between supply chains rather than individual businesses. However, according to a recent research report on the China’s pharmaceutical supply chain published by CAPS, Chinese supply chains remain complex and inefficient.

Increasingly, as supply chains expand towards the interior of the country to meet global cost demands, supply structures will need to be built from scratch. But it must not stop at the domestic level.

Chinese businesses must ensure they have globally competitive supply chains to mantain a long term competitive advantage.

One example is Haier. In 1998 the company set up a globalization strategy and in doing so progressively came up against global competitors such as Electrolux, Whirlpool, and Samsung. Haier made the decision to reengineer its business processes and restructure its supply chain to optimize purchase cost, inventory levels, plant utilization, labour cost, and cycle times. It also organized its procurement on a global basis to take advantage of its scale and international suppliers are now by far the largest part of its supply base; many of them are Fortune 500 organizations.

Huawei is another success story of globally developed supply chain. The manufacturer has implemented global procurement, promoted strategic cooperation with its suppliers, introduced sophisticated e-sourcing and supplier collaboration tools, and rolled out a series of ‘Partner Conventions’ around the world during 2010.

By promoting cooperative international relationwww.supplychains.com

ships with suppliers, these companies have strengthened their supply chains, carried out international innovation, and established equitable, open, and – most importantly – mutually beneficial alliances.

For companies just setting out on their supply chain journey, the Chinese preference of ‘relationships over law’ should suit supply management professionals seeking to develop collaborative partnerships. However, differences in corporate culture between China and the West can be a problem when integrating with western suppliers. In most Chinese organizations, the head of the organization has “absolute power” and the corporate culture of these organizations is based upon the power of the leader who can overrule policies and procedures. Under such circumstances, it can be very difficult to maintain enterprise policies and procedures. As a result, the process of management is not transparent in many Chinese companies, a characteristic not well suited to supply chain management – which needs transparency and cooperation as an essential norm throughout the chain.

Building internationally competitive supply chains is not an easy task anywhere, but there are special cultural road blocks to navigate in China. Such obstacles are definitely worth overcoming, however, as shown by the success of Haier and Huawei in gaining a competitive advantage over their market rivals by actively seeking to involve international suppliers.

Given the presence of investors willing to provide capital, governments prepared to be more flexible, and a need for logistics providers to consolidate operations, it could be the right time for 3PLs to channel funds into their present and future real estate needs.

However this window will only likely be open for a limited time.

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profiles

In Depth

Times Have Changed John Paterson, who has been with IBM for 40 years, discusses IBM’s 2006 entrance into China and dealing with global changes n John Paterson CPO and VP of Global Supply IBM

今昔往矣 John Paterson 已在IBM工作了40年，文中他将就IBM入驻中国以及 如何应对全球变化等话题与我们进行探讨 我加入IBM有四十年了，有三十年 都是在与供应链打交道。最初是在苏格 兰，92年我去了美国；06年我们的采购 总部从纽约迁到深圳，所以我也来到中 国。总部搬迁一是因为在当今这个全球 相通的时代，无论你置身何处，都可以 照常行使自己的职能，做好自己的工 作，无需再受工作地点的牵制；另外一 点也是毋庸置疑的，亚洲和中国市场的

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蓬勃发展引人注目，来到这里也是为了 能够加强自身供应基地的实力，争取更 多竞争优势。 采购部迁至中国以来，变化是有 的。开始我们在中国的业务主要涉及直 接商品、个人电脑和服务器的供应链。 很多供应基地并非源于本地，不少工厂 其实来自台湾韩国，带着自己的能力技 术。那时外国对中国市场的直接投资数

额不菲；但同时我们也看到中国企业的 不断崛起，其自身实力与外国企业不相 上下，或者说他们会很快发展完善到与 外国公司竞相媲美的高度，比如联想、 华为、中天这些企业，他们不仅完善自 我，同时还促进地方供应基地的建设。 中国近年来的工资上涨问题我并 不担心。在这种节骨眼上回头看看历史 就可摸索到智慧之源。我也不是初出

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profiles

I

’ve been associated with only succeeding but also rapidly supply chain roles for 30 helping to develop a local supply of the 40 years I’ve been base. with IBM; first in Scotland, I’m not that worried about the rethen in the U.S. in 1992. I cent wage increases in China. Hisspent a year on training finally transferred to Shentory is a great source of wisdom on zhen in 2006, when I relocated the this point: I am old enough – and procurement office there from New have been in this industry long York. That relocation was done for a enough – to remember when Jacouple of reasons. The first one was pan was the low cost source. We’ve procurement engineers to demonstrate that in today’s globseen the tech supply base move ally connected world, you can basifrom the US to Japan, to Korea, to cally run organizations and perform Taiwan, and then to China. Experiroles from everywhere in the world; ence shows that every place where you don’t have to be bound by headquarters to be effec- manufacturing industry takes root in is eventually taken tive. The second is, of course, that Asia and China are by somewhere else – largely because of cost. Although rapidly developing markets and we needed to strengthen we’ve seen increases in labor costs on the east coast of our supply base and other competencies here.

China, it remains a relatively cheap source, and there still Since our procurement department arrived in China, are huge parts of China that are untouched and where some changes have occurred. Our industry first engaged infrastructure continues to be built. This makes what with Chinese supply chains in China on direct goods, historically was a logistical challenge much less so.

PCs, and servers. The supply base here wasn’t indigeDon’t get me wrong: China will evolve in much the nous: there were factories from places like Taiwan and same way as other economies – they’ll get beyond being Korea who had moved their manufacturing capabilities. the assembly line of the industry to a situation where Since then, we‘ve seen huge foreign direct investment there’s major investment. China will ultimately move but we’ve also begun to see the emergence of Chinese from an export economy to one more balanced by local companies who either have or will have the capabilities demand – which will also make it easier to source prodto be global players through their own organic growth ucts in central China, etc. But I still think there’s a lot of – this includes Lenovo, Huawei, and ZTE; they are not runway before cost becomes a serious issue.

US$8 m

1700

Formed in 1996 as a part of IBM’s Shenzhen manufacturing JV (IIPC) Supply Chain procurement operation to support factory operations

global procurement

Now the largest IBM global production procurement organization outside of the USA

60 50 40 30 20 10 0

2001

2002

2003

2004

2005

2006

2007

Began significant global procurement growth in 2001

茅庐，想当年日本还是低成本原料供应 地的时候我就在这一行做了。我们目睹 了技术供应基地从美国迁到日本到韩国 再到台湾，最后来到中国。历史证明生 产行业的选址若后来被另外一个地方取 代，原因大都涉及成本。虽然现在中国 东部沿海地区劳动力成本是在增加，但 是原料方面的成本还是相对低廉的；而 且中国还有很多地区未被开发，很多地

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2004 IBM licensed the China Procurement Company (100% IBM Subsidiary) Shenzhen headquarters Strengthened government relations License expansion allowing outsourced Procurement services (BCS)

Strategy centers around developing local talent (limited Assignees)

方仍在完善基础设施建设，所以现在所 谓的成本问题在中国其实并不算问题。 但是不要曲解，中国的发展也会类 似于其它经济体。只要有不断的投资， 中国迟早会质变为行业生产线，并从一 个以出口为主的经济体向平衡内需方面 发展，从而推动中国中部等地区的产品 采购，而成本方面，我仍然认为短期内 它不会成为阻力。

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profiles

In Depth

Braking the Mold

The challenges of starting an international procurement office in China

H

n Yann Teste Director, Purchasing & Supplier Management Great China & South East Asia Knorr Bremse

Knorr-Bremse Group Sales US$3,856 million (56% RVS, 44% CVS) Rail Vehicle (RVS) Systems Sales Commercial Vehicle Systems Sales (CVS)

56% RVS

2009 Research & Development

US$214 million

14,432

US$1,705 million

US$2,165 million

44% CVS

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Countries

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Employees Worldwire

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8

Production Sites in China

ow did you and Knorr-Bremse get started in China?

Knorr-Bremse has been acting and selling in Asia and China for decades.

I myself started in Europe with Knorr-Bremse in 1999, but by mid 2004 I was sent to China to start up the first truck division location in Dalian.

We were three foreigners sent over, and it was really exciting. I was in charge of supplier base, quality, project management, and dealing with our first customer – the product line base was in France and I was consequently managing all the coordination with our French location and our start-up here. In the mean time our China location started producing the whole KB portfolio of products for all of our Chinese customers: from engine makers to bus, trailers, and truck manufacturers. We also produce for the ship building industry.

Then in 2006, I was asked to take over, on top of my previous activities, the global sourcing activities in Shanghai, in order to turn it into a recognized and powerful organization exporting components out of the Asian region. My team and I were then dealing with all the product line purchasing. I took over a team of five people and since then, we have been developing an Asian scope – excluding Japan and India – handling also direct purchasing, supplier quality, procurement, and indirect purchasing. The team now has about 50 people supporting a very significant increase in export from the region and a top localization rate.

People from different countries and Chinese provinces are working on my team, and after all the improvements we have been driving together, we are now globally recognized in our company.

What challenges is your industry facing in China right now?

The competition in China is challenging in terms of prices. Customers want the best price for the best quality. We have to understand what the customer s expect and then adapt ourselves and our approaches to their requirements, without ever compromising safety and quality. In the end, a good product costs less than a failing one. www.supplychains.com

Read the findings of the latest procurment survey on page 54.

So we need to be intelligent enough to find solutions that satisfy our extremely high product reliability and the specific local expectation and demand.

It is now widely recognized that Chinese customers are targeting high quality/high technology products more and more, and we truly think we are among the best to offer such a solution with our products.

With some of the cost increases in China, is KnorrBremse exploring other countries for supplies?

Well, we have been doing some research on the other countries. We have been investigating Malaysia, the Philippines, Indonesia, and Vietnam, with a serious focus on Malaysia and Vietnam. We’re also going to concentrate more on Thailand now. Indeed there is a major automotive industry/network of suppliers there, and we may look at procuring from there a bit harder. There could also be some potential in rubber commodities in these Southeast Asian countries. However, I’m thinking that China is definitely still offering the best balance between cost, technology and quality for the Knorr-Bremse truck division. At the same time, there needs to be a differentiating strategy between buying for local needs and buying

profiles

for export needs.

The appreciation of the RMB is a clear challenge for Global Sourcing Offices and teams. So alternatives need to be investigated now and efficiencies need to be deployed with our current China supplier base.

How did Knorr-Bremse respond to the significant increase in demand in China after the economic slowdown?

We are constantly searching for efficiencies and optimization in order to adapt volumes and cutbacks. KnorrBremse was one of the most successful and one of the earliest companies in adapting volumes during the crisis, and we clearly demonstrated to be able to go through the period with real success.

During the crisis, we were able to increase by 2 times our exports projects from the region with new parts, therefore, even if the local market and the current running parts quantities decreased we could come back with additional orders for our suppliers here. Because of this, we didn’t have any issue with our China supplier base: no one collapsed or went bankrupt, and we were all successfully going through the crisis to grow again now.

WHAT NEXT? JOIN THE ELITE FAST TRACK TO WORLD CLASS COMPETENCE Develop your competence to the highest levels internationally International Green Belt in Advanced Purchasing & Supply ® International Red Belt in Advanced Purchasing & Supply ® International Black Belt in Advanced Purchasing & Supply ®

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For further details about IIAPS and its corporate accreditation & benchmarking services visit www.iiaps.org, or contact us at info@iiaps.org.

To attend our next Black Belt Showcase Event in Shanghai, go to www.iiaps.org/events.html.

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November/December

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profiles

In Depth Yann Teste 东南亚采购供应管理总监，卡车部门 德国克诺尔公司 卡车部门 可以简单说说您和克诺尔在中国的起步过程？ 数十年前克诺尔就已入驻亚洲和中国市场。我1999年 开始在克诺尔欧洲部工作，2004年年中叶我被派到中国， 并在大连创建了公司首个货车部门。和我同时被派来的还 有另外两个非中国同事，挺有意思，很有挑战。我负责供 货商群、质量项目管理，同时还要兼顾我们的第一个大客 户——位于法国的生产基地，我要负责所有和法国生产基 地有关的协作项目以及在中国的起步工作。我们的中国公 司要生产针对当地客户的各类产品组合，从面向引擎制造 商到公共汽车、从零售商到卡车生产商等等；另外，我们 的产品还面向船舶建造业。 2006年，公司安排我管理当时我涉及的所有项目，在 上海开展全球采购，旨在将我们的部门发展成为更知名更 强大的零件出口商 ，让我们的产品打入亚洲之外的市场。 我们小组共5名成员，主要负责与生产线采购有关的工作。 成立之初，我们在除印度、日本以外的亚洲国家发展业 务，其中包括直接采购、供货商质量、采购和间接采购。 现在小组有50名成员，出口总量大幅增加，本地化程度相 当之高。 您所处行业现在中国面对何种挑战？ 中国的竞价激烈。消费者都希望物美价廉。我们必须 了解消费者的期待，然后再自我调整以满足其需求，但我 们绝对不会以牺 牲安全和质量为代价。 所以要找 到合适的解决方案来达 到很高的产 品可信度和特定的地 方需求是很 费脑子的。中国消费 者现在普 遍认为我们是行业领 现在我们的 中国供应基地也 急需提高效率

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视险若夷 域中最有力提供贴心解决方案的公司。 中国成本增长，克诺尔是否有意在其它国家寻求供货商？ 我们是对不同国家做过调查，在马来西亚、菲律宾、 印度尼西亚和越南都有投资项目，重点是马来西亚和越 南。现在我们还会把更多注意力放在泰国。那里的汽车行 业/供货商网络规模不可小觑，我们的发展也会为此有一定 难度。在涉及东南亚国家的橡胶贸易方面，我们也有相关 计划。不过在综合分析成本、技术质量等因素之后中国对 克诺尔来说仍是不二选择。不过在满足当地需求和出口需 求时有所不同，策略需要适时调整。人民币升值对全球采 购办公室和小组是个挑战，这不言而喻，在其它地方投资 是必须的，现在我们的中国供应基地也急需提高效率。 经济危机之后，克诺尔如何快速应对中国突飞猛进的增长 需求？ 我们一直致力于寻求提高效率和资源优化的方法以更 灵活地应变生产数额的变化。克诺尔在经济危机时期是应 对生产数额变化最为成功的企业，实际证明我们成功渡过 了这段时期。 期间因为我们出口项目中新开发的区域，生产额提高 了两成，所以就算当地市场需求减少，我们也可从供货商 处得到额外的订单。就中国供货商商群而言，我们没有遇 到相关问题，没有负债、没有解体， 我们成功渡过经济危机，现在依 然保持良好涨势。 中国消费者认为我 们是 业内最有力提供贴 心解决方案的公司

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“慢慢”征程

Trucks

中国货运 之 风雨未来

成

为全球首屈一指的超级 工业大国并非易事， 但有一样毋庸置疑： 货运！ 生产基地热火朝天、消费者市场如 火如荼，经济危机下中国逆流而上。物 流在供应链可持续发展中的地位越发重 要，科尔尼管理咨询公司表示，20062009年中国的公路货运业平均每年增幅 可达8%。 涨势见好并不意味着物流公司可卸 下重担。ARJ Commercial Leasing的总 裁兼首席执行官Richard Ang曾说：“ 市场近在咫尺，收益远在穷途”，这并 非夸大——市场竞争空前激烈，物流公 司残喘前行——很多公司只有牺牲服务 质量以降低成本。不少中国企业大量集 资，可子公司纷纷崛起却导致行业竞争 加剧震荡。1号店等商务企业已自建物 流以增强自主控制、提高效率、管理货 运。对3PL而言“品质连贯性出现问题 司空见惯，部分因为‘商品化服务’。 货运服务也算商品。” 物流公司难于控制统一总体配送服 务水平，生产服务质量从而大打折扣。 如果要提升业务优化资源，重审 轻资产势在必行。如今交通分流实为低 效，分包商未被高效分配，运营商有必 要在主要路线上投入更多货运资金。 科尔尼的高级经理李建称，“不久 之后的市场稳固很重要，最初呢，被淘 汰的竞争者减少；接着便是并购。但是 市场现状混乱，并购进展缓慢，从中预 测成败实为不易。 中央政府支持市场稳定，在物流行

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业已从国有企业入手创建税收优惠措施 和金融鼓励政策。 国外物流企业能有效促进行业水平 的提高。在中国他们会更严格的遵守法 规，所以会耗费更多成本，但他们可依 赖全球客户群建立良好口碑。从服务连 贯性的角度，跨国公司和国外客户越发 看重这一点，拥有庞大的客户群的中国 制造商也是。 越来越多的企业开始要求货物跟 踪，这对大型且颇有实力的公司更为有 利，特别是外国公司。联邦快递中国运 营部总经理Ricky Liu说，“竞争不可 怕，因为它能推动企业效率。价格在竞 争中也不是唯一的制胜点，在我们看来 质量更重要！” YRCW亚洲部总经理Eric Friedlander 认为外国公司的制胜法宝就是对当地需 求保持高度敏感并能快速调整战略。“ 我们希望经理是本地人，但受过外国教 育，了解美国文化和我们的公司文化， 但在遇到社会问题和语言方面的障碍的 时候，他应该有足够的魄力，这些基 础业务在实际操作中却往往成为绊脚 石。” 在运营业务中是基础，但在实际操 作中却往往拖累业务。” 从拖拉机到卡车 另外，现在大多数本地物流公司 雇佣毫无经验的司机。这些司机贷款购 买交通工具，薪资期待很低。他们的收 入并不因开货车，而是短期内转让现有 车辆。这些司机不过是白天开拖拉机， 晚上换开货车的农民，运营者必须加强

培训以提高其素质和服务质量。物流公 司也要投入资金升级交通工具和技术 （诸如条形码和GPS）、提高仓储硬件 设施、加强上/卸载管理以优化利用成 本。另外，因为电汇逐渐取代现金，款 项管理需要加强监控以防欺诈。 好易通物流的副总经理Larry Laung表示，当下的混乱局面部分因为 标准化程度不够；部分因为当地司机是 根据价格来选择合作伙伴。仅仅注重价 格会打乱市场秩序，还会挑起“价格 战”。商业伙伴之间流动性过高、联系 松散降低了人际网络的质量，削弱了运 营者的可靠性意识。货运者对“非绝对 必要”的安全条款置之不理，意外风险 由之而增。 另外一座难以逾越的“大山”是情 胜于法的亚洲人文，随着更多外来运营 者的到来和严格法规的颁布，当地人有 望建立较强的守法意识。 市场需要强有力的法规和执行力 度，特别是在道路安全方面。公司需要 严肃对待安全问题、完善建立ISO标准 并要求货运商坚持良好的驾驶 习惯；另外还要建立完善的保 险体系。 中国货运行业蒸蒸日 上，但为满足消费者日益上 升的需求，运营者必须在 市场稳固的同时提高决策 速度和服务水平、加强 操作安全。清除这些障 碍，物流公司的运营才 会更为顺畅。 sdjksldjlaskdj skljdaksldjksadjksad

November/December

23

Feature Eric Friedlander Asia Managing Director YRCW

Trucks

A Long and Winding Road Bumps ahead for Chinese logistics Samuele Gabbio

A

country’s way to become a global industrial superpower may not be smooth, but there’s one thing it certainly is: full of trucks.

As manufacturing and consumer markets keep expanding in China and show the world how to jump over a global crisis, logistics becomes a more and more crucial factor in granting sustainable expansion to local supply chains. According to management consulting firm A.T. Kearney, China’s road freight industry has achieved an average 8% growth year-on-year between 20062009.

Despite the positive trend, Chinese logistics firms are not having an easy time.

Extremely high competition, excessive fragmentation, and low standards of service reveal that the road ahead is still quite bumpy. According to Richard Ang, President and CEO of ARJ Commercial Leasing, “the market is there, but the money is not.” Competition right now is too high and is cutting logistics firms’ earnings to the limit of sustainability, forcing them to lower the quality 24

November/December 2010

of their services rather than promoting efficiency.

At the moment it is very easy for Chinese entrepreneurs to raise capital, and as a consequence, logistics companies have mushroomed around China exacerbating competition and destabilizing the sector.

Even commercial firms, like online retailer Newegg.com, are starting their own logistics rather than relying on sector specialists, as they believe it can grant them more control over timeliness and reliability of delivery, a crucial factor for the development of their business.

“Quality inconsistency is a common problem at the moment for 3PL firms, and this is partly due to a phenomenon defined as ‘commoditization of services’,” continues Mr. Ang. “As the market is getting more and more fragmented, most of operations gets outsourced to local trucking companies, whose service gets treated like a mere commodity.”

The result of these combined factors is a serious difficulty for logis-

tics companies to centrally control distribution and standardize service level, with a consequent heavy loss in quality at the expense of manufacturers and end customers.

A general rethinking of this assetlight strategy is required, in order to generate an upgrade of both resources and practices. Operators need to invest more trucks on key routes, as at the moment too many sub-contractors are being used at the same time, and traffic is not being channeled in effective ways.

Jian Li, Senior Manager at A.T. Kearney, believes that “a consolidation of the market is now a necessary factor and will soon be taking place. It will start with the elimination of less competitive players and continue through mergers and acquisitions. M&As are still slow now because the market is very chaotic and makes it difficult to understand which firms will be successful and which will fail, in particular at local level where the market is most fragmented.” www.supplychains.com

Competition right now is too high and it is cutting logistics firms’ earnings to the limit of sustainability.

Richard Ang President and CEO of ARJ Commercial Leasing

The Central Government favors consolidation and is promoting it among SOEs involved in logistics.

It has also created a series of tax breaks and financial incentives to promote mergers and acquisitions among logistics firms.

Foreign players will be another crucial component in driving change and enhancing industry standards.

They face big challenges in China, as they tend to have higher costs compared to local competitors due to stricter compliance with regulations, but they can count on a global customer base and an established reputation.

These elements tend to favor them with MNCs and foreign clients, but also with those Chinese manufacturers who have developed a broad customer base and need to grant consistency of service over the entire country.

According to Werner Global Logistics’ General Manager for Asia Pacific, Juan Bautista,“The future of logistics in China is very bright. As the infrastructure continues to ma-

ture, more goods will travel longer distances and require larger trucks to increase efficiency. Foreign operators, especially those with mature operations in the west, specially North America, will bring additional investments of equipment, capital and operating expertise to the China market.”

More and more companies and customers are now also requiring tracking and tracing services, and that plays in favor of bigger and more consolidated firms, in particular foreign ones.

Ricky Liu, Managing Director of

China Operations at FedEx, says: “We don’t fear competition and actually believe it to be a positive factor, as it pushes companies to become more efficient. Price is not the only element in competition: in our case quality is the crucial point”.

His counterpart Eric Friedlander, Managing Director for Asia at YRCW, believes that the key to success for foreign logistics firms is to be flexible and aware of local needs, rather than imposing a US or EU oriented approach, as at the moment management in China cannot be too centralized and should instead focus on smaller areas of performance.

“We believe the ideal manager is a local-born person educated abroad, with a strong understanding of US culture and of our corporate vision, but with absolute control of those social and linguistic issues which are fundamental in handling local operations and often cause delays or mistakes”.

China’s LTL distribution compared to mature markets China: Top 5 LTL carriers account for 4% market share

Europe: Top 5 LTL carriers account for 28% market share

USA: Top 5 LTL carriers account for 60% market share

Chinese LTL market concentration

European LTL market concentration

US LTL market concentration

Market Size (in 100M RMB): 1,620 in 2008

Market Size (in 100M RMB): 1,560 in 2006

Market Size (in 100M RMB): 3,285 in 2006

4%

Top LTL Carriers

Top LTL Carriers

2 TNT-Hoau

28%

2 CNEX 2 CNPL

96%

2 Deppon

72%

2 YRC-Jiayu

Dachser SNCF DSV Deutsche Bahn 2 Deutsche Post 2 2 2 2

Top LTL Carriers

40% 60%

Top 5 LTL carriers

Top 5 LTL carriers

Top 5 LTL carriers

Other LTL carriers

Other LTL carriers

Other LTL carriers

Source:

2 YRC 2 Fedex Freight 2 Con-Way 2 UPS Freight 2 Arkansas Best

Industry report; Primary research; A.T. Kearney analysis

www.supplychains.com

November/December

25

Feature

Trucks

From tractors to trucks Another serious issue lies in the presently dominant truck-ownership model.

Most local logistic companies employ inexperienced drivers who own a vehicle bought through a loan and are ready to work for very low wages in exchange for financial support.

These drivers make their money not by running the truck, but by reselling the vehicle after a short time.

Such a system dramatically lowers the quality of service, as in most cases these persons are nothing but farmers converted into drivers overnight: literally going from tractors to trucks. Operators therefore need to give more importance to training their drivers in order to improve performance and increase service quality.

Logistics companies will also need to invest in updating vehicles and technology (with instruments like barcoding and GPS), and in upgrading storage infrastructures and load management, in order to optimize costs and improve efficiency. An26

November/December 2010

Participants at the Global Supply Chain Council event on Trucking

other necessary step is the optimization of payments-collection by substituting cash with wire transfers to prevent frauds and facilitate monitoring.

Larry Leung, Deputy General Manager at HYT logistics, believes the present chaotic situation is partly due to poor standardization and partly to the mentality of local truckers, as in the selection of partners price figure always comes first.

“The tendency to focus simply on price destabilizes the market and creates ‘price wars.’ Moreover, high mobility and weak tie-ups among business partners impoverish the quality of networking and make operators less reliability-conscious. Truckers are often eager to skip redundancy, eliminating ‘non strictly necessary’ items related to safety, thus increasing risks of damage and incidents,” commented Mr. Leung.

Another major obstacle to overcome is that Asian culture tends to be people-based rather than lawbased. Entrance of foreign operators and tightened regulations will

hopefully help establishing a stronger compliance with procedures.

A general outlook of the institutional framework reveals a need for stronger regulations and tighter law enforcement, particularly for what concerns respect of road safety by truck drivers.

Companies need to start taking safety more seriously, implementing ISO standards and requiring their drivers to comply with GDPs (good driving practices). Also a system of insurance premiums tied to actual driving habits would be extremely beneficial.

In conclusion, the overall picture delineates a future of great expectations for Chinese trucking industry, but in order to meet growing customers’ expectations, sector operators will have to move rapidly towards market consolidation, improvements in service standards, and increased operational safety.

After all the bumps are cleared, logistics firms will be able to enjoy a much smoother ride.

www.supplychains.com

Feature Sponsored

Procurement

下一里程

博世中国推出 SupplyOn

几乎每个在中国有分公司的大型跨国企业都开始寻 觅下一步发展计划，以推动其中国供应链快速发展，不论 是朝国内延伸，还是朝海外扩张。市场需求增长，价格上 扬，盈利模式中必须引入有组织的流动技术。 博世中国正紧锣密鼓推出SupplyOn解决方案，为采 购、物流和质量部门服务，以提高业务效率、保证持续 性，这是博世全球计划的一部分。博世在中国已有15个部 门和车间将SupplyOn平台投入使用；它在中国经营 47个分 公司，并将这些分支机构作为现代化和产业升级的重要节 点。 使用目的 目标明确，博世中国便推出这种新的IT平台作为下一 步精简采购的方案。虽然处理方式和形式都挺多，但是博 世在和供应商之间架建了网络平台，这上面双方可以分享 采购信息，就未来发展预测交换意见和信息，这样采购交 易的透明度得以提高。Bin说：“采用现代科技来确保信 息安全并且建立标准化模式至关紧要。咨询科技的重要性 在供应链的所有环节中都越发明显，尤其在物流和采购方 面。” 在博世汽车部件(苏州)公司，SupplyOn WebEDI能够 缩短其跟供应商的交流反应时间。博世苏州的生产计划员 Charling Shen也称SupplyOn技术能够保证数据传输的准确 性和透明度。最近博世通过SupplyOn推广了一个新的业务 模式，即供应商管理库存模式（VMI）以降低库存。 Charling说在他的部门里，这个平台优化了采购规划 过程，提高了效率。“以前我们会通过邮件或者传真跟供 应商采购订单，这浪费了很多时间，而且很难保证数据在 沟通过程中百分百传到位。现在有了EDI，只需要单击按 钮就能把所有讯息准确无误地传给供应商，供应商也能迅 速地下载我们的采购计划，这样也可以提高他们的工作效 率。” SupplyOn是一个信息共享平台，博世通过这个平台跟 供应商共享更多的采购需求与预测，供应商会看到这些数 据；博世系统自动运用提前装运通知（ASN），整个过程 中，没有人为介入，所以就不存在人为误差和数据更改的

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问题，所以数据的准确性得以确保。 建立 博世正向其大小型供应商推广这个系统。在推介会 上，博世对供应商进行最初的培训和并指导供货商应用系 统，直到其完全掌握。Charling说博世工厂配置EDI系统及 SupplyOn平台仅仅需要一个月时间，而对新用户来说，只 需短期培训，就可很快上手。Thomas Fendt说一般人只要 半天培训就能使用，所以这对公司新来员工来说也不是问 题。最难的恐怕是让新手真正了解SupplyOn技术后面的理 念和思路，而非实际的机械操作，就此问题博世会定期检 查程序、维护SupplyOn系统并为遇到问题的用户提供问讯 服务。 确保网络平台敏感信息的安全性是众多供应商关心的 问题，为此，博世同SupplyOn总部签署了信息保密协议； 另外，Supplyon上有很多对供应商和博世的限制，它会配 置不同的用户ID以不同的权限，以此控制信息的保密度。 对供应商的影响 有了这项技术，还因为相关培训，这项计划方便了供 应商和客户之间的采购信息传送。博世可更便捷地了解到 供应商采购的信息。之前是公众模式，供应商以前要反复 核对PDF 或者传真中的采购数据，现在有了SupplyOn，他 们只需一个按钮就可把全部数据全部下载到自己的计划里 面，这样“极大提高供应商的工作效率，他们的运营从中 受益，对我们也会更为积极的配合”，Charling说道。 也许对于供应商来说，最为重要的是——因为平台信 息共享，他们有权把博世的信息传给他们自己的供应商， 这对减少库存很有帮助，让整个供应链都非常流畅。博世 电动工具亚太区采购总监Michael Kemmer说 “SupplyOn让 通讯水平标准化了，我们只有一个平台，它不仅为不同层 面的供应商服务，还贯穿了采购、物流和质量过程。” “当今市场流动性大，如何应对不断发生的变化？这 才是业务中最为棘手的，”Bin这么说道“SupplyOn只是一 个解决方案，我们还需要不断更新技术提升业务，这在当 今竞争激烈的市场是最为重要的！”

November/December November/december

27

Feature Sponsored

Procurement

The Next Level Bosch China rolls out SupplyOn

A

lmost every major multinational company with branches in China is beginning to look at the next steps that will push its China supply chains to the next level, both domestically and internationally.

The market is more demanding, prices are going up, and it’s time to factor organizational and flow technology into the equation.

In order to help with the efficiency and the sustainability of their business, Bosch China is in the process of rolling out SupplyOn solutions in their purchasing, logistics, and quality departments as part of a greater global initiative. Bosch, which already has 15 departments and plants in China using the SupplyOn platform, operates 47 entities in China and sees their branches here as the next important node of modernization. “Our purchasing has already reached an economy of scale in China,” says Huang Bin, Corporate Purchasing Director, Asia Pacific at Bosch (China) Investment Ltd. “At this point, it’s very important that we have a very clear purchasing strategy and a well structured organization.”

Purpose for Using It With these goals in mind, rolling out a new IT platform was the next step in streamlining purchasing practices for Bosch China.

While there are many different forms that SupplyOn can take when dealing with a company, in Bosch’s case the solution acts as a web-based platform between Bosch and suppliers, on which they can share purchasing information and delivery forecasts in order to help the transparency of procurement transactions. “It’s really important to use modern technology in order to secure information and to establish a standardized process,” says Mr. Huang Bin. “IT is increasingly important through all of the supply chain, especially in the logistics and purchasing areas.”

At the Bosch Automotive branch in Suzhou, SupplyOn WebEDI works to shorten the communication 28

November/december 2010

length between Bosch and the suppliers, which saves both Bosch and the suppliers a lot of time. Charling Shen, Production Planner of Bosch Automotive Products (Suzhou) Co. Ltd, also says that for his department, SupplyOn helps to ensure accuracy and transparency of each data transfer. Bosch has also recently promoted a new business mode via SupplyOn entitled Vendor Managed Inventory (VMI).

Because of these new implementations, Charling says that the platform has optimized the process of procurement planning in his department while increasing work efficiency. “Before, we got purchasing orders from our suppliers by email or fax, which wasted time and couldn’t ensure 100% data transfer,” he said. “Now the data can be delivered accurately on time, and suppliers can also download our procurement plan at fast speed.”

For the suppliers, advantages of a new platform mean that they can see order requirements on SupplyOn immediately. The Bosch system will get Advanced Shipping NoFact Box tification (ASN) automatically. There is no Bosch in China manual operation durNumber of Offices: 47 ing the process, which means less chance for 2009 consolidated sales: human error and less RMB 27.4 bn in 2009 need for re-confirmation of data. There is Number of Associates: no manual operation or 21,200 entrance of data during the process, so the data Business sectors: becomes more credible.

- automotive Set up In terms of effort, Bosch is working to slowly roll out this sys-

- industrial - consumer goods - building

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Feature Sponsored

For more information visit www.supplyon.com

tem to all of its large- and small-scale suppliers. During their kick-off introduction meeting with suppliers, they do initial training and monitor the suppliers until they get the hang of the system. Charling says that from start to finish, the rollout process normally takes a total of one month. The advantage of this system is that new users only need short-term training. Thomas Fendt, Senior Manager of Supplier Quality and Supplier Development at Bosch Power Tools (China) Co. Ltd. says that people can be fully trained and ready in a matter of half a day, which can also be applied to new users entering the company. The most difficult part of this whole process seems to be making sure new users understand the concepts behind SupplyOn, not the actual mechanisms. To help with this issue, Bosch does regular check-ups on the process, and SupplyOn offers maintenance and help desk services for users who run into trouble.

One huge concern about online platforms for many suppliers is information security. To mitigate this, Bosch Global recently signed a non-disclosure agreement (NDA) with SupplyOn. SupplyOn also has very limited access between Bosch and individual suppliers; in other words, SupplyOn assigns different authorization to every user ID to ensure data security.

www.supplychains.com

Influencing Suppliers Through this new technology and other training efforts, Bosch suppliers are being brought into the plans of their customer and can see their procurement information being transferred more efficiently. Compared to the run-of-the-mill “Public Mode” which required suppliers to repeatedly check the data in PDF or Fax format, SupplyOn makes it possible to download all data into one procurement plan by a simple press of a button. “As the suppliers see the benefits from the platform being applied to their own operations, they have the tendency to co-operate better with our own goals,” said Charling.

Perhaps most important is the fact that they can also share information with their own suppliers because of the information-sharing function on the platform. This helps to decrease inventory stock and will streamline the whole supply chain. “SupplyOn has standardized our communication levels across the board,” says Michael Kemmer, Purchasing Director, Asia Pacific of Bosch Power Tools (China) Co., Ltd. “We have only one platform; not only for our different levels of supplier communication, but also across the board for sourcing, logistics, and quality process.”

“The most difficult part of being in this business in this part of the world is managing the constant changes of this dynamic market,” said Mr. Huang Bin. “SupplyOn is just one of the ways in which we can constantly update and review our performance, which is vital within the market we are working in.”

November/december

29

Feature

HR

Stepping Out

T I

The path less traveled to the supply chain industry

here is a great number of supply-chain and logistics professionals who started off with an academic focus on something other than supply chain management. From the Australian Army to consulting, and linguistics to logistics, professionals from different walks of life have found their way into the supply chain industry. For this issue, we wanted to talk to some of these individuals to see how their non-traditional backgrounds have affected their careers today, and to listen to advice they have to offer to young professionals looking to do the same.

studied Chemical Engineering in Singapore before furthering my education with a Masters in Industrial Engineering. After that, I got a job a Chemical Engineer. The company was quite large, and the opportunity came up to get into supply chain. I was a supply chain manager for a few years, which is a normal stepping stone in that company. My engineering background allowed me to see this aspect of the business in a discrete way. I definitely learned a lot from this position which still helps me today, and I would say that anyone who is looking for a career in commodities or trading should spend a few years in supply chain. n Leslie Lim

A

fter bumming around for almost five years after school, I applied for Officer Cadet training with the Australian Regular Army. Then one day, the phone rang and I answered: the call was from Logistics Command in Melbourne. I spent almost 6 years in the army, moving into the corporate world when I left. I eventually felt the need for the theory and completed a 16-unit MBA at Deakin University from 1995-97. After twelve years, I started my own consultancy in 2001. Since then I have led major supply chain projects in Australia, USA, Europe and the UK. I would say the great advantage of having done it my way is that my thinking is not as channeled as that of others. The great thing about learning the theory 12 years after I had started working was that I had an enormous wealth of experience I could readily apply. n Gen Ford, Founder & Managing Director, Ithaca Business

I

learned that a ping pong ball is actually a dangerous good…

I graduated from the University of Sydney with a bachelor of arts in linguistics. I went to a college called TAFE and took a course related to logistical import and export. While in school, I got a job working at a freight boarding company; so that’s how I got into the industry. My first degree doesn’t have a large impact on my job, but it helped me to be confident with my English and it gave me a really helpful understanding of culture. I think that the logistics industry is very funny because your experience is more important than the typical knowledge you get from the university. A lot of young people will think “Oh I learned that in school, I know what to do,” but they will end up making mistakes. n Kara Cheung,

I

have a PhD in Chemical Engineering, but I did return to university to complete an MBA in Marketing and Finance. Having a background in engineering has provided me with valuable training in heavy analytics. In engineering analysis, one often uses something called Finite Element Analysis to solve complex problems, where we take a major problem and break it down into hundreds of smaller ones, and then slowly solve the entire issue. There are extremely complex problems in a supply chain network, and the same concept can be applied here. Having a different background than my peers has not been an obstacle for me. In fact I think that diverse education allows people to think outside the box and can create a good balance in the supply chain environment. n Manoj Mehta, General Manager, Global Sourcing Solutions, Goodyear Tire

30

November/December 2010

www.supplychains.com

Feature

条条大路 通物流

HR 不

少供应链物流领域的管理者出身本非物流，入此领域是机缘巧合还是个 人爱好？是有意为之抑或无心插柳？本期杂志我们采访了几位行业专 才，他们有的原本服役于澳大利亚正规军，有的本科主修语言学……后来如何 华丽转身？我们将同您分享他们的故事和经验。

玩供应 取捷径

我

毕

我

业以后五年我都无所事事，之后我 成了一名澳大利亚正规军的见习军 官。有一次老板外出，我碰巧接了个电 话，对方是墨尔本后勤指挥部，他们想在 达尔文市招高级职员。我便毛遂自荐，但 对此并不抱期望。六年的军旅生涯结束 后，我意识到在商业世界还是有必要学习 理论，所以从九五年九七年我在迪肯大学 报了一个MBA课程。零一年我创办了自己 的供应链咨询公司，自己做主，经手项目 主要在澳、美、欧、英。工作后有足够的 经验可供理论学习参考借鉴。 n Gen Ford, 伊萨卡创始人兼总经理

我本科专业是化工，之后硕士专业是工业工程。我的公司规模很大，被 安排到供应链这块也是无意之中的事。我当了几年供应链经理，这在公 司里算是敲门砖了。工程背景让我在该领域工作时有独到的眼光和更加谨慎的 态度。任职其间我学到了很多，让我受益至今。我认为任何一个意图投身商品 贸易的人都应在供应链领域打拼几年积累相关经验。 n Leslie Lim

我毕业于悉尼大学语言学 系。后来我报了一个和物流 进出口有关的TAFE课程。我第一次 接触物流要追溯到念书的时候，我 在一家货运公司打工。其实我的专 业对工作并没有直接影响，但是它 扫除了语言障碍，让我更深地了解 了英语国家的文化。物流很有趣， 你的实践经验远比在学校学到的理 论知识要重要。很多新人往往会很 自信，认为什么都是小菜一碟，但 实际却很容易栽跟头。 n Kara Cheung

我

的PhD是化工专业，不过之后 我又念了一个金融市场方向的 MBA。工程学习中的相关训练让我在 之后进行大量分析的时候颇为受益。 工程分析中的“有限元分析”和解决 物流网络中复杂问题的思路相似，即 把一个大问题拆散成很多小问题，然 后一个一个解决。知识永远不嫌多， 涉猎越广，思路就越容易打开，这对 供应链的管理和发展是相当有益的。

n Manoj Mehta, 固特异全球采购解决方案总经理

GSE is a design and build turnkey contractor conducting industrial, R&D, and logistic projects all over China. We build an average of 2 million sq.m of logistics facilities every year, with notable clients include AMB, Gazeley, Wal-Mart, DHL, IKEA, L’Oreal, TNT and Prologis etc. across China and Europe. Our service covers: Due-Diligence Study Site Assessment / Selection Master Planning / Construction cost estimate Design Optimization/ Green Building consultancy Hi Speed Project delivery / Sustainable Construction Aftercare Service

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Feature

E-commerce

Can online

B2C click with

Logistics Established firms partner; new firms self-invest Kevin Foehner

Song Wen, Taobao 32

November/December 2010

â&#x20AC;&#x153;

â&#x20AC;&#x153;

We are frustrated with the lack of development of logistics networksâ&#x20AC;Ś

S

o far so good for e-business in China, which has seen its market more than double since 2009 and is not expected to slow down before the end of the year. But while major players like Taobao Mall (the B2C service of Taobao. com), 360buy.com and Amazon.cn (formerly Joyo.com) are welcoming the boost in revenues, expanded operations have raised problems in logistics and customer service, questioning the ability of the sector to sustain the booming market .

A comparable boom has hardly ever been sustained for so long in other markets around the world. This has put stress on the logistics side of operations. How can a company keep pace with orders and deliveries while business is growing by up to 5 times per year? Chinese dot-com retailers seem not to agree on the answer, as a major split has arisen between established businesses and newcomers in terms of handling growth.

While the former have decided to stick to the traditional approach and rely on 3PLs, the latter have challenged sector definitions and set up their proprietary delivery services. Given the early stage of development of e-business in China, it is hard to predict which of the two approaches has more chances to succeed. www.supplychains.com

Feature Amazon’s warehouse Fernley, Nevada

China’s Online Shopping Users (million, 2007-2011F)

Partnership focus Strategic partnerships between online retailers and logistics firms have so far been the logical foundation to build an efficient and competitive business. Most established players who have moved into the Chinese market have chosen professional companies to handle their logistics.

This has been the case for Alibaba’s Taobao, the sector leadersof e-commerce in China, which is currently managing 20 partnerships with 3PLs across China.

The same path has been taken by its global competitor and sectorpioneer eBay.com. According to the company’s BD Manager Yiheng Tang, “eBay cooperates with www.supplychains.com

the top four logistics companies, including China Post and AMEX, and also uses smaller 3PL companies based in South and East China.”

Foreign online B2C companies, such as Amazon.com, have become extremely successful in the US by using partnerships with established 3PLs. Amazon has recently made moves into China, and according to Loretta Chao of the Wall Street Journal, “Their strategy has involved leasing fulfillment centers and partnering with local suppliers in Beijing, Suzhou, Guangzhou and other carefully selected city centers.”

These companies are transferring methods that proved successful in Europe and North America to the Chinese market, while on the contrary a growing pool of locally-focused businesses are following an all new approach.

Logistics Investment A growing number of Chinese B2C online retailers are taking control of all aspects of their business, including logistics management. Redbaby has chosen to rely solely on its own logistics service, claiming to have the largest private logistics network out of any B2C company in China. Vancl.com delivers its apparel with its logistics November/December

33

Feature

E-commerce Taobao’s Online Transaction Value Chain Delivery: Third party logistics companies List products, set prices, Buyers

Browse products, order

process order

Communicate with Ali

Communicate with Ali

A C2C

Source: Taobao

Payment:

subsidiary “Ru Feng Da”, set up in 2008, and has established distribution centers of its own in several cities, despite also working with more than 80 3PLs. Competitor 360Buy has similarly created distribution centers in 24 different locations across China.

The original idea for e-commerce companies was to reduce assets, and their decision to take over this aspect of operations has left logistics professionals shaking their heads.

A possible explanation for the unexpected turn could be the abundance of cash currently in the hands of these businesses. With major companies like Dangdang experiencing year-on-year growth of over 100 percent, it is not surprising that B2C companies find it easy to invest in their own logistics assets. Sources close to Taobao, the largest and most profitable player in China, suggest that the company will continue to heavily invest in its own logistics, adding 32 new warehouses in as many new Chinese cities over the next two years.

Keeping the customer Professionals from iResearch Consulting Group provide further reasoning behind this trend, suggesting that maintaining control of the delivery to end users ensures that company’s quality standards can be upheld. The world of online 34

November/December 2010

Sellers

shopping in China is a flooded market, and a major focus on customer service is at the forefront of priorities for e-businesses. Service quality is not only referring to the time that goods take to be delivered, but also to how they are delivered, therefore logistics are being targeted as a major aspect to help create a loyal customer base.

B2C companies admit that the Chinese community of online consumers have different needs from other Asian countries. “They demand high quality service, but they’re not willing to pay a high price,” stated Jacky Huang ,Yihaodian’s Operations Director, at a Council’s event address-

ing e-commerce.

Numerous B2C companies acknowledge that the smaller 3PLs are unable to maintain their service standards, and tend to treat the delivery process as “box moving” rather than the companies’ main face to face interaction with the end user. “We are satisfied with the top companies, and as for smaller 3PL logistics companies, we’ll evaluate them first and then make recommendations to our suppliers,” remarked eBay’s Mr. Tang regarding the selection process of smaller 3PLs. What to expect Supply chain and logistics professionals have spent more than a decade and a half building logistics networks in China, and while they are highly successful in developed regions, they are still struggling to effectively reach the outskirts of the country. Foren Fu, Research Director of iResearch, suggests that the only company that currently has the capability to deliver to any Chinese city is China Post – which is quite expensive – and the quality of their service has been questionable.

Song Wen, Senior Logistics Man-

China’s Main B2C Operators’ Market Share (2008 Q1) 7cv 0.8% Menglu 2.5% PPG 2.7% 99read 3.8%

MainOne 0.5% Others 18.9%

Dangdang 16.2% Amazon /Joyo 15.4%

Redbaby 4.6% 139shop 8.8%

m18 10.8%

360buy 15.0%

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E-commerce ager of Taobao, stated that despite his company’s reliance on established 3PLs, they have started developing logistics networks in second and third tier cities in China, where logistics coverage from professional partners is weaker.

Evidence of the emergence of a hybrid approach is the decision by Newegg.com, possessing their own subsidiary OZZO Logistics, to also

sign an agreement with ZJS Express, an established logistics company with a strong network of distribution centers and warehouses. It’s interesting to note that Anthony Chow sits as both president of Newegg and OZZO. While this hybrid approach is meeting the current needs of online retailers, it raises questions regarding a prospective conflict of interest between the newly created subsidiary and the logistics partners.

Integration into supply chains seems to be another major issue as to why 3PLs have not made more partnerships with the burgeoning ecommerce companies.

Yihaodian, Taobao, and iResearch agree that if 3PLs were able to integrate themselves and adhere to the specialized needs of their businesses, all at a reasonable cost, they would be happy to partner with them. If current logistics companies want to cash in on the growth of the online retail market, they need to become more flexible in adapting their services to their customers’ requirements.

In a market that could be valued at over US$ 60 billion by 2011, ecommerce companies are not going

to wait for logistics players to catch up with the industry, and will be using their cash to invest in their own logistics networks.

Taobao’s speaker Song Wen says, “We are frustrated with the lack of development of logistics networks and with the fact that we are having problems developing effective channels of distribution.”

The motivation behind e-business firms investing in their own logistics due to a lack of sophistication with current 3PL networks is questionable. As a result, some logistics companies remain hesitant to enter into partnerships with B2C players.

Are online companies engaging in partnerships with logistics players in an attempt to learn the tricks of the trade? Or are they truly looking to establish long-term agreements for the mutual benefit of both partners?

Tell us what you think. Send your thoughts to editor@supplychain.cn

Superlogistics takes flight

F

uel was added to the fire the e-commerce market in China. recently surrounding the Speculations began when Ali“Superlogistics Plan” of baba Group recently invested milAlibaba Group’s, Tao- lions in the initial public offering bao, after information was leaked of Global Logistics Properties, regarding a massive expansion the largest provider of modern plan on the part of the company. warehousing facilities in China.

A source close to the matter out- The news will send shockwaves lined a plan to build 32 new distri- through the 3PL industry, and furbution centers in the next 2 years ther raises questions regarding the across China, which would increase interests of online B2C companies its reach to 52 cities, up from 20. when entering into partnerships The plan would further tighten the with logistics firms. company’s current stranglehold on Logistics professionals sound off! CHAiNA magazine wants your reactions to this news. Email your comments to editor@supplychain.cn

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Feature

E-commerce

网上B2C B2Cvs物流 合作还是自建 Step Delivery:

Third party logistics companies List products, set prices,

Step Buyers

Browse products, order

process order

Communicate with Ali

Communicate with Ali

Step Sellers

A C2C

Payment: Step

中

国电子商务市场2009年 交易规模较上一年度翻 了一番，形势一片大 好，上扬势头预计年内

都不会有所下挫。其中的大腕如淘宝商 城（淘宝最新的B2C服务）、京东商城 和亚马逊（前身卓越）自然觉得盈利是 多多益善，但是扩大业务对物流和客服 的要求会更高，其中麻烦也更多，蓬勃 旺市中行业存活力备受考验。 中国市场之外还未曾出现旗鼓相 当的涨势。但是牛市中物流却入负千 钧。试想公司业务年均增长五倍，那如 何确保随之增长的订单处理速度和配送 速度？“国产”的零售商貌似不屑于上 述论调，因为随着市场新秀的涌现，其 在应对涨势方面与老牌企业可谓兵分 两路。 老牌企业固守传统，坚持3PL路 线；而新星们则无险不入，自建物流。 中国电子商务发展还未成熟，两股势力 平分秋色，胜负难测。 合作 要建立高效强劲的业务，逻辑出

36

November/December 2010

发点往往都是网上零售商和物流公司 建立战略合作关系。大多数入驻中国市 场的老牌企业都会依靠专业公司来处理 物流。 EBay是这样，其本地对头淘宝也是 这样，这位中国电子商务的霸主如今在 全国就有20家第三方物流合作伙伴。 放眼国外，亚马逊还是这样，而 且3PL路线让其在美国市场颇为成功。 最近在向中国市场进军的过程中 ，其 策略“大都涉及租赁中心，要不就是与 诸如北京、苏州、广州等地的供应商合 作，供应商所在地事先都要经过谨慎选 择”， 华尔街日报的Loretta Chao这 么说道。 让跨国企业在欧美市场大获成功的 市场战略在进入中国市场之后也正在调 整；另一方面本地企业数量激增，他们 在力推全新的战略路线。 自建 中国现在越来越多的B2C网上零售 商意欲增强业务控制力，包括物流管 理。红孩子自建了物流渠道，并号称 是中国B2C领域最大的自有物流配送公

？

司。凡客诚品虽已有80多家3PL合作伙 伴，但其后还是自建快递公司并在2008 年布局相关域名“Ru Feng Da”，在几 个城市中自建配送中心；而京东商城在 全国不同区域拥有24个配送中心。 电子商务公司原本计划减少资产， 而物流专家对此大都不支持。 这出乎意料，原因可能在于这些公 司手中的雄厚资产。当当网的收益按年 同比增長就已过100%，对其它B2C公司 来说投资物流确实不算难事。2009年京 东商城计划在全国14个城市中建立交接 点，投资额达6700万。 客户 艾瑞咨询的专家对此发展趋势进行 了分析，称在对最终用户的传递过程中 保持控制力才能保证公司上乘的质量水 准。中国网上购物发展已势如井喷，而 电子商务世界，注重客户服务则是重中 之重。服务质量不仅仅是送货时间的问 题，还同货运方式有关，所以要拥有足 够忠诚的客户群，物流地位非同小可。 B2C公司也看到中国的网上消费 群体有别于其他，“他们希望高质服 务，但是绝不情愿付高价”， 在一次 Council举办的电子商务论坛中Jacky Huang这么解释。 不胜其数的B2C公司也意识到，那 些小型的3PL无力保证服务水准——他 们把货运当成“拖箱子”，在和终端用 户接触时也不会顾及公司形象。“大公 司内部结构完善，不会让我们多操心； 对于那些较小的3PL物流公司，我们会 事先对其进行评估；然后把不错的公司 会推荐给供应商”，eBay的汤先生谈到 了公司对3PL的筛选。

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E-commerce 期待 供应链物流领域的专家在中国建 立物流网络耗时十五年，大捷于发达地 区，却残喘于偏远区域。艾瑞咨询的研 究员Foren Fu提到，现在中国只有一个 业务范围能够触及各个城市的公司—— 中国邮政——但是他们收费很高，服务 质量却有待提高。 淘宝高级物流经理文颂表示，尽管 其公司与知名3PL合作，但在中国二、 三线城市，这些合作伙伴在当地的辐射 力还是挺弱的。 新蛋的“混搭”则将形成物流新 格局，虽旗下已拥有OZZO奥硕物流，但 它也与宅急送（ZJS）强强联合。新蛋 老总邹果庆同时也执掌OZZO，这挺有 趣。“混搭”方案迎合了网上零售商不 断上升的需求，不过双刃剑的另一面就 是子公司和物流合作夥伴之间难以避免 的矛盾纷争。 3PL未同新兴电子商务公司合作， 原因何在？这要看另一个重要议点：整

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合供应链。 1号店、淘宝和艾瑞咨询都认为3PL 若能够投入合理数额的成本进行自我整 合、坚持专业化，那与其合作未尝不是 件美事。如果物流公司想在网上零售市 场谋利，那其业务必须更为灵活以应对 客户千变万化的需求。 在这个2011年有望突破600亿美元 的市场，电子商务公司不会原地踏步等 着物流公司迎头赶上而无动于衷，他们 会投入更多资金搭建自己的物流网络。 来自淘宝的文颂说过，“物流网络 欠发达已够让人头痛了，但现在还得惊 忧高效配送渠道的完善问题。” 电子商务公司投资自建物流，有人 说原因是现今3PL网络不够精密，这种 说法其实站不住脚。不少物流公司在和 B2C公司合作问题上并非满腔热忱而是 踌躇再三。网络企业和物流公司合作究 竟为何？是为从中探得行业秘诀？还是 真的希望在长期合作中实现共赢？

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Feature

Features

Farming Out Pharma

O

How western pharmaceuticals view future Chinese manufacturing

Vishal Bhandari, Axel Erhard, Saurabh Tejwani, Mike Wise

Over the last few years, Chinaâ&#x20AC;&#x2122;s pharmaceutical industry has been booming, due in large part to strategic moves and sourcing strategies of Western pharmaceutical companies seeking low cost manufacturing. Evonik recently opened a new Active Pharmaceutical Ingredients (API) plant in China and Yu Dahai, Evonik Chinaâ&#x20AC;&#x2122;s president, announced that it would annually inject more than RMB 930 million into China until 2013. Last year AstraZeneca announced moving its API production from the U.K. to China while Eli Lilly axed more than 5,000 jobs in the U.S. and added 2,000 in China. Chinese pharmaceutical exports have reached close to US$30 billion and have been growing at double-digit rates over the last few years. Many pharmaceutical plants have come up in China to support this growth. More than 100 drug manufacturing sites in China are currently manufacturing API Chinese or drug products for US NDA (New Drug Application) and ANDA (Abbreviated New Drug Application). A majority of these sites are focused on the manufacturing of starting materials, intermediates (usually precursors to APIs in pharmaceutical manufacturing process), and APIs, which typically have less burdensome regulation requirements than the finished drugs.

The main driver for sourcing starting materials, intermediates, APIs, and (to 38

November/December 2010

some extent) finished drugs from China was the cost advantage of 30-50%. Cheaper labor, tax advantages, undervalued currency, and lower capital and overhead costs all contributed to this. However, this could all change in the future. All of these advantages are expected to erode in the coming years as inflation in China rises, currency appreciates and tax rebate structures start to evolve.

Losing the Advantage A surgical assessment of each of the drivers behind the cost advantage can reveal a clearer picture of the future. China has seen annual wage increases of 19% over the last five years, and the trend is likely to continue for at least another four or five. These wage increases will directly cause increases in overhead costs. There is also a broad consensus that Chinese currency is present-

RMB-USD Exchange Rate (RMB1 in USD)

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Feature

ly undervalued. While China succumbed to world pressure and allowed its currency to appreciate by 21% between 2005 and 2008 (See Figure), it now holds the RMB exchange rate constant to counter recession by promoting exports.

However, world pressure to revaluate the RMB is mounting again. In June 2010, China said it would allow the RMB to float more freely, but it has gained just 2% against the USD since then. In September, the House of Representatives in the US passed legislation to penalize China’s foreign-exchange practices, sending a powerful warning to Beijing. The measure would allow the U.S. to levy tariffs on countries that undervalue their currencies. While there may be differing points of view on the degree of currency appreciation, it is still likely that the currency will appreciate by up to 15% over the next 3-4 years. The Chinese government will tightly control this process and manage it based on global macro economic situations but the tone to allow reforms in RMB exchange rates has started to emerge from within China.

Another advantage that may soon be pulled out from under pharmaceutical companies is the generous tax rebates. China promotes their pharmaceutical export industry by providing significant VAT (Value Added Tax) rebates averaging 13%

to pharmaceutical exporters. Even though tax rebates are a direct way for the Chinese government to support pharmaceutical companies through shortterm downturns, it does not help the industry stay competitive in the long term. These rebates will likely start decreasing as China’s domestic market matures and growth picks up. Currently, most pharmaceutical companies are moving generic and low cost APIs to China where the VAT rebates are more likely to be slashed first.

With these changes, China’s current gross cost advantage of 30-50% could easily be reduced to 13-25%.

Factor in supply chain complexity (lead times and inventory implications), the rising costs of quality assurance, and upcoming stringent environmental regulations, and Western pharmaceutical companies will start to re-think their China outsourcing strategy.

Long Term Strategies Western pharmaceutical companies have started to acknowledge these trends as they develop their long term sourcing strategy. A robust risk analysis and quantification of exposure will be critical before they start to develop a mitigation strategy, which should involve developing scenarios that reflect a com-

China is projected to be the 7th largest pharmaceutical market in the world by 2010 2002 RANKING US Japan France Germany Italy UK Spain Canada Brazil China

2006 RANKING 1 2 3 4 5 6 7 8 9 10

US Japan France Germany Italy UK Spain Canada China Brazil

Source: IMS Health, IMS Market Prognosis International March 2007 updated

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2010 RANKING 1 2 3 4 5 6 7 8 9 10

US Japan France Germany UK Italy China Canada Spain Brazil

1 2 3 4 5 6 7 8 9 10

E

xports of starting material, intermediates and APIs (the majority of exports are from these categories) are most threatened by the factors discussed. They are typically bulk products and have a lower labor content than finished products. Also, GMP (Good Manufacturing Practices) guidelines from US FDA (Food and Drug Administration), SFDA (State Food and Drug Administration, China’s regulatory agency), and western pharmaceutical companies’ own requirements mean that the Chinese plant for API manufacturing is very similar in technology and cost to the US equivalent. Therefore, the savings from outsourcing are small and reducing rapidly because of above discussed trends. For finished product the advantages are greater and are not eroding as fast. Pill pressing, blister packaging, secondary and tertiary packaging have much lower labor and capital cost in China than in the USA or Europe. It’s not unusual to see completely manual final packaging in China compared with completely automated in – say – Germany. Inspite of this, exports of finished drug products are still relatively small as selling drugs with “Made in China” label is a big challenge in western countries.

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Feature

MARKET GROWTH

2009-2010

Top10 Sales Ranking Pharmaceutical Companies in China Harbin Pharmacy Group Limited

2819.81mill.

Yangtze River Pharmaceutical Group

2758.56 mill.

Shanghai Roche Pharmaceuticals

1500.09 mill.

Xian-Janssen Pharmaceutical

1266.60 mill.

Tianjin Smith Kline & French Laboratones

1186.42 mill.

Jiangsu Hengrui Medicine

1051.90 mill.

Beijing Double-Crane Pharmaceutica

934.19

mill.

Glaxo Wellcome

841.50

mill.

Jiangxi Jiminkexin Group

732.61

mill.

Hansoh Pharmaceutical Group

709.13

mill.

pany’s currency exposure and a breakdown of cost structure of outsourced supplies and supply chain specifics (e.g. inventory policies, lead times etc.).

The solution they choose will need to be aligned with their strategy, supply chain capabilities, and their product / supplier portfolio.

Easy l Revisiting Contract Terms and Financial Hedging – Western pharmaceutical companies are likely to revisit terms and conditions to reduce their exposure to currency flux and use financial instruments to hedge currency risk exposure. While this may be relatively quick to implement, there is a definite cost involved in establishing these hedges.

(http://drug.job1001.com/)

Features 制药外包 中国制药之西方视角 在过去的几年里，中国制药业因 策略调整和西方制药公司的采购策略 受益颇丰。Evonik最近在中国和***地 区开设全新的新药成分（API）生产 厂。Evonik中国区总裁称，在2013年以 前，公司每年会对中国市场投入9亿3 千万人民币。AstraZeneca去年宣布将其 API生产基地从英国迁至中国；Eli Lilly 在美国大刀阔斧削减5000职位，同时 却在中国增加2000个职位。中国医药 出口总额将近300亿，在最近几年中以 双位数持续增长，其中也因大量制药 企业纷涌而至。最近，中国100多个药 业生产点都在生产API或用于美国新 药申请（US NDA）、简化新药申请 （ANDA）的新品种。绝大多数基地都 主要生产初始材料、中间体（一般在制 药过程中是API的前身）和API，和成品 药物相比就没有太多繁重的监管要求。 中国有廉价的劳动力、优惠的税 制，另外还有货币贬值、低价资本及营 业成本，所以从中国采购初始材料、 中间体、API和成药可以节省三成到五 成成本，这也促使中国成为药物采购源

40

November/December 2010

地。但这并非一成不变，中国的通货膨 胀、货币升值以及退税结构都可以让所 有优势一文不值。 优势不再 若审视成本优势背后的每个因素， 不难分析未来的图景。在过去的五年 里，中国每年工资上涨19%，这个趋势 在未来的四到五年内还会保持。薪资 上涨会直接影响营业成本。 另外中国 货币贬值也是公认的。虽然从2005年到 2008年，中国禁不住国际压力将其货币 升值21%，但现在中国仍执行反衰退政 策（促进出口）、控制人民币汇率。不 过随着国际社会不断施压，人民币有望 再次升值。今年6月，中国政府允许人 民币自由浮动，但是之后币值还是调控 了2%以抵制美元。九月，美国众议院 通过了一个惩罚中国外汇政策的法案， 向北京发出强有力的信号，要求改变外 汇政策，旨在对所谓低估本币汇率的国 家征收特别关税。虽然对货币升值程度 的看法不尽相同，但是在未来的三到四 年内币值有望上升15%。其间中国政府

将会时时监控并根据宏观经济状况进行 调整，不过中国内部已传出人民币汇率 改革的口风。 另外一个不久之后就会***的优势 就是退税机制。中国通过向药品出口商 征收平均13%的增值税退税来促进药品 出口。尽管对中国政府来说，要支持制 药公司撑过短期低谷，最直接的策略就 是出口退税，但是长远来看，这并不能 增加行业竞争优势。中国国内市场日 趋完善，收益不断增长，退税也会随之 降低。最近，因为增值税退税的大幅减 少，很多制药企业都蜂拥到中国生产普 遍且低成本的原料药。 有了这些改变，中国最近三到五成 的总成本优势就很容易降到13-25%。供 应链的复杂性（订货交付时间和库存影 响）、质保成本的增长以及即将实施的 严格的环保法规，西方国家的制药企业 也要对中国外包策略三思而行了。 长期策略 西方国家的制药企业在发展长期 的采购策略之时开始认识到这些趋势。

www.supplychains.com

Feature Potential Benefits

Small Ease of Implementation l Collaboration beyond qualification - Pharmaceutical companies can work closely with strategic suppliers to share technical know-how, capital excellence methodologies, and best practices for production processes/quality assurance to help them with productivity improvements.

l Diversifying supply sources – Western pharmaceutical companies can reduce their exposure to China and include places like India, South-east Asia (e.g. Singapore, Thailand, Philippines), and Eastern Europe to avoid getting too heavily weighted on China.

Large

Diffficult Making sourcing decisions based on product category and future outlook of cost advantages – Companies need to forecast price advantages that can last over the long term rather than focusing on the present, since source changes are time consuming (can take years) and difficult in this industry.

l

l Aligning sourcing decisions with revenue streams - Companies can mitigate currency and inflation risks by aligning low-cost country sourcing decisions with the revenue stream in those emerging markets.

The reward potential and ease of implementation will vary for different options, and executing these options will require significant internal and external collaboration. Winners will have to understand the trends and act swiftly.

公司的缓解策略必须反应公司的货币风险、分项成本结构 和供应链外包用品细节（如库存政策，交货期等）发展状 况，在推行相关策略之前，稳当的风险分析和量化透明评 估是不可或缺的。所选方案必须符合其发展战略、供应链 能力以及产品/供应商服务。 u 重视合同条款和财务对冲---西方制药企业都会重 审相关合同及条款已减少货币流量风险并运用金融工具来 对冲汇率风险。虽然实施速度可观，但是成本也是不可避 免的。 u 除了质量还要合作---制药公司和战略供应商紧密 合作分享专有技术、资本优化方法和最佳生产工艺 /质保 措施来提高生产效率。 u 供应原料多样化---如果一个西方制药公司最近在 中国过度负重，那西方制药公司可以降低其在中国曝光 率，包括像印度、东南亚（如新加坡、泰国、菲律宾）和 东欧等国。 u 根据产品分类和成本优势预测来制定采购方案--公司需预测较为长远的价格优势。因为货源改变会耗时耗 力，在行业中实属不易。 u 采购决议配合营收模式---公司在成本低廉国家可 配合其营收模式来制定采购决议以此降低货币/通膨风险。 回报程度和实施难易会因不同决议而改变，执行这些 方案需要内部（跨功能）和外部（同供应商）的配合。看 清趋势，随机应变才能成为 赢家。

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November/December

41

Feature

Shipping

Modernizing and Reinvention An update on the Yangtze

W

ith billions of Renminbi being poured into road and rail projects in China’s interior, central government planners must feel blessed to have a natural resource in the form the 6,300 km Yangtze River to link China’s interior to the coast. However, the river has also long been taken for granted.

Modernizing the river requires only a fraction of the capital expenditure that is invested in road or rail. The RMB 10.3 billion of the government’s stimulus package allocated to the Yangtze for 2010 was equal to the amount originally set aside by the central government for the entire 11th five-year plan (2006-2010). Another RMB 43 billion has been budgeted for dredging and waterway equipment and infrastructure such as buoys and anchorage spaces for the years leading up to 2020.

However, the future of transportation along the Yangtze River looks bright. In August 2010, Premier Wen Jiabao chaired a State Council meeting that placed the Yangtze at the core of China’s efforts to build a comprehensive, efficient and eco-friendly transport system.

This followed a high-profile Yangtze tour by Vice Premier Zhang Dejiang in December 2009 when he called on everyone to work hard towards ‘a common goal of providing a truly efficient, green and low-cost mode of transport to serve the thriving industries along the Yangtze and beyond’.

Container cargo breakdown on major Yangtze ports, 2009 2009 年长江干线规模以上港口分月内外贸集装箱吞吐量 The Yangtze’s fastest-growing container ports, 2009 900 年长江干线集装箱吞吐量增长最快的十大港口 2009 Thousand TEU Domestic trade 内贸箱

700

吞吐量(千TEU)

Foreign-trade related 外贸箱

800

147%

Chizhou 池州

110%

Yueyang 岳阳

600 Changzhou 常州

102%

500 Jiangyin 江阴

49.8% 36.7%

Maanshan 马鞍山 400 Tongling 铜陵 300 Jiujiang 九江

25.7%

200 Taizhou 泰州

24.8%

Wuhan 武汉 100 Wanzhou 万州 0 Jan

1月

Feb

33%

20.1% 18% Mar

April

0 30% 2月 3月 4月

May

Jun

Jul

Aug

Sept

Oct

Source: Yangtze River Administration 来源：交通部长江航务管理局

Source: Yangtze River Administration 来源：交通部长江航务管理局

42

Nov

Dec

60% 90% 120% 150% 5月 6月 7月 8月 9月 10月 11月 12月

November/December 2010

Shipping trends Long regarded as China’s ‘golden waterway’, the Yangtze and its 3,600-odd tributaries have a combined navigable length of more than 70,000km, making up 70% of China’s total. It is also the country’s busiest river, accounting for 80% of all cargo volumes. Even so, it remains a sorely under-utilized resource; only in the lower reaches is the river used to anywhere close to its true potential.

Mr. Tang Guanjun, Director of the Yangtze River Administration under the Ministry of Transport, concedes that the Yangtze lags far behind the Rhine and Mississippi rivers in terms of efficiency and the use of modern technology. The administration says that annual freight volumes on the inland section of the Mississippi stand at about 13m tons/km compared with just 1.52m tons/km on the Yangtze. According to official figures, the average size of vessels on the Yangtze is 700 dwt, half the size of those that sail on the Rhine. Lack of vessel conformity on the Yangtze is another problem; the more than 100 types of non-standardized vessel models plying the Yangtze seriously hinder the efficient utilization of the Three Gorges ship locks.

According to figures released by the Yangtze River Administration in May 2010, throughput of the 24 major ports along the Yangtze trunk line stood at 1,272m tons in 2009, up 12.6% from the previous year. Foreign traderelated cargo rose by 25% to 150m tons, of which 78% was made up of imports. Container throughput bucked the national trend and increased by 4.48 per cent to 7.33m TEU, largely as a result of continued earthquake relief efforts and strong domestic traffic.

China’s strong economic recovery following the government’s stimulus package has led many to believe that the Yangtze shipping will continue its upward trend. Acwww.supplychains.com

Feature The book is available US$ 125 or RMB 818 plus postage. Council members only pay US$ 110 or RMB 750 plus postage.

To buy a copy, click on www.supplychains.com/en/cat/?38

and Southeast Asia. Due to a reduction in the number of international shipping connections following the start of the global economic downturn, Sateri has had to analyze journey times and route frequencies in greater detail before selecting its ocean carriers. Within China, goods are transported by truck or barge, depending on the location of the client; the key determinant is the lowest cost.

Sateri has a private terminal in Poyang Lake, the largest freshwater lake in China and a major tributary of the Yangtze. The terminal has two berths that accommodate 2,000-3,000 dwt vessels on high tide when the water level reaches 6-8 meters. In the dry season, between October and March, the water level falls to as low as 2.2 meters.

The company is planning a major project to expand the terminal’s handling capacity of dangerous goods.

Major shipping lines are deemed too expensive, so the cording to an official forecast, total cargo throughput company uses private operators instead. It imports about on the Yangtze trunk line in 2010 is expected to exceed 110,000 tons of coal a year to create steam used in the 1,400m tons, up about 10%, while foreign trade related production process. Most of the coal comes from Sichcargo will increase 14% to around 170m tons. Growth uan province but the river journey can take up to 14 days in imports, particularly of metal ores, iron and steel, and because of fluctuating water level downstream of the chemical raw materials, will continThree Gorges Dam, according The Yangtze’s fastest-growing container ports, 2009 ue to outstrip that of exports. to the ship operators. The comThe Yangtze’s fastest-growing container ports, 2009 2009 年长江干线集装箱吞吐量增长最快的十大港口 pany’s strategy is to find new 2009 年长江干线集装箱吞吐量增长最快的十大港口 Ready to Grow sources of quality coal that can Jiujiang, whose name means be delivered in a more reliable 147% Chizhou 池州 147% Chizhou 池州 ‘nine rivers’, is the only city in Jimanner. It has established a 110% Yueyang 岳阳 110% Yueyang 岳阳 angxi province located on the new source in Shanxi province 102% Changzhou 常州 102% Changzhou 常州 Yangtze trunk line. A strategic albought from traders in the port 49.8% Jiangyin 江阴 49.8% Jiangyin 江阴 liance between SIPG Jiujiang port city of Qinghuangdao, Shan36.7% Maanshan 马鞍山 36.7% Maanshan 马鞍山 and Nanchang port contributed to dong province, from where it 33% Tongling 铜陵 33% Tongling 铜陵 the city’s 25% growth in container is delivered to the plant via the 25.7% Jiujiang 九江 25.7% Jiujiang 九江 throughput in 2009 to just over sea and then the Yangtze.

24.8% Taizhou 泰州 24.8% Taizhou 泰州 100,000 TEU. The city, situated In 2009 the company was 20.1% Wuhan 武汉 20.1% Wuhan 武汉 between Wuhan and Nanjing, is approached by several major Wanzhou 万州 18% Wanzhou 万州 18% well connected with road, rail and shipping lines to containerize 0 30% 60% 90% 120% 150% airport networks. Heavyweight in0 30% 60% 90% 120% 150% their coal shipments. These Source: Yangtze River Administration 来源：交通部长江航务管理局 vestors include Sinopec, Minmetlines, faced with plummeting Source: Yangtze River Administration 来源：交通部长江航务管理局 als, Suzuki and Wal-mart. volumes in their export marAnother multinational investor, Sateri International, kets, had been looking to increase their business in the decided to locate its China viscose fiber mill opera- domestic market. However Sateri has not been able to tions in Jiujiang because of the city’s good transporta- secure medium- or long-term price contracts for contion links. Its plant is located close to the river and about tainerized coal, which means it cannot lock in its future 20km from the downtown area of the city. It imports spending plans. It also complains of a general lack of dissolving pulp from Brazil via Shanghai. Other raw special handling equipment in ports capable of unloadmaterials, including chemicals such as sulfuric acid, are ing coal from containers. For these reasons, Sateri besourced in China, many of them locally. Sodium hydrox- lieves that containerizing commodities like coal will reide is sourced from Yichang. main unrealistic for the foreseeable future.

The company’s finished products are sold domestically The Council and Yangtze Business Services are jointly organising in the provinces of Jiangsu, Zhejiang, Guangdong, Shan- a Supply Chain Roadshow in Jiujiang on December 2 – 3. To join us, dong and Hubei; its major export markets are Europe register online at www.supplychains.com/en/cev/572 www.supplychains.com

November/December

43

Feature

Shipping

与时俱进 重新发现

中

国用于国内公路铁路建设的投资可达数 十亿元，而6300公里的长江从中国之腹

奔流直下直抵沿海，但人们对它的态度 可谓是暴殄天物。 长江现代化并不需要天价投资，要 的只是政府对交通建设巨额投资中的冰山一角。政府在2010 年对长江工程投103亿元——不过是中央政府“十一五”规划 款项中预留的部分；另外430亿人民币预算用于2020年以前的 航道疏通及基础设施建设，如浮筒和锚位建设等等。 总的来说，长江的未来一片曙光。今年 8月，温家宝总 理在国务院会议中将长江定位为中国重点发展项目，旨在将 其发展成为综合、高效、环保的交通枢纽。

货运的发展趋势 长江干堤3600公里，干支流通航里程共约70000km,占中 国内河通航里程的70％，自古就是中国的“黄金水道”。 长江 水运量已占全国内河水运总量的80%，是中国最繁忙的通航河 流。但长江被充分利用的只有下游区域。 长江航务管理局局长唐冠军承认，长江在效率和现代 化方面确实不能与莱茵河、密西西比河相提并论。密西西比 河的内陆水运货物每年可达13公吨/千米，而长江只有1.52 公吨/千米。官方数据显示长江船只平均700载重吨，只是莱 茵河上的一半。很多船只不合格也是另外问题，长江上将近 The Yangtze’s fastest-growing cargo ports, 2009 2009 年长江干线货物吞吐量增长最快的十大港口 29.8%

Taizhou 泰州 Taicang 太仓

29%

Jiangyin 江阴

24%

Jiujiang 九江

23%

Zhangjiagang 张家港

21.8%

Container cargo breakdown on major Yangtze ports, 2009 2009 年长江干线规模以上港口分月内外贸集装箱吞吐量 900

Thousand TEU

Domestic trade 内贸箱 Foreign-trade related 外贸箱

800

吞吐量(千TEU)

700 600 500 400 300 200 100 0

Jan

Feb

Mar

April

May

Jun

Jul

Aug

Sept

Oct

1月

2月

3月

4月

5月

6月

7月

8月

9月

10月 11月 12月

Nov

Dec

Source: Yangtze River Administration 来源：交通部长江航务管理局

100多种不达标的船只严重阻碍了长三角干支流货运航路，影 响了货运效率。 长江航务管理局2010年5月公布，2009年长江干线24个主 要港口的吞吐量达到1272公吨，同比增长12.6%。外贸货运增 长了25%，达到150公吨，其中进口占78%。货柜吞吐量增长了 4.48%，达到733万标准箱，逆市上扬，这也因为抗震救灾时 物资运输增长，还有强大的国内交通运输力。 中国经济复苏，加之政府的刺激政策，很多人对长江货 运保持乐观。官方预测2010年长江干线的货柜吞吐量将超过 1400公吨，涨幅会到10%；外贸货运涨幅将至14%，总量预计 达到170公吨。对金属矿石、钢铁、化工原料的进口总量巨 大，并将大于出口总量。

19%

Changzhou 常州

11.9%

Huangshi 黄石 Yichang 宜昌

11.2%

Changshu 常熟

10.9%

Yangzhou 扬州

10.9% 0

10%

20%

Source: Yangtze River Administration 来源：交通部长江航务管理局

44

长江新动向

November/December 2010

30%

趋势待发 九江是江西省唯一一个地处长江干道上的城市。地处 武汉和南京之间，交通便利，水陆空齐全，2009年上港集团 九江港与南昌港的战略结盟有效推动了九江货柜吞吐量的增 长，其涨幅达25%，总量超过10万标准箱。诸如中石化、五 矿、铃木和沃尔玛等大型企业都在此有投资项目。 赛得利也因交通优势将其粘胶纤维运营点设在九江。生 产点近河，离市中心约20公里，化学制品如硫酸直接从中国

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Feature

采购；氢氧化钠由宜昌提供；其它制品可就地取材。成品在全国 出售；出口市场主要在欧洲和东南亚。经济危机后，赛得利深入 分析了货运淡旺季和航线频繁度。 赛得利在中国最大的淡水湖鄱阳湖拥有自己的码头。码头两 个泊位，高峰期可容纳两三千载重吨大型船只。旱季时公司会发 展危险品运输。 赛德利自建货运以节约成本，每年进口11万吨煤炭用于生产 所需的蒸汽，四川省是其煤炭主要供应源，但因货运时间太久， 公司正寻找新的高质煤炭供应地。目前公司在山西已开设新的采 购点，主要通过山东秦皇岛港口南下至长江。 赛得利并不能承受中长期的合同，因为不希望受未来支出计 划的牵制。同时赛得利也提到因为港口用于卸载煤炭特殊搬运设 备大都有限，货柜运输诸如煤炭等物资在短 期内是不现实的。

The TheYangtze’s Yangtze’sfastest-growing fastest-growingcontainer containerports, ports,2009 2009 年长江干线集装箱吞吐量增长最快的十大港口 2009 2009 年长江干线集装箱吞吐量增长最快的十大港口 147% 147% 110% 110%

Chizhou 池州 Chizhou池州 Yueyang 岳阳 Yueyang岳阳

102% 102%

Changzhou 常州 Changzhou常州

49.8% 49.8% 36.7% 36.7%

Jiangyin 江阴 Jiangyin江阴 Maanshan 马鞍山 Maanshan马鞍山 Tongling 铜陵 Tongling铜陵

33% 33%

Jiujiang 九江 Jiujiang九江

25.7% 25.7% 24.8% 24.8%

Taizhou 泰州 Taizhou泰州

20.1% 20.1%

Wuhan 武汉 Wuhan武汉

18% 18%

Wanzhou 万州 Wanzhou万州

价格：125美元（折合人民币818元） Council会员价：110美元（折合人民币750元）

00

30% 30% 60% 60% 90% 90% 120% 120% 150% 150%

Source: Yangtze River Administration 来源：交通部长江航务管理局 Source: Yangtze River Administration来源：交通部长江航务管理局

中国大陆以外地区请自付邮费 购买请点击：www.supplychains.com/en/cat/?38

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November/December

45

FOCUS

Insurance

Tienmann Chau, COO, Ximco Corp.

At Your Own Risk?

Strategies to shield your operations Samuele Gabbio

T

he Global Supply Chain Council called on insurance experts Giacomo Rustioni and Leo Xiang – from SP Insurance Brokers – and Tienmann Chau – from Ximco Corporation – to conduct a workshop for representatives of firms who are dealing with logistics in China. During the event, they addressed recurring questions pertaining to the best method of insuring dispatched products in China.

Protection The function of logistics insurance is to cover risk concerning damages or losses during the transportation of goods. On the cargo owner’s side, it covers damage to the shipment of goods, while on the logistics provider’s side it covers failure to comply with the contract.

Cargo and warehoused properties both need insurance. Insurance con46

November/December 2010

tracts are normally divided in possible causes for damage: fire, natural disasters, leakage, theft, etc.

Property insurance does not cover fault or any liability from the sides of both owner and 3PL operator.

An insurance claim on property can reimburse the owner, but the insurer has the option of making the carrier liable through subrogation – the right to recoup the expense when another party should be made responsible – if it has some form of fault.

It is important to remember that property insurance can only cover the property owner, while 3PLs need to be covered by a “Freight Carrier/Forwarder Liability Insurance”. The liability of a logistics operator is normally divided into four categories: cargo liabilities,

customs liabilities, third party liabilities, and errors and omissions.

Moreover, according to Chinese law, insurance for logistics operators does not, by default, guarantee protection over damages caused by subcontractors. Therefore, a specific insurance is necessary if one or more subcontractors are involved.

It is also common practice in China to charge the insurance cost back to the client, a practice than often causes clients to under-report and leave part of the risk uncovered.

Be Prepared When damage occurs, it is crucial to be prepared to handle the claim in a timely manner and to provide all required documentation. A notice of settlement for all claims has to be sent to your insurance www.supplychains.com

FOCUS Giacomo Rustioni, Senior Manager, SP Ins. Brokers

broker as soon as possible, as the deadline set by the law is three days after the discharge of cargo.

Handling claims in China can be tricky, in particular for manufacturers covered by a global insurance plan, as it is difficult to obtain necessary reports from local authorities that comply with international insurance contracts.

Margaret Li, Logistics and Distribution Manager at Ermenegildo Zegna, explained during the event that her company often has to insure its shipments twice. She says that when damage occurs, it is extremely difficult to obtain the documentation required to comply with their global insurance plan. “Our products are very expensive,” she noted. “We recently shipped a RMB 500,000 watch, and consequently we cannot take risks, so we need to reinsure

the product locally.” Li says that in China, carriers and authorities only know how to report according to local procedures.

Manufacturers in the high-tech industry are encountering similar problems, as in China many insurers have per kilo specifications that don’t fully cover the costs of highend products.

From the questions and issues addressed during the workshop, it was clear how important it is for both manufacturers and logistics firms to be well informed and negotiate scrupulously an insurance plan that closely fits their situation. If a broker is involved, then experience, awareness of local realities, specific competence in the relative sector, and up to date knowledge of regulations should be the elements that guide choices of insurance.

...operational risk is an inherent element in logistics business

Land Quota Obtained!

CapitaLog, Beijing and Nanjing CapitaLog Langfang Logistics Centre • Located in Langfang Development Area of Hebei province; near G104 Expressway and the Second Capital International Aiport • Grade A warehouse with 60,000 sqm • The facility will be available in 2011 and specific tenant requirements can be incorporated.

CapitaLog Nanjing Logistics Centre • Located in Nanjing Airport Development Area of Jiangsu province; near NanjingGaochun Expressway and Nanjing Lukou International Airport • Grade A warehouse with 350,000 sqm • The facility will be available in 2011 and specific tenant requirements can be incorporated.

京港廊坊物流中心 • 位于河北省廊坊开发区，毗邻104国道 及首都第二国际机场 • 60,000平方米的优质仓库 • 计划于2011年完工，亦可根据客户需求 进行定制

京港南京物流中心 • 位于江苏省南京空港产业园内，毗邻 宁高高速公路及南京禄口国际机场 • 350,000平方米的优质仓库 • 计划于2011年完工，亦可根据客户需求 进行定制

For more information and lease inquiry, please contact: 更多租赁详情，请联系：

Wonder Wang 王成志 +86 21 6133 5340 136 0183 2854 wonder.wang@ap.jll.com

Taku Zhuo 卓愈 +86 21 6133 5574 139 1719 6852 taku.zhuo@ap.jll.com

www.joneslanglasalle.com.cn

www.supplychains.com

November/December

47

FOCUS

Best Practices

VICS Arrives in China The association sees opportunities in the Mainland

F Hank Lim

ollowing the development of supply chain strategy among many of China’s major players, the non-profit association, Voluntary Inter-industry Commerce Solutions group (VICS), has newly arrived in China and is looking to set up a base of users. Since 1986, this association has been focused on initiating new best practices and standard solutions for the retail-consumer goods supply chain based mainly in the Western world.

VICS is essentially a neutral party that brings together trading partners, competitors and service providers to develop business guidelines and processes that are proven to enhance supply chain management effectiveness and efficiency, while increasing retail sales. Initiatives include EDI, bar coding in general merchandise, floor-ready merchandise standards, Collaborative Planning, Forecasting & Replenishment (CPFR®) and numerous others.

48

November/December 2010

The total annual sales of VICS’ members exceed $2.3 trillion making it one of the largest industry associations in the world. Members include Procter & Gamble, Walmart, Motorola, Samsung, LiNing and many world enterprises. When properly implemented, VICS guidelines, practices and specifications can lead to better anticipation of and reaction to changes in consumer demand, resulting in improved sales, profits and the use of fixed and working capital.

Walmart and the future Collaborative Planning, Forecasting and Replenishment (CPFR®) is one of VICS more interesting methods that could apply to the China market. It is defined as a business practice that combines the collaborative intelligence of multiple trading partners in the planning and fulfillment of customer demand. CPFR links sales and marketing best practices, such as category management, to supply

chain planning and execution processes to increase availability while reducing inventory, transportation and logistics costs.

Wal-Mart currently operates the world’s largest Collaborative Planning, Forecasting and Replenishment (CPFR®) initiative in the world, engaging nearly 1,300 suppliers in ongoing partnership.

Implementation has not been limited to Wal-Mart stores in the US. CPFR® has also been deployed at Sam’s club division across the United States and Canada. Subsequently Wal-Mart has introduced the process internationally, beginning in Canada and Great Britain.

Sam M. Walton once said, “Communicate and share everything you possibly can to your associates and partners. The more they know, the more they will understand. The more they understand, the more they will care.”

Going Digital For many years prior to CPFR®’s inception, Wal-Mart held quarterly www.supplychains.com

FOCUS

Best Practices meetings with key vendors. The meetings collaborate on the POS sales forecast for all items. CPFR® essentially brings the quarterly vendor forecast meetings on-line.

Events in the on-line event calendar (such as ads, displays and community activities) build on the base POS forecast to create a complete 30/60/90 day plan for each store.

Suppliers can enter events and create/send collaboration comments through the Retail Link site to suggest changes. The Wal-Mart CPFR program uses exceptions to manage both tactical and strategic supply chain issues. At the tactical level are operational exceptions – primarily store out-of-stock alerts.

At the strategic level are forecast, change, forecast difference, and forecast accuracy exceptions. Human nature is still a factor in collaboration. Suppliers tend to be overly optimistic in planning the impact of their promotional activities. Often a supplier will project a 20% lift from a campaign when the typical impact is more like 2.5%.

Wal-Mart’s success shows that there is no “one way” to manage a CPFR program. There are many flavors and approaches that are appropriate to different suppliers and sales channels. Even though Wal-Mart developed a sophisticated CPFR site within Retail Link, the company realizes that collaboration is not about the systems, it’s about the relationships. Relationships make the process work well. Collaboration will succeed as long as trading partners recognize that “My business is only as good as my partners’.” The Walwww.supplychains.com

Mart CPFR program shows that, with discipline and commitment, store-level collaboration can work – not just with one supplier, but with over 1000. The competitive advantages of greater in-stock and lower inventory costs at this scale are substantial. Suppliers should be encouraged by these benefits as well. Research shows that 50% of the time, a consumer will buy a competing brand or skip the purchase altogether if an item is out-of-stock. Better in-stock rates result in greater sales and greater brand loyalty. The more suppliers collaborated with Wal-Mart, the better their in-stock results.

Spreading through China In China, supply chain collaboration has been receiving attention over the years. Li-Ning, China’s leading sports brand has been an active participant in CPFR® and ran several pilot projects with its top suppliers. The pilot project team at Li-Ning collaborates with each dealer to evaluate the inventory level and modify the ordering

quantity to closely reflect the actual consumer demand. In order to quickly bring the program online and to ensure the success of the pilot project, Li-Ning has also invested a lot of resources to train its suppliers and dealers. In mid 2009, Li-Ning reached out to VICS and requested the association to provide a 3-day CPFR® Certification Program training to its pilot project team.

Also participated in the CPFR®’s pilot projects are China’s electronics and appliance retail giants Gome and Jiangsu Five Star, a subsidiary of US’ Best Buy. Gome agreed on a CPFR® pilot program with Motorola on its mobile handsets. The goals of this pilot project would to increase forecast accuracy, reduce inventory and enhance the overall supply chain efficiency and effectiveness. Motorola was the first mobile handset company to link with Gome’s IT system. With its CPFR® success in the US, Best Buy has been planning to roll out the program in its China’s subsidiary, Jiangsu Five Star electronics.

In May of 2009, Samsung Electronics and Best Buy China officially entered in an agreement to implement CPFR® and would be put in to action in early 2010.

Both companies believe that this proven practice in the US will streamline both sides’ supply chain process, creating a winwin relationship. Even though CPFR® is still in its infancy for China’s retail industry, Samsung stated that it is planning to implement CPFR® with many of its major retailers in China in the future.

November/December

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FOCUS

M M&A

ergers and acquisitions are a hot topic in the China logistics sector, with companies â&#x20AC;&#x201C; domestic and foreign â&#x20AC;&#x201C; potentially gearing up for some major buyouts. Driven by the growing importance of China in the global economy, plus an expanding supply chain due to a manufacturing shift towards Central/Western China and massive infrastructure spending (10% GDP, vs. 3.5% in India and 2% in the US), the area promises to be very interesting in the coming years.

While plagued by a number of key challenges, such as high operating costs with low value-added services, a fragmented industry and lack of managerial talent, the Chinese logistics M&A environment is likely to become increasingly active and feature consolidation in the logistics sector. Change will not only come from the private sector, but also government sponsored efforts aimed at reducing systematic inefficiencies, raising barriers for entry, as there are currently one to two million players in the industry, thus creating companies that can move freight on a national scope and fos-

Come Together

A closer look at the consolidation of Chinaâ&#x20AC;&#x2122;s logistics sector Barry Chen tering the development of national champions with international recognition. Moreover, customer demand for a fewer number of suppliers will help spur the industry on towards consolidation.

Domestic Deals Major M&As may be brewing on the horizon, but most recent deals within Chinese transport and logistics remain small. Over the past five years (until July 2010) 55% of deals completed in China had a volume of less than US$50 million. When looking at the average deal volumes, the ones over the last five years display a similar picture with the exception of 2006 and 2010 (see chart). These exceptions were caused by a handful of high volume deals, including the US$1.1 billion acquisition of Shanghai Port Container by Shanghai International Port Group in 2006 and the US$ 2.56 billion acquisition of Shanghai Airlines by China Eastern Airlines in 2010 (originally announced in 2009).

When excluding foreign buyers and only looking at domestic deals valued at US$ 2 million or more, the

310.74

25 16

12 63.65

2005

50

99.73

8

6

2006

2007

Total (USD Million)

November/December 2010

309 16

55

66

2008

2009

# of Transactions

2070

picture is somewhat similar. Most deals are smaller than US$ 50 million, but average deal volumes are significantly higher. This suggests that the larger deals are mainly domestic, while foreign buyers tend to buy relatively smaller sized targets.

Over the last five years the ratio of foreign versus domestic deals has shifted towards a larger ratio of domestic deal activity, with the latter accounting now for 75% of deal activity in 2010 until July, up from 33% in 2005. The increased domestic deal activity and the move towards consolidation can be explained by the increased threat of foreign companies, the big four integrators, and the government policy measures.

Not disclosed, 25%

>100M, 16% 50-100M, 4%

<50M, 55%

www.supplychains.com

A

FOCUS

domestic deals account for 75% of activity in 2010 until July

Big Deal For many smaller companies within the transport and logistics sector, increasing scale and becoming more efficient is making M&A an interesting strategic option as organic growth would be less effective. Also, due to the specialized nature of certain logistics services, business cases are not limited to expansion, but also include in-sourcing cases in which certain specialized suppliers or manufacturers buy logistics companies or buy out competitors mainly because of their distribution arm. Usually these players are suppliers within a specific industry which require specialized logistical services or have the potential of adding more value by providing logistical support. For example a supplier would want to expand its services by implementing an inventory information exchange system with its clients in order to automatically maintain a constant flow of replenishments. Insourcing instead of outsourcing the logistics would save the trouble of finding a logistical supplier to execute the deliveries. With the reliability of logistical services still being a major issue, having full control over in-house logistical operations would also have the advantage of being able to deliver more reliable transportation.

For example, China Organic Agriculture, a Liaoning based food trading and distribution company with an extensive distribution network throughout China’s major cities (key markets include Beijing, Nanjing, www.supplychains.com

and Shanghai) purchased a 60% controlling stake in Dalian Huiming, also a food trading and distribution company with a product range and broad distribution network (in regions including the provinces of Liaoning, Jilin, Heilongjiang, Sichuan, Fujian, and the cities of Beijing and Shanghai). China Organic Agriculture’s aim was to complement their product range and extend their distribution network quickly and efficiently.

Another company trying to get ahead through acquisitions is the China National Medicines Corp, a producer and distributor of pharmaceutical products and provider of value added services (logistics services, drugstore warehousing management, pharmaceuticals distribution management etc) with its key markets in Huainan, Anhui province and Beijing. With the aim of extending its product portfolio and distribution network, as well as gaining access to a network of franchised retail stores, China National Medicines Corp initially acquired a minority stake, later upped to a controlling position in Sinopharm Group Co. Ltd.

logistics companies – who chose to initially franchise their operation in order to achieve scale quickly – are now buying up their franchised operations to have better control over their distribution network.

Others, driven by the threat of foreign players and government policies aimed at making the industry more efficient and more concentrated, will also contribute to consolidation. Given the large number of players in the logistics sector, which results in extremely low concentration, and the fact that industry standards in terms of efficiency are still lagging behind other countries, it might still take a long time for the industry to reach the desired level of consolidation. Although such process, especially among 3PL’s, will take a long time, the emergence of a number of stronger strategic players has already started, with SOE’s (mainly in marine shipping, like for example COSCO) taking a leading role.

Barry Chen is the Corporate Practice Director for InterChina Consulting. Mr. Chen has 19 years of experience with consulting, international corporate development, and strategic planning.

Other Options Other forms of consolidations are also becoming apparent, as certain Date

Acquirer

Target

Deal Value USD (M)

07/2010

Shenyang Hejin Hldg Invest

Dalian Baoyuan Port

40.93

04/2010

Air China and Total Logistics

Shenzhen Airlines

150.90

02/2010

Tianjin Dagang Shengkang

Wenling Xinhai Ocean Shipping

22.97

02/2010

Grand Point Investment

Tianjin Port

1,482.97

01/2010

China Eastern Airlines

Shanghai Airlines

2,562.79

11/2009

PYU Yichang Investment

Yichang Port Group

21.84

08/2009

Nan Lung Holdings

China Southern Airlines

333.59

07/2009

CES Global Holdings

China Eastern Airlines Corp

209.68

07/2009

China Eastern Air Holding

China Eastern Airlines Corp

813.70

02/2009

Wuhan Econ Dvlp Invest

YUD Yangtze River Invest

27.00

02/2009

Keen Field Enterprises

Shenzhen Chiwan Whart Hldg

23.73

12/2008

Tianjin Hairun Indl Grp

Tianjin Port Free Trade Zone

23.48

06/2008

Yingkou Port Group Corp

Yingkou Port Liability

422.17

November/December

51

FOCUS

Supply Chain

China’s Tobacco Industry Is Leaving Others in Its Smoke

Bruce Tompkins Executive Director, Tompkins Supply Chain Consortium

T

obacco is a profitable industry for countries such as China and the United States, and although its popularity has begun to wane in many countries, the usage rates in elsewhere continue to rise. Therefore, there is still a substantial need for efficient and effective supply chain practices in the industry.

In China the tobacco industry is a government-run monopoly. Not surprisingly, it is the single largest contributor to the country’s tax revenue, making up 6-8% of the total tax income in China over the past seven years.

And the industry continues to remain strong with no signs of tobacco usage fading.

As a government-run monopoly, China’s tobacco industry is unique compared to other tobacco markets in the world.

In order to learn more about the current tobacco industry in China, Tompkins International recently conducted a detailed analysis of China’s tobacco market and compiled information related 52

November/December 2010

to the state of the supply chain and projected trends.

This article discusses some key findings from the survey.

Market Segment Overview Since 2003, the Chinese government has been implementing a significant consolidation of the number of cigarette producers. This consolidation has driven a concentration of the top cigarette brands. The top 10 brands now represent nearly 40% of the marketplace, versus just 16% six years ago.

As part of the government-led consolidation, countylevel administrative areas will no longer have the right to sell tobacco products, and all sales and distribution have to be from the prefectural level or above.

The consolidation has also allowed tobacco sales to freely cross provinces and regions where they were not allowed previously.

Distribution Operations Additionally, there have been major changes in the distribution and logistics

www.supplychains.com

FOCUS

Number of cigarette Producers

Market Concentration of Top 10 Brands

150 123

50

120 90

84

60

44

31

31

30

20

39.5

31.9

30

57

30

37.9

40

15.9

17.5

21.7

26.4

10 0 2002 2003 2004 2005 2006 2007 2008

0

2002 2003 2004 2005 2006 2007 2008

of the industry due to the consolidation. As the number Additional standards are being defined and impleof producers has declined, so has the number of distri- mented to improve the efficiency of logistics for the bution centers (DCs). Generally this has meant that only tobacco industry. At the same time, it is imperative for the best DCs and logistics providers are still remaining, anyone working in the sector to be informed of current as competition has become more intense. And now the and future standards in order to work effectively in the tobacco industry has some of the most advanced DCs distribution and logistics. of any market in China.

While there has been much consolidation, the Tomp- Warehousing kins International survey indicates that 154 DCs are in According to the study, China’s tobacco industry has operation throughout China, and there are 118 addition- approximately 340 tobacco leaf warehouses, 485 3PL al DCs that were being constructed by the end of 2008. warehouses and 166 factory warehouses. There are a toTrends for the new DCs include: tal of five million monopoly retail stores selling to the • Expanded use of high bay rack – three to four levels public supported by approximately 350 DCs. The largest high; DC covers 50,000 retail stores.

• More attention to DC cube utilization; • Significant reduction of floor stock; Conclusion • Greater use of automated equipment; In summary, the tobacco industry in China is huge • Growing use of RFID to track each pack of cigarettes and shows no signs of weakening. As a government from production to customers. monopoly, the industry has many advantages of scale China’s tobacco industry is highly regulated, and it is and efficiency that otherwise would not be feasible. The the only industry in China with stanmonopoly exists throughout the dards for logistics and DCs. These supply chain – from leaf collecTobacco Industry standards were created by the govtion to sales at retail stores. This Distribution Centers ernment – the China Tobacco Mo- 1800 structure has allowed for con1,694 nopoly Bureau – in partnership with 1600 siderable consolidation and has the leading service providers (LSPs). helped create one of the most 1400 From 2008, the two most significant efficient supply chains of any in1200 regulations issued were: dustry in China.

1000 • YC/Z 260-2008 Standard System As time passes, additional auto800 for Logistics of Tobacco Industry mation (pick-to-light, voice pick600 – Specifies the terms and definiing, etc.) will be put in place in the ~350 400 ~350 tions used in the industry, and regDCs, and technology will be im200 ulations/standards to be applied plemented throughout the sup0 for various aspects of warehousply chain to further improve the 2008 2004 ing. speed, capacity, and productivity • YC/Z 261-2008 Operations Criof the network. Then, China’s teria for Cigarette Logistics Distribution – Specifies tobacco industry will be a model of successful supply the standard operations procedures for DCs covering chain and distribution operations. their various departments. www.supplychains.com

November/December

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FOCUS

IPO

Update on International Procurement

MADE

Industry leaders exchange views

I

nternational Procurement Organizations (IPO) are responsible for locating the most cost-effective suppliers across the globe and then relaying the information to businesses whose goal is to reduce their overall costs of production. A recent survey conducted by Smith&Nephew and the Emlyon Business School Asian Campus, and supported by the Global Supply Chain Council, was designed to get a better understanding of how various companies viewed the effectiveness of their own IPO practices.

The offices were asked to evaluate different aspects of their own operations which revealed what is currently working and what needs improvement. A group of 58 IPOs from various sectors in China re-

sponded with the results shedding some light on the current trends within the industry.

Sourcing and scope expansion A substantial 72% of the stakeholders reported that they source for both their Asian and global operations thus attempting to make their regional scope very large. Results showed that 41% of the companies are not satisfied with the scope of their products sourced, which is likely why companies are putting more effort into this area. This trend is confirmed in the graph below (page 10), where only those in mass consumption retail limit the scope of their IPO to Asia, most likely due to local consumer preferences.

Another 70% of the respon-

What are the most important criteria in the selection of a supplier?

80% 71%

70% 60%

53%

50%

47%

40%

43% 34%

30% 20%

19%

n tio ca Lo

en ce s R

ef

er

nc e pe Ex

ca pa n io

NA

dents stated that their Chinese IPO is responsible for sourcing in other Asian countries besides China, which could potentially lower risks and diversify sourcing bases to avoid the impact of inflation, new social and environmental laws, etc. Sourcing outside of China not only reduces the risks caused by high inflation, but also improves the range of products, which in turn develops a competitive advantage. A significant portion (45%) of companies is worried about current inflation trends in the Chinese market. As a result, sourcing in other countries such as Vietnam and Bangladesh is being employed as possible methods of overcoming inflation.

Top Task: Finding and investing in the right supplier The results of the study revealed the top tasks and priorities of a Chinese IPO. An overwhelming (90%) stated that their number one priority is to find suppliers. Numerous methods are used to find a supplier- the most common being through exhibitions and trade shows, with 73% of companies providing this answer. Websites are the second most effective means of finding suppliers, that means search engines such as Alibaba, suppliers own sites, and sourcing and procurement associations websites

Pr

od uc t

rie

ci

s st co w Lo

Q ua lit

y

pr

oc es s

0

ty

10%

IN CHI

54

November/December 2010

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FOCUS

Geographical scope OF IPOS

What are the main tasks assigned to your IPO? 100%

metals and chemicals

80%

Mass consumption retail

90%

72%

60%

Logistics

84% 67%

62%

40%

Industrial equipment

20% Automotive

0 0%

40

Global

80% Asia

being used.

After seeking out a supplier, the top aspect that was considered by the IPO was the company’s quality process. Quality is by far the highest priority issue when selecting a supplier as China’s ISO standards can still not be trusted.

Recommendations when entering an agreement with a new supplier were to perform audits (in some cases carried out by a third party) and quality checks early and often.

Low costs and production capacity followed as the next most important aspects of selecting a decent supplier. Experience and references were next, and location was the final and least important aspect.

After establishing an agreement, the main investment IPOs made in their suppliers is providing training. 73% of the organizations claim to be investing in training with their new suppliers, and 66% of stakeholders indicated that training of suppliers as one of the main task assigned to their IPO. Interesting findings,odds, and ends One of the most interesting www.supplychains.com

120%

Select Contracting Audit suppliers and negotiation

Purchasing and order

Cost and finance analysis

Asia & Global

findings is that 60% of respondents plan to source from potential competitors.

Although an unexpected result at first, it makes sense—by sourcing from competitors, it is ensured that all products are held to the same quality standard.

The survey also found that etools are seriously underutilized, with one fifth of companies not using them at all. This came as a surprise since other surveys have shown indications of major developments in integrated software supporting spent analysis, contract management, supplier information management, supplier performance management, RFI, RFP, and reverse auctions.

These e-tools are known to create integrity among the group, but are still rather expensive and difficult to settle.

Almost half of companies surveyed reported that they are not satisfied with the market research activity of their IPO. This is not the core activity of IPOs, which normally have a small research department to predict and analyse industry trends, gain trust from headquarters(trust and credibility have been an issue between both parties), as well as empower the

IPO in terms of project development.

Conclusions International procurement offices (IPOs) are an exceptional way to manage and optimize a company’s global sourcing effort. One quarter of the surveyed companies reduced their overall procurement costs by 30 % or more after launching an IPO in China. 7 % are actually saving in excess of 50 %. One-third expect IPO-related savings of 30 % or more within three years, and four out of every five believe that their IPOs are meeting or exceeding expectations.

Honing the IPO into a welloiled machine seems to be the trickiest task at hand, and it seems like each company must find the right balance for its respective projects and industry.

Finding credible information is also an issue given the competitive nature of the business. As a result, organizations will have to continue with their own strategies and current publications on best practices for the time being.

November/December

55

Shifting Gear

Automotive looking to improve odds

T

he automotive industry seems ready to step up their act in China.

At the recent Automotive Event hosted by the Global Supply Chain Council Mr. HuChu Xu, Director of Booz & Company in Shanghai, said that the automotive industry in China is showing several strong trends.

The first is that, in the event of a financial crisis, enterprises around the world work to proactively improve their operation efficiency by optimizing and transforming their supply chain system, rather than simply focusing on how to cut sourcing costs.

Xu also mentioned that R&D will come under greater scrutiny, as nearly 70% of vehicle costs are determined during the design stages. He says that many companies in China would be wise to set up more cross-functional R&D teams 56

November/December 2010

and a system that is integrated with the supply chain. Sharing related technology and cost information would reduce response times. Toyota was cited as a company able to effectively implement an integrated supply base. Their “build to reuse” platform strategy has allowed them to quickly launch derivative products into the new marketplace. Unfortunately, this is also exactly what got Toyota into trouble with their recent quality scandals. As many cars used parts from the same supplier, the discovered defects and ensuing recalls spread like wildfire through different models and ended costing millions in damages.

However, Xu also counters that the frequency of design change in Toyota is far below the average industry rate. Toyota also has about 30% of the engineering work performed by the designers, which means that suppliers are involved

Monica Liau

in both the cost planning and the product development process from an early stage.

Up a Notch Goodyear is an example of the automotive industry working at breakneck speed to improve their efficiency and expansion. When Goodyear first arrived in 2005, they had the goal of reaching US$ 1 billion in spending within five years— a massive goal, but one which they felt they needed to reach. “Goodyear has had to compete really hard to show they could manage their supply chain,” said Manoj Mehta, General Manager for Global Sourcing Solutions at Goodyear.

“If anything goes wrong with the supply chain, we have to take full responsibility and accountability.”

Manoj says that another challenge they had to address was how to best engage the market here, www.supplychains.com

Focus

which demands to pair Goodyear’s quality with China’s pricing. This means sticking with a market that is still immature and less likely to see the benefits of long-term use versus current low-cost pricing.

SAP woes IVECO in Chongqing is currently dealing with their own challenges as they work to introduce the Fiat global initiative to implement SAP/Master data in most of their branches around the world. SAP was slated to go live in Chongqing in October. Stefano Piccoli, the supply chain director of SaicIVECO, says that while they were

Sales Contact Jellis Kan, T. +852-2965-1668, jellis.kan@reedexpo.com.hk Contact Reed Exhibitions airfreight@reedexpo.com.hk

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on target, the process has definitely made his life more stressful.

The Chongqing plant, which is a joint venture with Hongyan, has a capacity of 54,000 vehicles per year at a peak of 216 vehicles per day. The plant producing heavy vehicles was first plagued by inefficiencies within their supply chain.

The plan – started in February 2010 – is focused on mastering workflow data in terms of department interactions, process monitoring, and coordination. The setup team was also charged with the task of mastering data adjustments in which all old consistencies are extracted. Lastly, a high number

of old product documentation was transferred over to be managed by the SAP system. It’s a tall order for any factory to roll out in eight months, though Piccoli looks confident to be able to meet his target.

All the sweat and tears ay be worth it. Xu from Booz&Company says that demand for vehicles will remain in a state of growth during the near future. While overcapacity currently exists, the demand will keep up over the next 5-10 years.

After 2012, growth may slow with new car regulations, but the car market is likely to remain booming in China for the near future.

The right place. The right time. The right people.

The interactive global platform where East meets West for business.

AsiaWorld-Expo, Hong Kong www.airfreightasia.com

November/December

57

58

November/December 2010

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Focus

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

Michelle Ho Vice President of Finance UPS Asia Pacific

Guang Zha Logistics Supervisor Henkel China

17-year veteran Financial Manager Michelle Ho has been appointed the new Vice President for Finance for UPS Asia Pacific region. Prior to this assignment, Ho was the director of finance for the UPS Asia Pacific region, where she spearheaded cost management programs in the region among various other finance initiatives. She is the first female executive to hold the job of VP for finance in the Asia Pacific Region.

Guang Zha has been appointed the Logistics Supervisor of Henkel China. He comes to Henkel from Hutchison Logistics, where he was the project development manager.

He has experience in sales strategy, where he evaluated competitors and drove profitable, sustainable sales growth. He also has over four years in operations management, as he worked on planning and distribution in the electronics industry and logistic design.

Steve Whittingham Managing Director Agility, Korea and Japan

Desmond Chan Managing Director Menlo, South Asia

Steve Whittingham has been appointed Managing Director for Agility Korea and Japan to address these growing markets. During his 20-year career, Whittingham has held senior management and managing director positions with UTI in South Africa and Zimbabwe, managing director positions with BAX Global in Thailand and Malaysia and was the director and general manager of a retail distribution company in Australia.

Whittingham will be based in Agilityâ&#x20AC;&#x2122;s Seoul office.

Menlo Worldwide Logistics has promoted Desmond Chan to Managing Director for South Asia. Chan, who has 22 years of industry experience, will be responsible for overall business performance and growth in Singapore, Malaysia, Thailand, India and Australia. He joined Menlo in 2005 as the companyâ&#x20AC;&#x2122;s South Asia director of operations. He came to Menlo following five years at FedEx Express, where he worked in roles including Asia Marketing Manager and South Pacific Regional Manager.

Chan is based in Singapore.

Karl Neumaier Vice President of Logistics Hilti

Karl Neumaier has been named Vice President of Logistics at Hilti.

He was previously the Director of Americas Supply Chain Management at Visteon, and before that was the Director of Asia Pacific Supply Chain Management at Visteon. There, he was responsible for core purchasing processes, indirect purchasing, logistics, manufacturing planning, customs, lean manufacturing, and packaging. Key metrics include inventory turns, customer delivery rating, cost savings.

www.supplychains.com

Vivian He Supply Chain Deputy, GM Metersbonwe Fashion & Accessories

For the latest positions, go to www.supplychains.com/jobs/search.asp

Vivian He has been appointed Supply Chain Deputy GM at Shanghai Metersbonwe Fashion and Accessories. In the past Ms. He has gained over 9 years of experience in supply chain management within the fashion and garment industry, most recently as the Supply Chain Manager at Etam, working with suppliers management, quality control, logistics, warehousing, and project management.

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59

Event

Best Practices

Smartening up

Practices to improve your workforce’s performances

I

IAPS (the International Institute for Advanced Purchasing and Supply), a not for profit organization dedicated to raising international standards in purchasing and supply management, held an event focused on human re sources in China brainstorming on how to best maintain a happy and healthy workforce. First and keynote speaker John Paterson, Chief Procurement Officer of IBM, said his company works to have a “structured approach to skill management” and the opportunity for “flexible and borderless” education options. In his eyes, this means having several multilateral types of education at several different points in a person’s career. He believes the more people in his department who understand IBM’s entire supply chain end-to-end, the more effective it will be.

Paterson, who arrived in China in 2006, also noted that the leadership of any given international company should be distributed according to where it is most needed, not where the headquarters are located.

Whereas in the past, the tendency was to keep top officers close to the main office node, IBM is now focusing on new hives, especially their branches in China, India, and Eastern Europe. This demands large 60

November/December 2010

investments to develop leadership. Paterson says that IBM spends over US$ 8 million a year on training its employees - from sending them to school to utilizing programs like IIAPS Robert Barrett, Director of Consulting at PriceWaterhouse Cooper, said that plans along these lines are on the right track. “The procurement role has changed over the last decade,” he noted. “Companies in China need to have a plan to get their employees beyond basic skills.” He touched especially on the current lack of middle management in the Chinese workforce, and noted that leadership, communication and ability to manage change were what he saw management lacking the most in China.

Barrett also touched on the notorious tendency in China to lose people after investing in them through training. “As an organization, you need to have a culture of keeping your people,” he said. “You have to analyze your employee’s reason for leaving.” An audience member noted that in his experience, the majority of employees aren’t leaving for pure money issues: they leave because they don’t receive enough opportunity to grow and develop.

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EVEnt

Hearing

A

Kevin Foehner

Vocollect wants to spread the word

recent presentation on Voice Directed Technology hosted by the Global Supply Chain Council was met with a lot of raised eyebrows. The technology, which allows users to interface with the current warehouse management system using speech, has been adopted widely in the United States and South Korea, but has yet to make headway in China.

However, Larry Sweeney, Founder and Senior Vice President of Vocollect said this lack of knowledge was to be expected, explaining that the purpose of his presence at the event was definitely more education than sales. Sweeney is part of a team working to bring his company’s message to the Chinese logistics landscape Simple Beauty At first glance, using voice technology seems to be a simplistic solution that represents a step back in technology. However, Sweeney counters that lists and digital menus overcomplicate tasks for warehouse workers. Voice technology easily manages short commands with only the necessary information (item, amount and location) that an employee needs to successfully complete an order. On top of that, Sweeney emphasizes that Vocollect utilizes a hands-free device designed for the job, enabling peak worker-efficiency.

In terms of voice technology industry examples, Roland Chong, Senior Director of Estée Lauder was able to showcase his own distribution center in Seoul, South Korea. After the business plan and partnership was approved, Chong was able to integrate voice technology with the established warehouse management system in about six months and saw efficiency and productivity more than double. Chong says his Korean warehouse operation also realized an error rate of less than .1%, compared to a previous 18%.

Training time was cited at 21 minwww.supplychains.com

utes (versus 45 minEstée Lauder Facts utes).

Productivity: Doubled Sweeney took the podium as the final speaker of the Picking: lines/hour morning, to rePreviously: 70 lines/hour confirm the data produced by Estée Training time Lauder. He also took Vocollect: mins the opportunity to Paper: 45 mins showcase a number of American compaAccuracy rate: 99.99% nies using Vocollect Previously: 82% technology to give their businesses a ROI: % healthy competitive advantage, including Fox Racing Apparel, Smith Drug, and Burris Logistics. Despite the numerous success stories, Sweeney admits that the movement into China has been slow.

So why isn’t such technology being widely used in China? The event participants for the most agreed that the low cost of labour in the Chinese market reduces the allure of technologies like Vocollect. Some professionals who attended the event openly claimed to not having considered the technology when outfitting their Chinese warehouses. Even with Estée Lauder’s proven success in Korea, the company does not plan on expanding this technology to China in the near future, claiming that it’s not currently cost efficient. Estee Lauder will implement voice technology in their refitting operations in Australia and Singapore first.

Voicetechnology is fairly mature in the western marketplace, and is consistently being used in Western Europe and North America. Using these operations to showcase success-stories from well-known companies spanning different industries to Chinese businesses, Vocollect and its partners believe that they will be able to establish their technology in China as the market looks to mature in the future.

150 21

35

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61

CLASSIFIED Listings

LOGISTICS SERVICES

LOGISTICS SERVICES

4SCM A10, 5/F, 61 Old Warehouse Building, 61 Yangshupu Road, Shanghai 200082 上海市杨树浦路61号老栈商务楼5楼A10室 邮编200082 +86 (21) 6148 9800 www.4scm.com.cn

Deret Logistics Asia Suite 1703 Shanghai Bund International Tower, 99 Huangpu Road, Shanghai 200080 上海市黄浦路99号上海滩国际大厦 1703室，邮编：200080 +86 (21) 6306 2592 www.trans-access.com.cn

Arvato Services B-1/F XingHong Science & Technology Industrial Park, Feng Huang Gang Village, Xi Xiang, Bao’an 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：518102 +86 (755) 3386 1666 www.arvatoservices.com.cn

DHL Supply Chain 3398, Xiupu Road, Shanghai 201315 上海市秀浦路3398号， 邮编: 201315 +86 (21) 3825 6288 www.dhl.com

ARJ Commercial Leasing Limited 1500 Lianhua South Road Max-Mall Office Tower Block 8-9 Unit 810, Shanghai 201100 中国上海市闵行区莲花南路1500弄 梅陇镇新都会,商务中心8-9号楼810室 邮编：201100 +86 (21) 3358 2270 +86 (21) 3358 2170 www.arjchina.com Asia Inspection 2201-03, Guidu Building, 3007 Chun Feng Road, Luo Hu DistricUnit 810, Shenzhen 深圳市罗湖区春风路3007号， 桂都大厦 2201-03室 +86 (755) 8231 6796 +86 (755) 8231 6739 www.asiainception.com BDP International Unit 2101-2110, Shanghai Bund Int’l Tower, 99 Huangpu Road, Shanghai 200080 上海市虹口区黄浦路99号上海滩国际大厦 2101-2110室，邮编：200080 +86 (21) 6364 9336 www.bdpinternational.com Best Logistics Technology Bidg 11 West, 1F West Lake Soyea Software Park 176 Tianmushan Road, Hangzhou, Zhejiang, 310013 浙江省杭州市天目山路176号西湖数源 软件园 11号楼1层西2201-03室 +86 (571) 8899 5656 +86 (571) 8827 0027 www.800best.com CEVA Logistics 19/F, Jiang Nan Shipyard Building 600 Luban Road, Shanghai 200023 上海鲁班路600号江南造船大厦19楼 +86 (21) 5302 9988 www.cevalogistics.com Damco 5/F, Tian An Centre, 338 West Nanjing Road, Shanghai 200003 上海黄浦区南京西路338号天安中心24楼， 邮编：200003 +86 (21) 2306 2000 www.damco.com Dajin Logistics 3000 South Lianhua Road, Prologis Logistics Park, Minhang, Shanghai 201109 莲花南路3000号，普洛斯闵行物流园区 内， 邮编201109 +86 (21) 3430 7666 +86 (21) 3430 7221 www.dajin.com.cn

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DSV Air & Sea Logistics 38/F, 1 Grand Gateway, 1 Hongqiao Road, Shanghai 200030 +86 (21) 5406 9800 www.dsv.com www.dsv.com/cn DTW Logistics Group 16 Tianzhu Middle Road, Zone A, Tianzhu Airport Industrial Area, Shunyi District, Beijing 101312 北京市顺义区天竺空港开发区A区天柱中路 16号，邮编101312 +86 (10) 5923 7777 www.dtw.com.cn Duisport Packing Logistics A, 8/F Shanghai Industrial Bldg, 18 North Caoxi Road, Shanghai 200030 上海漕溪北路18号上实大厦8楼A座， 邮编200030 +86 (21) 6427 2906 www.duisport-packing-logistics.com Elee 375, Kefu Road, Nanxiang Town, Jiading District, Shanghai 上海嘉定区南翔镇科福路375号 +86 (21) 3912 4360 www.eleechina.com Emptoris Unit 01, Floor 7, 1 Grand Gateway 1 Hong Qiao Road, Shanghai 200030 虹桥路1号港汇中心1座701单元， 邮编200030 +86 (21) 6447 6600 +86 (21) 6407 2737 8www.emptorischina.com

FM Logistic 3 West Guangzhou Road, Taicang EDZ Jiangsu Province.

江苏省太仓市经济开发区 广州西路3号 主楼8楼，邮编：201103 +86 (512) 8889 8666 www.fmlogistic.com Geodis 3/F. OOCL Plaza, 841 Middle Yan’an Road, Shanghai 200040

November/December 2010

LOGISTICS SERVICES 上海市静安区延安中路841号 东方海外大厦3楼，邮编200040 +86 (21) 6193 2323 www.geodis.com H&T International Transportation 5/F, China Merchandise Building 152-155 Connaught Road Central, Hong Kong +852 2543 0708 http://www.hthkg.com.hk HAVI Logistics 6 Xingsheng Jie, Beijing Economic & Technological Development Area, Beijing 100176 北京经济技术开发区兴盛街6号， 邮编：100176 +86 (10) 6788 3335 www.havi-logisitics.asia Hercules Logistics Unit 5A, Bldg. A, Shenfubao Hightech Park, No. 3, Huanghuai Road., Futian Free Trade Zone, Shenzhen, Guangdong 518038 广东省深圳市福田保税区， 黄槐道3号深福保科技工业园A栋5A， 邮编518038 +86 (755) 8358 0000 www.hercules-logistics.com

LOGISTICS SERVICES Linkstar Logistics 49A, 199 North Riying Road, Waigaoqiao Free Trade Zone, Shanghai 200131 上海市外高桥保税区日樱北路199号49A, 邮编：200131 +86 (21) 5046 1865 www.linkstarlogistics.com Logisfashion Transportation Tower, Room 1101 218, Hengfeng Road, Shanghai 上海市现代交通大厦恒丰路218号1101室 +86 (21) 5180 1781 www.logisfashion.com

13/F Tower A, Golden Eagle Mansion, 1518 Min Sheng Road, Shanghai 200135

上海浦东新区民 生路1518号 金鹰大厦A座13楼 +86 (21) 6160 1198 www.menloworldwide.com

8/F Tower Block, LiFung Plaza 2000 Yishan Road, Shanghai 201103

上海市闵行区宜山路2000 号利丰广场 主楼8楼，邮编：201103 +86 (21) 2416 4700 www.idslogistics.com ID Logistics Room 19D, Dong Tai Plaza, 309 Tanggu Road, Shanghai 上海市塘沽路309号19D +86 (21) 6306 7083 www.id-logistics.com Kuehne & Nagel Block 1, 11-16F, 1868 Gong He Xin Road, Shanghai 200072 上海共和新路1868号大宁国际商业广场 第一幢11-16楼，邮编：200072 +86 (21) 2602 8000 www.kuehne-nagel.com Linfox Road Transport 26-F, Cross Region Plaza, 899 Ling Ling Road, Xuhui District, Shanghai 200030 上海市徐汇区零陵路899号飞洲国际广场26 楼F座，邮编：200030 +86 (21) 5150 6699 www.linfox.com Linghua Logistics 333 Ke Yuan Road Zhangjiang HiTech Park Pudong New Area, Shanghai 201203 上海市浦东新区张江高科技园区科苑路333 号，邮编201203 +86 (21) 5080 0107

Logwin Air+Ocean China 5/F & 6/F, Ocean Towers, 550 East Yan’an Road, Shanghai 200001 上海市延安东路550号海洋大厦5楼和6楼， 邮编：200001 +86 (21) 2326 2000 www.logwin-logistics.com Nowaday Rational Logistics 685 Huadan Road Qingpu District Shanghai 201708 上海市青浦区华丹路685号， 邮编201708 +86 (21) 5155 6226 www.heli56.com Penske Logistics Room 1801, Honi International Building, 233 Weihai Road, Shanghai 200030 上海威海路233号恒利国际大厦1801室， 邮编：200041 +86 (21) 6227 8566 www.penskelogistics.com P.G. Logistics Group 4/F, Baogong Building, 361 East Longkou Road, Tianhe district, Guangzhou 广州市天河区龙口东路361号宝供大厦四楼 +86 (20) 3848 2090 www.pgl-world.com Schneider Logistics UC Tower,Suite 1605, 500 Fu Shan Road, Shanghai 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 International Freight Forwarding 20/F, East Building, New Hualian Mansion, 755 Middle Huai Hai Road Shanghai 200020 上海市淮海中路755号新华联大厦东楼20 楼，邮编：200020

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CLASSIFIED Listings

LOGISTICS SERVICES +86 (21) 3395 0600 www.sdvchina.com SunJet Logitics 299 Huaxiang Road, Shanghai 上海华翔路299号 +86 (21) 6127 2637 www.sunjex.com Sinotrans Guangdong 16/F, 97 Haiyuan Road, Huangpu, Guangzhou, China 510700 广州市黄埔区海员路97号外运大楼16楼， 邮编：510700 +86 (20) 8710 2800 +86 (20) 8710 8400 gd.sinotrans.com Toll 18/F, Times Plaza, 1 Taizi Road, Shekou, Shenzhen 518067 深圳蛇口太予路1号新时代广场1801室， 邮编：518067 +86 (755) 2681 9188 www.st-anda.com TNT Hoau 2239,Huaxiang Road,Shanghai 上海市华翔路2239号， 邮编201107 +86 (21) 6091 6666 +86 (21) 5080 0109 www.hoau.net Werner Global Logistics 5/F South Harbour Building, 1 Fenghe Road, Shanghai 上海市浦东新区丰和路1号港务大厦南5楼 +86 (21) 3887 9520 www.werner.com YatFai Logistics 39-H, Fortune Building, 88 Fuhua San Road Futian District, Shenzhen, Guangdong Province 广东省深圳市福田区福华三路88号， 财富大厦39楼H座 +86 (755) 3336 6898 www.yatfai.com YRC Logistics 8F, Building 2#, Xinda Commercial Building, 1158 Xiehe Road, Shanghai 200335 上海协和路1158号鑫达商务楼2号楼8楼， 邮编：200335 +86 (21) 6137 7668 www.yrclogistics.com PROFESSIONAL SERVICES Accenture 30/F, Central Plaza, 381 Huaihai Road, Shanghai 200020 上海市淮海中路381号中环广场30楼， 邮编：200020 +86 (21) 2305 3333 www.accenture.cn Baker & McKenzie Suite 3401 China World Tower 2 China World Trade Center, 1 Jianguomenwai Dajie, Beijing 100004 +86 (10) 6535 3800 www.bakernet.com BBK Consulting 17/F Lippo Plaza, 222 Middle Huaihai Road, Shanghai 上海市淮海中路222号力宝广场17楼 +86 (21) 5396 5600 www.e-bbk.com BPS Global Group Unit 3104, Tower 1, Kerry Everbright

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PROFESSIONAL SERVICES City, 218 West Tianmu Road, Zhabei District, Shanghai, China 200070 中国上海市闸北区天目西路218号嘉里不夜 城第一座3104室, 邮编:200070 +86 (21) 6317 8830 +86 (21) 6317 2030 www.bps-group.net Control Risks Suite 1001 East Tower China Merchants Plaza, 333 North Chengdu Road, Shanghai 200041 上海市成都北路333号招商局广场东楼 1001室， 邮编200041 +86 (21) 5298 1800 +86 (21) 5298 0991 www.control-risks.com Demand Solutions PO Box 6180, Norwest Business Park, Baulkham Hills BC NSW 2153 +612 9659 4555 Dragon Sourcing Suite 1502, Jin Tian Di International Mansions 998, Renmin Road Shanghai 200021 上海市人民路998号今天地国际大厦 1502室，邮编：20002 +86 21 61413955 www.dragonsourcing.com ET2C International 23 Wangjiao Plaza, 175 East Yan’an Road, Shanghai 200001 上海黄浦区延安东路175号旺角大厦23楼， 邮编：200002 +86 21 5308 1220 www.et2cint.com

27/F, Room 02 418-428 Jiang Ning Road 200041 Shanghai, China

上海市江宁路418-428号 27楼02室， 邮编：200041 +86 (21) 6217 0253 www.iiaps.org InnoCSR Room 11- A2, Yujia BD, 1336 Huashan Road Shanghai 200052 上海市长宁区华山路1336号 玉嘉大厦11 楼A2座, 邮编：200052 +86 (21) 5237 7387 +86 (21) 6091 9265 www.innocsr.com Ivie Asia Room 1507, You You International Plaza, 76 Pu Jian Road, Pu Dong New District, Shanghai 200127 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

PROFESSIONAL SERVICES

PROFESSIONAL SERVICES

Lloyd’s Register Asia 20/F Ocean Towers, 550 East Yan’an Road, Shanghai 200001 上海市延安东路550号海洋大厦20楼， 邮编：2000012 +86 (21) 5158 5700 www.lr.org www.lloydsregisterasia.com

World-Check Unit 4C, Times Plaza, 1, Taizi Road, Shekou, Shenzhen, 518067 深圳蛇口市太子路1号新时代广场4C座， 邮编518067 +86 (755) 2688 9786 www.world-check.com

Logistics Executive Suite 13G, Shanghai Ind’l Investment Bldg.

18 North Caoxi Road, Shanghai 200030 上海市徐汇区漕溪北路18号， 上海实业大厦13楼G座，邮编：200030 +86 (21) 6427 6697 www.logisticsrecruitment.com.cn

AMB China Suite 2908, Plaza 66 II, 1366 West Nanjing Road, Shanghai 200040 上海南京西路1366号 恒隆广场二座 2908单元， 邮编：200040 +86 (21) 6135 1688 www.amb.com

Michael Page International 601-603 Shanghai Kerry Centre 1515 West Nanjing Road, Shanghai 200040 上海南京西路1515号，嘉里中心601- 603 邮编：200040 +86 (21) 3222 4758 www.michaelpage.com.cn PricewaterhouseCoopers 11/F, PricewaterhouseCoopers Center, 202 Hubin Road Shanghai 200021 上海湖滨路202号普华永道中心11楼， 邮编200021 +86 (21) 2323 8888 +86 (21) 2323 8800 www.pwccn.com Resources Global Professionals Room 2705-06, Lippo Plaza, 222 Middle Huaihai Road, Shanghai 200020 上海市卢湾区淮海中路222号 力宝广场2705-06室， 邮编：200020 +86 (21) 6386 8710 www.resourcesglobal.com Russell Reynolds Associates 4504, Jin Mao Tower, 88 Centure Avenue, Pudong, Shanghai 200121 上海浦东世纪大道88号金茂大厦4504， 邮编200121 +86 (21) 6163 0888 www.russellreynolds.com Smart Sourcing 1210-1213 Guo-Li Plaza, 1465 West Beijing Road, Shanghai 200040 上海市北京西路1465号 国立大厦1210-1213室， 邮编：200040 +86 (21) 5212 1200 www.smart-sourcing.com ThreeSixty Sourcing International 3/F, Hua Sheng Mansion, 398 HanKou Road, Shanghai 200001 上海市汉口路398号华盛大厦3楼 邮编: 200001 +86 (21) 6322 5000 +86 (21) 6352 8899 www.threesixtysourcing.com Tractus Asia Suite B, 22/F, Zhaofeng Universe Building, 1800 West Zhongshan 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

REAL ESTATE SERVICES

BlueScope Steel 12F HSBC Tower, 1000 Lujiazui Ring Road, Shanghai 200120 上海陆家嘴环路1000号汇丰大厦12楼, 邮编：200120 +86 (21) 6841 1898 +86 (21) 6841 2340 www.bluescopesteel.com Blogis International Logistics +86 (755) 2669 4211 www.blogis.com.cn 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， 邮编：200031 +86 (21) 2401 1200 www.cbre.com.cn Colliers International 16/F Hong Kong New World Tower, 300 Middle Huaihai Road, Shanghai 200021 上海淮海中路300号， 香港新世界大厦16楼， 邮编：200021 +86 (21) 6141 3688 www.colliers.com/china

Room 2708 Azia Center, 1233 Lujiazui Ring Road, Shanghai 200120

上海市陆家嘴环路1233号 汇亚大厦2708室， 邮编：200120 +86 (21) 6105 3999 www.GLProp.com Goodman Group 2107 - 2109, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 200021 上海淮海中路333号瑞安广场2107-2109室 邮编200021 +86 (21) 6133 2000 +86 (21) 6386 2386 www.goodman.com Lingang Free Trade Port Economic Development 6/F, 188 Yesheng Road, Pudong,

November/December

63

CLASSIFIED Listings

REAL ESTATE SERVICES

REAL ESTATE SERVICES

36 Fengshou Road, Pingsha Town, Gaolan Container Port Zone, Zhuhai, Guangdong 27C Industry Building, 18 North Caoxi Road, Shanghai 200030

广东省珠海市平沙镇丰收 路36号 +86 (756) 772 7118 +86 (756) 772 7122 www.volumeip.com

上海市徐家汇漕溪北路18 号实业大厦27C, 邮编200030 +86 (21) 6090 1388 +86 (21) 6090 1399 www.gsegroup.cn

25/F, Tower 2 Plaza 66, 1366 West Nanjing Road, Shanghai 200040

中国上海市南京西路1366 号恒隆广场2座25楼，邮 编200040 +86 (21) 6393 3333 +86 (21) 6393 3080 www.joneslanglasalle. com.cn Mapletree Suite A-D,14/F, Times Square Office Building, 500 Zhangyang Road, Pudong, Shanghai 200122 上海市浦东新区张扬路500号, 华润时代广场办公楼14楼ABCD单元， 邮编：200122 +86 (21) 5836 7177 www.mapletree.com.sg Nanjing ZAL Management Office 18 B Deji Mansion, 188 Changjiang Rd. Nanjing 210018 南京市长江路188号德基大厦18楼B座， 邮编:210018 +86 (25) 8572 6079 info@nzmcl.com

IT & SOFTWARE SOLUTIONS DDS Logistics & Sourcing Software Suite 2605,26/F, Hong Kong Plaza, 283 Huaihai Road, Shanghai, 200021 上海市淮海路283号香港广场26楼2605 室，邮编：200021 +86 (21) 6103 5715 www.ddslogistics.com/cn

Shanghai 201308 上海市浦东新区业盛路188号6楼, 邮编：201308 +86 (21) 2095 0600 +86 (21) 2095 0604 www.linganglogistics.com

Epicor Software 2008 Cross Tower, 318 Fuzhou Road Huangpu District, Shanghai 200001 上海市黄浦区福州路318号 高腾大厦2008单元，邮编：200001 +86 (21) 63912808 www.epicor.com GXS International Room 1602, 16/F, Grand Gateway Tower 1, 1 Hongqiao Road, Shanghai 200030 上海市虹桥路1号港汇广场1座1602室， 邮编：200030 +86 (21) 6120 1088 www.gxschina.com.cn

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

JDA Software Unit 06, 29/F, Raffles City, 268 Xizang Middle Road, Shanghai, 200001 上海市西藏中路268号,来福士广场2906 室，邮编:200001 +86 (21) 2327 9400 +86 (21) 2327 9401 www.jda.com

Apprise Software 6009 Changjiang Science Building 40 Nanchang Road, Nanjing 210037 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

Manhattan Associates Software Unit 2110, 21/F, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 200021 上海淮海中路333号瑞安广场21楼2110 室，邮编：200021 +86 (21) 6386 8800 www.manh.com

IT & SOFTWARE SOLUTIONS Apprise Software 6009 Changjiang Science Building, 40 Nanchang Road, Nanjing 210037 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.cn

Schmidt Room 2406 Huashen Mansion, 398 Hankou Road, Shanghai 200001 上海市黄浦区汉口路398号华盛大厦2406室 邮编：200001 +86 (21) 6133 9708 +86 (21) 6133 9718 www.schmidthk.com

Barloword Optimus 15/F NCI Tower, 12A Jianguomenwai Avenue, Chaoyang District Beijing 100022 北京市朝阳区建国门外大街甲12号新华保险 大厦15楼邮编，邮编：100022 +86 (10) 8523 3103 www.barloworldoptimus.com

SEEBURGER Room 523-526, 5F, Cimic Tower, 800 Shangcheng Road, Shanghai 200120 上海浦东新区商城路800号 斯米克大厦5层523-526室, 邮编：200120 +86 (21) 5835 7779 www.seeburger.cn

BravoSolution 19F-08, Chinese Overseas Building, 129 West Yan’an Road, Shanghai 200040 上海市静安区延安西路129号华侨大厦 19楼08室，邮编：200040 +86 (21) 6145 8500 www.bravosolution.com

Tradecard Room B, 23/F, Jinrun Mansion, 6109 Shennan Road, Futian District, Shenzhen 518040 深圳市福田区深南路6109号 金润大厦23楼B座，邮编：518040 +86 (755) 8830 9265 www.tradecard.com

IT & SOFTWARE SOLUTIONS

Suite 1515, Silver Centre, 1388 North Shanxi Road, Putuo District, Shanghai 200060 上海陕西北路1388号 银座中心1515室， 邮编：200060

+86 (21) 6149 8042 www.supplyon.com Vocollect Asia Pacific Unit 3, 29/F, Sino Plaza, 255-257 Gloucester Road, Causeway Bay, Hong Kong 香港铜锣湾告士打道255-257号 信和广场3单元29楼 +852 2893 3321 +852 3051 8209 www.vocollect.com EQUIPMENT PROVIDERS CHEP (China) 40/F, Suites 8-10, 2 Grand Gateway, 3 Hongqiao Road, Shanghai 200030 上海市虹桥路3号港汇二座40楼08-10室 邮编200030 +86 (21) 6127 2488 +86 (21) 6127 2466 www.chep.com Dexion (Shanghai) Logistics Equipment 155, Zha Yin Road, Shanghai 200438 上海市闸殷路155号， 邮编 200438 +86 (21) 6505 0011 www.dexion.biz Loscam Packing Equipment Room 508, 707 ZhangYang Road, Pudong, Shanghai 200120 上海市浦东新区张扬路707号508室， 邮编：200120 +86 (21) 6104 8156 www.loscam.com Schoeller Arca Systems Unit 1111-1112, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 上海淮海中路333号, 瑞安广场办公楼1111-1112室 +86 (21) 3133 2081 www.schoellerarcasystems.comApprise

Vailog Room 702, City Gateway, 398 North Caoxi Road, Shanghai 200030 +86 (21) 6090 5292 www.realtyvailog.com

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COMPANYINDEX Apple ����������������������������������9, 37, 65 Ariba �������������������������������������������� 13 ARJ Commercial Leasing �����23, 24, 25, 62 AstraZeneca ��������������������������38, 40 BAX Global ����������������������������������59 Beijing Double-Crane Pharmaceutica ����������������������������40 Best Buy ��������������������������������������49 Booz & Company ������������������56, 57 Bosch ������������������������������27, 28, 29 Bright Food Group �����������������������13 Campbell Soup ����������������������������13 Canon ������������������������������������������ 11 CAPS �������������������������������������������17 Caterpillar ������������������������10, 25, 37 CES Global Holdings �������������������51 Chigo �������������������������������������������14 China Eastern Air Holding �����������51 China Eastern Airlines �����������������51 China Longking ���������������������������37 China Mobile ��������������������5, 14, 16, China National Medicines Corp ���51 China Post �����������������������33, 34, 65 China Tobacco Monopoly Bureau 53 Cisco �������������������������������������37, 65 CLGO ������������������������������������������37 Continental Minerals ��������������������13 Cosco ��������������������������������������8, 51 Crown Equipment ������������������������10 Crown Relocations ����������������������65 Daimler ���������������������������������������� 11 Damco �����������������������������������12, 62 Dangdang ������������������������������34, 36 Decathlon ������������������������������������12 Dell ����������������������������������������37, 65 Diageo �����������������������������������������12 eBay ���������������������������33,34, 36, 65 Eli Lilly �����������������������������������38, 40 Emlyon Business School Asian Campus ���������������������������������������54 Ermenegildo Zegna ���������������������47 Estée Lauder ������������������������������� 61 Etam ��������������������������������������������59 Evonik ������������������������������������38, 40 FDA ���������������������������������������������39 FedEx ������������������������������������25, 59 Fiat ��������������������������������������� 11, 57, FM Logistics ����������������������������9, 65 Foxconn ��������������������� 5, 8, 9, 11, 65 Gap ����������������������������������������������10 Glaxo Wellcome �������������������������� 40 GLP ���������������������10, 25, 35, 63, 65 Global Sourcing Offices ���������������21 Gome ������������������������������������������� 49 Goodyear �������������������������30, 56, 57 Grand Point Investment ���������������51 GSE ���������������������������������31, 64, 65 GSIC ��������������������������������������������10 H&M ��������������������������������������������� 10 Haier ��������������������������������������������17 Hansoh Pharmaceutical Group ���40 Harbin Pharmacy Group Limited �40 Henkel �����������������������������������������59 Hetao Wine Industry Group ���������15 Hilti �����������������������������������������������59 Holder Group ��������������������������������8, Honeywell ������������������������������37, 65 Hong Kong Shipper’s Council ����� 11 Hongyan ��������������������������������������57 Huawei ����������������������16, 17, 19, 65 HYT logistics ��������������������������������26 IBM ������������������5, 16, 18, 19, 60, 65 IDS Group �����������������������12, 62, 65 IIAPS �������������������������������21, 60, 63 Intel ���������������������������������������� 37, 65 InterChina ������������������������������������51 International Copper Associatioin 14 International Freighting Weekly ��� 11 iResearch ������������������������������34, 35 Ithaca Business ��������������������������� 30 Iveco ������������������������������������� 11, 57, Jiangsu Hengrui Medicine �����������40 Jiangxi Jiminkexin Group ������������ 40 Jinchuan Group ���������������������������13 Jinheng Holdings �������������������������13 Jones Lang LaSalle ���������������47, 65 Jungheinrich �������������������������������� 10 Keen Field Enterprises ����������������51 Kion ��������������������������������������������� 10 Knorr-Bremse ������������������������20, 21 www.supplychains.com

EVENTSCALENDAR Komatsu ��������������������������������������10 Lenovo �����������������������������������������19 Levi ����������������������������������������������10 Levillair ������������������������������������������8 Li&Fung ���������������������������������10, 65 Li-Ning �����������������������������������������49 m18 ���������������������������������������������34 Made-In-China �����������������������������13 MAN ��������������������������������������������� 11 Mapletree Investment ������ 11, 64, 65 Marks and Spencer ���������������10, 12 Meiwei Pharmaceutical ���������������15 Menlo �������������������������������45, 59, 62 Mercedes-Benz ��������������������������� 11 Metersbonwe �������������������������������59 Mitsubishi ������������������������������������10 Motorola ��������������������16, 48, 49, 65 NACCO Industries �����������������������10 Nan Lung Holdings ����������������������51 NRDC ������������������������������������������10 Newegg.com �������������������24, 25, 35 Nike ���������������������������������������10, 65 Ningbo Bonded Zone ������������������15 Nissan �����������������������������������������10 Nokia �������������������������������������16, 17 Novartis ���������������������������������37, 65 OZZO Logistics ���������������������35, 37 Panasonic ������������������������������������ 11 Pro Logistics ��������������������������������13 Purchasing Practice �������������� 17, 65 PYU Yichang Investment �������������51 Qinong Pharmaceutical ���������������15 Redbaby �������������������������������������� 33 Redbud ����������������������������������������10 Reed Exhibitions �������������������������57 Reliance ��������������������������������������12 Renault ���������������������������������������� 11 Rethman AG & Co �����������������������13 Samsung ������������� 11, 17, 48, 49, 65 Sateri �������������������������������������������43 Scania ����������������������������������������� 11 SFDA �������������������������������������������39 Shanghai Roche Pharma ������������40 Shenyang Hejin Hldg Invest ��������51 Sinopec ��������������������������������������� 43 Sinopharm Group ������������������������51 SIPG ��������������������������������������������43 Smith & Nephew �������������������������� 54 SP Ins. Broker �����������������������������47 SupplyOn ������������������� 27, 28, 29, 64 Suzuki ������������������������������������������43 SynTao ����������������������������������������16 Taiwan Good Goods Association �14 Taobao �������������3, 32, 33, 34, 35, 65 TCM ���������������������������������������������10 Tianjin Dagang Shengkang ���������51 Tianjin Hairun Indl Group �������������51 Tianjin Smith Kline & French Laboratones ��������������������������������40 Toll �����������������������������������30, 63, 65 Tompkins �������������������������������52, 53 Toyota ������������������������������������ 10, 56 Ttnet ��������������������������������������������13 Tyco ��������������������������������������� 37, 65 United Biscuit ������������������������������13 UPS ���������������������������������10, 25, 59 UTC ���������������������������������������37, 65 UTI �����������������������������������������������59 Vancl ��������������������������������������33, 65 VICS ����������������������������������5, 48, 49 VIP ����������������������������������������� 41, 65 Vocollect ����������������������������5, 61, 64 Volvo �������������������������������������� 11, 65 Wall Street Journal ����������������33, 34 Wal-mart ��������10, 31, 43, 48, 49, 65 Wonder Auto Technology �������������13 Wuhan Econ Dvlp Invest ������������� 51 Xiamen Port Development ����������10 Xian-Janssen Pharma ����������������� 40 Ximco Corporate �������������������������46 Yangtze Business Services ��������� 43 Yangtze River Administration �������42 Yangtze River Pharma Group ������40 YCH Group ����������������������������������10 Yihaodian ������������������������������������� 35 Yingkou Port Group Corp ������������ 51 YRCW ������������������������������23, 24, 25 Zhuhaigang ���������������������������������14 ZJS ����������������������������������������35, 37 ZTE ����������������������������������������������19

2010 NOV

9

10

2010 CSCMP China Conference Chongqing

2010

Softell Chongqing

9

Venue:

Organizer:

NOV

CCPIT, CDI

Venue:

13

TUES-SAT

TUES-WED

CIIF-Shanghai International Industry Fair Shanghai Shanghai New International Expo Center Organizer:

CIIF

2010 NOV

9

Industrial Automation Show 2010 (IAS) Shanghai Venue:

13

TUES-SAT

2010 NOV

10 12 WED-FRI

2010 NOV

17 18 WED-THU

2010 NOV

18 THU

2010 NOV

23 25 TUE-THU

2010 NOV

29 30

MON-TUES

Shanghai New Int’l Expo Center Organizer:

Hannover Milano Fairs China Ltd 2010 Ninth China International Fair for Transport and Logistics Beijing Venue:

National Convention Center Organizer:

China Communications and Transportation Association

CHaINA ’10 – China’s Largest Supply Chain Event Shanghai Venue:

Renaissance Shanghai Zhongshan Park Hotel Organizer:

The Council 2010 CHaINA Awards: Asia’s Oscars in Supply Chain Shanghai Venue:

Renaissance Shanghai Zhongshan Park Hotel Organizer:

2010 NOV

10 11

Beijing Venue:

China National ConventionCenter Organizer:

China Communications and Transportation Association

Supply Chain Optimization for Purchasing Management Shanghai Venue:

Silver Centre Organizer:

The Council

Venue:

Longemont Hotel Shangha Organizer:

WED-THU

Chinese Government

2010

Port and Ship International India 2010 Beijing

NOV

15 MON

2010 NOV

17 18 THU

2010 NOV

20

21

SAT-SUN

The Council China International Transportation and Logistics EXPO 2010

China Hi End Retail Summit 2010 Shanghai

2010 NOV

23 26 TUE-FRI

2010 DEC

2

3 TUES-THU

Venue:

The CIAE Exhibition Center Organizer:

Inter Ads Ltd. CHaINA ’10 – China’s Largest Supply Chain Event Shanghai Venue:

Renaissance Shanghai Zhongshan Park Hotel Organizer:

The Council International Conference on Greater China Supply Chain and Logistics Chengdu Venue:

The Southwest Jiaotong University Organizer:

College of Logistics Bauma China 2010 Shanghai Venue:

Shanghai New International Expo Center Organizer:

China Construction Machinery Association Supply Chain & Logistics Roadshow in Jiujiang

Jiujiang Venue:

Jiujiang

Organizer:

The Council

November/December

65

FINAL word

India

Not a Game

A 164-foot long foot-bridge collapsed outside the Nehru Stadium

New Delhi struggles to get the Commonwealth Games in fighting shape Monica Liau

L

ooking to keep up with the recent Beijing Olympic Games, New Delhi bid strongly and in 2003 won the privilege of hosting the 2010 Commonwealth Games. However, while Beijing’s Olympic orgy event was touted (for the most part) as a logistical and tactical success, New Delhi and the Indian governments name has been dragged through the mud.

With only around a week left to go, the media eye was suddenly alerted to the rapid crumbling of the Commonwealth facilities. A steel arch supporting a 164-foot long foot-bridge collapsed outside the Nehru Stadium, which is set to host the opening and closing ceremonies and athletic events. The collapse, which killed 11 workers, is blamed on faulty British parts. The games preparation has also been riddled with accusations of corruption, extremely unsanitary conditions in the athlete’s village, a collapsing ceiling, poor governance, terrorist threats, 66

November/December 2010

outbreak of dengue fever and poor infrastructure. So intense are the reports that several Commonwealth game heavy weight competitors like British triple-jumper Phillips Idowu and cycling champion Sir Chris Hoy have pulled out, citing the danger.

The chaos surrounding the Commonwealth Games unfortunately throws into stark relief how much India still struggles when attempting to pull off big-ticket projects and large scale infrastructure. It also provides an extreme example of the limitations of a bureaucracy wracked by democratic red-tape and deeply embedded corruption. While India is working hard to be seen as a modern country, it is wracked by pot holes and frequent power outages.

According to the Money Reports news center, India ranks 51st overall in the World Economic Forum competitiveness index, but for in-

frastructure it fell 10 places to 86th this year. Inadequate supply of infrastructure ranked as the most problematic factor for doing business in the country. Money Report notes that this infrastructure deficit knocks an estimated 2 percentage points off growth and “forms a constant unflattering comparison with China and its ability to complete the sorts of projects that made the 2008 Beijing Olympics a showpiece.”

The question is: How India will respond to the global lambasting it has been experiencing? While the realizations promoted a flurry of frenetic 24 hour cleaning, security and construction activity, will this country-wide mortification serve as a wake up call as regards the need for better policies on corruption and construction that could propel India back into a competitive sphere? www.supplychains.com

Discover CHaINA Like Never Before With the New iPad App Stay connected to the latest top stories in supply chain in Asia.

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This App includes a free issue of the magazine and the vendors directory that you can read for preview. One and two years subscriptions are also available.

To view and download CHaINA Magazine, search for “chaina” on iTunes, it’s easy.

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