2009 Nov-Dec Issue
CHaINA Magazine is Asia's leading title bilingual magazine focused on supply chain, procurement, sourcing and logistics.
CHINA PORT FOCUS NOVEMBER/DECEMBER 2009 www.chainaonline.com RMB 40 HK$40 SG$9 EUR5 US$6 THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS 2009: CATALYST FOR CHANGE China Rises to the Moment 2009: FROM THE EDITOR Managing Editor Russel Beron Editorial Advisor & Publisher Max Henry Contributing Editor Rebecca Kanthor Art Director How Xu Graphic Designer Acco Fang Finance Manager Jenny Kim Project Executive Yolanda Gu Event Manager Echo Sun Photographers Grant-Oh! Buchwald Hideto Machikawa Contributing Writers Namrita Chow, Patrick Daly, Robert Dixon, Tielman Nieuwoudt, Damon Ross Paling, Peter Stokes Editorial Advisory Board Jeff Broadhurst, Vincent Chang, Chris Deans, Marnix Ettema, John D. Van Fleet, Jean Luc Laboucheix, JP Sexton, Aldo Spaanjaars, Yann Teste, Guy Tran CHaINA Sponsorship For information on sponsorship opportunities with CHaINA Magazine, please email firstname.lastname@example.org DISTRIBUTION We distribute CHaINA free by direct mail to subscribers in Greater China who are involved in all aspects of supply chain management, manufacturing and logistics. Our target subscribers are logistics, warehousing and transportation directors and managers; sourcing, procurement and purchasing directors and managers; and manufacturing executives at foreign and domestic Chinese companies. For subscription inquiries, please contact: email@example.com. Contact us to receive a free digital or print edition of the magazine. CHaINA Magazine is distributed through selected locations in Shanghai, including hotels, restaurants, business centers, airport lounges and other key locations. Comments and Feedback We welcome feedback and comments about our content or any issues relating to supply chain management or trade in China. Please email any comments to: firstname.lastname@example.org Many curious foreigners � much like myself - arrived in China to witness or be a part of the unfolding of a compelling story. This issue, our final of the year, takes a look at a new twist in the story that took place over the past 12 months as a result of the global economic shake-up. In this plot turn, driven by an insatiable appetite for resources and global recognition, China has leveraged its foreign currency reserves and skill sets to gain more ground and global influence. By nature, most of us don't like change, especially when it threatens our way of life. So resistance to China's steady march upwards, from companies and governments in North America and Europe, is no surprise. The latest wave of resistance was initiated by the Obama administration with tariffs on Chinese tire exports which have extended to steel exports and other products. Likely we'll see more of these trade wars in the coming year as China bites back against foreign imports which threaten its own domestic industry. The big story still seems to be China's domestic economy, with the large promise it holds for both foreign and Western brands. As new brands such as The Gap enter the market and existing brands such as Ikea, H&M and Zara continue their expansion and compete with Chinese brands, the market is likely to become even more hotly contested. As our feature on Ports indicates, the Government is also thinking domestically when it's not buying up available assets around the world. Beijing has again refocused its energy inwards, spending on infrastructure inland and along the Yangtze River artery. The move to balance China's wealth gap through stimulus measures will no doubt continue as governments and hungry corporations focus on China's interior. What all these changes seem to point to is a fast maturing China. Examples are everywhere that Supply chains are no exception. Localized foreign players such as TNT/HOAU are striving to be the first non-state owned logistics provider to build a nationwide network. Indicators are that supply chain standards and processes will continue to improve as technology such as RFID are more widely used and service standards rise in the face of competition. China's emerging market gold rush may be ending, but the maturing market still holds plenty of promise. Russel Beron Publisher and Managing Editor CHaINA Magazine Chaina magazine's sponsors: CHaINA Magazine (ISSN 1992-9668) is published jointly by Painted Horse Media Limited (Hong Kong) and the China Supply Chain Council Limited (Hong Kong). There is no charge for qualified readers to receive subscriptions. Send subscription requests or address changes to email@example.com. The contents of the magazine may not be reprinted in whole or in part without the permission of the publisher. The publisher is not responsible for product claims and representations. CHaINA is a registered trademark of the China Supply Chain Council. www.chainaonline.com NOVEMBER/DECEMBER 2009 3 FEATURE 20 Catalyst for Change: China's Chance in the Sun As 2009 winds down, we look at how the past year of trials has actually been a time of great opportunity for China. 28 China's Ports and Global Peter Stokes gives an update on Ports and Terminals in China with an angle on electronic exchange of information. Integration-Where to Now? 14 Interview With Frank Sutherland, Steelcase 44 Wuhan- Journey to China's Industrial Heartland 48 Establishing a Regional Distribution Centre in China 4 NOVEMBER/DECEMBER 2009 www.chainaonline.com THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS NOVEMBER/DECEMBER 2009 www.chainaonline.com CONTENTS FIRST Vietnam 42 Vietnam's Textile Industry-Opportunity and Challenge Tielman Nieuwoudt writes on the advantage of Vietnam's textile sector and its drawbacks. Event 46 What's Up with RFID in China? Veteran RFID expert, Jim Maclean explains how RFID usage is developing in China. 47 The Search for a China Pallet Standard Continental Logistics specialist Farid Pazun explains how standardization could cut costs and increase efficiency. Expert 48 Planning for Economic Recovery- Establishing a Regional Distribution Center in China Damon Ross Paling shares the experience of a U.S. luxury retailer in setting up a regional distribution centre in China. 6 Protectionist Measures China is facing tariffs on its products around the world and is fighting back with some protectionist measures of its own. 8 A look at some of the key recent stories impacting logistics and supply chain management in the Asian region. NEWS 17 View from the Road Wang Zhao Guo, long haul trucker, gives us a perspective on logistics from behind the wheel. PROFILE 32 A Kanban-Driven Material Supermarket at Braun, Shanghai, Ltd. Patrick Daly, Managing Director of Alba Consulting Group describes the project challenges and successes of creating a design solution layout for Braun's Shanghai manufacturing plant. CASE Green 38 Supply Chain Management Readies for Green Explosion Nicolas Pechet, Vice President of China, GIA Group China, discusses sustainable practices in the manufacturing and logistics sectors in the Asia Pacific region. Research 40 Increasing Demand in Cold Chain Logistics in China Jones Lang Lasalle releases a new report uncovering the potential of China's cold chain logistics sector. FOCUS Cars 50 VIP Porsche - Luxury Goes Local 51 The Executive Standard in Luxury Sedans Books 52 How China's Leaders Think LIFE Word 53 When Global Manufacturing Leadership Fails 55 CLASSIFIED LISTINGS 58 COMPANY INDEX 58 EVENTS CALENDAR FINAL www.chainaonline.com NOVEMBER/DECEMBER 2009 5 Chinese factory workers brush steel pipes at a factory in Dongwei village, Zouping county, Binzhou city, in East Chinas Shandong province, 20 June 2009. 6 NOVEMBER/DECEMBER 2009 www.chainaonline.com FIRST Word Protectionist Measures While most of the world suffered through the recession, China has leveraged its large foreign currency reserves to buy up commodities and resource companies to fuel its manufacturing engine. This has sparked protectionist measures on Chinese products from corporations and governments in the U.S., Europe and elsewhere. Renewed protectionism began in earnest in September as the Obama administration set tariffs on Chinese tires, followed by tariffs on steel imports and renewed tariffs on consumer products such as shoes. China in turn continues to impose tariffs on imports it sees as a threat to domestic industries. 90% � The amount of anti-subsidy duties the U.S. Steel Corp. requested the Commerce Department to impose on US$400 million of steel imports from China used in the chemical, petrochemical, refineries and related operations. � The number of years the European Union has decided to impose anti-dumping tariffs -- of 30-40% -- on aluminum foil and seamless steel pipes from three countries including China. 5 347% Imaginechina - The amount of the antidumping tariff imposed on October 9 by the Ukraine Interdepartmental Committee of International Trade on 10ml Chinese syringes. Other tariffs include 24% on 2ml syringes and 54% on 5ml syringes. - The range of antidumping tariffs that China's Ministry of Commerce has imposed on nylon imports from the U.S., Italy, the U.K., France and Taiwan. 5-37% www.chainaonline.com NOVEMBER/DECEMBER 2009 7 NEWS Retail Retail H&M Ups China Store Count Swedish fashion giant Hennes & Mauritz (H&M), the world's third largest clothing retailer aims to raise its Greater China store count by nearly 30 percent by the end of December to 27 from the current 21 as part of a broader push into Asia. The company has 15 stores in the Chinese Mainland and six in Hong Kong, with six more set to open in the Chinese mainland this year. A Chinese woman walks past an H&M (Hennes & Mauritz) store in Beijing, China, April 17, 2009. online shopping site and generated more than three million sales a day last year, and 75 percent of the items were delivered by express services. Online shoppers exceed 120 million in China and ninety percent of them choose to have purchases delivered via express service. Retail e-Commerce Represents 30% of China Express Delivery More than 500 million express packages in China were generated from electronic commerce business in 2008, accounting for about one third of the country's total express volume. China's online retail sales reached RMB132 billion (US$19.3 billion) last year, representing one per cent of national volume. Taobao.com is the country's biggest China Unicom to Sell iPhones From October China Unicom, the country's number two mobile phone carrier, will sell Apple's popular iPhone in China from October at a retail price of RMB5,000 (US$732.5). The price is set above market expectations, as it seeks to build up its 3G service. Analysts said Unicom may have to set the price high to force buyers of the popular handsets to sign up for packages carrying longer-term contract commitments as competition heats up in the recently reformed sector. 8 NOVEMBER/DECEMBER 2009 www.chainaonline.com Imaginechina NEWS Retail Shifting focus from Japan where it found success, retailer, The Gap is now setting up in China. Prepsters in China can look forward to next year when Gap, Inc. opens its first store in Shanghai. "Chinese consumers love American brands," says Gap's Chief Executive, Glenn Murphy, but is there still room in their hearts...and wallets for a latecomer? CHaINA asked two retail experts for their opinion. Shaun Rein, Managing Director China Market Research Group (CMR) "Retail sales went up 15 percent for the first three quarters this year and we think they'll go up another 16-18 percent next year. Gap is coming in and could target a consumer market that is still growing, remains confident and is willing to try quality brands. Coming in late isn't the question. I'm not sure Gap has the branding and style that Chinese consumers like and it remains to be seen what their price point will be. What's Gap's positioning and will their styles fit China? Preppy design doesn't work in China They're going to have to change their marketing. They're going to have to localize stores and product designs. I'm not sure opening in Shanghai or Beijing is the right move. Markets in 2nd and 3rd tier cities are more optimistic. Shanghai and Beijing have been hit harder by the financial crisis. If you opened in Chengdu or Hefei, it's easier to generate buzz, consumers have money and they're more optimistic. I think Gap will have some major challenges." Nathan Burkland, Senior Partner, Vertical Retail Consulting "Gap is one of the first major US Retail Stores of this format to come in and it will be interesting to see how they attempt to penetrate the market. Usually Chinese consumers like foreign brands if they are perceived as high quality or a premium brand. In the US Gap is more of a casual brand. I think there is room for strong brands to still enter because the market is expanding and the strong brands can take some of the market share from the weaker brands. Brands that grew in China due to general economic expansion and not from strong competencies will struggle as retail continues to become more competitive. We have seen lots of retailers experience tremendous growth in China by simply opening stores and servicing pent up demand. Those days have been over for a while and companies must become better at what they do in all aspects of their business if they expect to perform well in China. However, this presents a great opportunity for some of the best brands. There really is no other market of this size that is experiencing this type of growth. It helps to have entered earlier but even if it is late, it's either now or never." www.chainaonline.com NOVEMBER/DECEMBER 2009 9 NEWS Supply Chain Shanghai GM R&D Test Center Being Built in Anhui Province Construction has begun on the Shanghai GM R&D test center at Guangde county in Anhui Province. The center is expected to be finished in 2011.The new R&D center is expected to cover 5.67 square kilometers, and has an investment of RMB 1.643 billion. After it begins production, the center has the capability of working on 140 cars at the same time, and will have an extensive track for testing. The center is expected to be the most advanced of its kind in China. CSR China Moves Residents, Keeps Lead Smelters Going. China plans to move 15,000 residents in its biggest lead smelting area away from the plants in order to allow them to keep operating, after tests showed over 1,000 children had excessive lead in their blood. Some smelters and lead production lines in Jiyuan, Henan province, had shut for nearly two months after the lead tests, which came amid a spate of cases of high lead in children leaving and going to school in the shadow of smelters across China. The mayor of Jiyuan, Zhao Suping, said 15,000 people in 10 villages around the plants would move at a total cost of about RMB 1 billion yuan (US $150 million), allowing lead plants including China's largest, owned by Yuguang Gold and Lead, to keep operating. Manufacturing Chinese Factories Face Worker Shortage Although China's employment situation is still grave, a shortfall in labor resources has cropped up in some regions as both the domestic and global economy have picked up. Those suffering most from labor shortages are small and medium-sized enterprises, the major employers of migrant workers. Some analysts warned the current labor scarcity was mainly a result of seasonal factors instead of solid growth in external demand. (WEPZ). The design center will be completed by the end of 2009 and the manufacturing facility is expected to be completed by the end of 2010. R&D Unilever China R&D Center Opens in Shanghai The new R&D center, with an investment of $71.66 million, covers an area of 30,000 squre meters, and is located in Shanghai's Changning district. Flextronics to Build New Facility in Suzhou to Support Manufacturing and R&D Capabilities for Computing Products In a signing ceremony held recently with Suzhou Wuzhong Economic Development Zone and Jiangsu Wuzhong Export Processing Zone, Flextronics (Nasdaq: FLEX) announced that it will expand its presence in China through the development of a new facility in Wuzhong. The new facility will support the growing demand for computing products in China and will include a design center and extended manufacturing capabilities in the Wuzhong Export Processing Zone Paul Polman, CEO of Unilever, speaks during the opening ceremony of the Unilever China Research & Development (R&D) Center in Shanghai in September. 10 NOVEMBER/DECEMBER 2009 www.chainaonline.com NEWS Logistics Airbus Plans to Build a New Logistics Center in Tianjin, China European aircraft manufacturer Airbus is planning to set up a new logistics center in China to coordinate its growing operations in the country. The logistics center will likely be located in Tianjin. Airbus opened its first final assembly line outside of Europe in the northeastern Chinese city last year. The plant assembles A320s and delivered its first plane in June. Airbus forecast its procurement of components and materials in China will rise to US$200 million by 2010 and to US$450 million by 2015. The company sourced about US$70 million worth of parts and materials from China in 2007 and expects to source US$140 million this year. It has also begun construction of a plant in Harbin, Northern China, to manufacture major components for the A350 XWB and it is scheduled to start operations by late 2010. Airbus will own a 20 percent stake of the plant, and Harbin Aircraft Industry Group Co. will hold a 50 percent stake. Hafei Aviation Industry Co., Avichina Industry & Technology Co. and Harbin Development Zone Heli Infrastructure Development Co. will hold 10 percent each. Chongqing to Spend US$29.3 million Yearly to Support logistics The city of Chongqing has set up a fund for the development of the logistics industry and plans to spend RMB200 million (US$29.3 million) every year to subsidize the city's major logistics operations. Chongqing has been positioned as a logistics hub for southwestern China and one of the key hubs for the whole country according to the China State Council's development plan. In order to realise the plan, Chongqing is to pour RMB164.3 billion on 175 logistics projects. By 2012, the city's logistics industry added value will reach RMB65 billion; port capacity of 3.5 million TEU. Shenyang Bonded Logistics Center launched Shenyang Bonded Logistics Center in Shenyang Jinhai Economic Development Zone was officially sealed off and put into operation in mid-October. The center is currently the sole inland bonded area in Northeast China. It is located in Shenyang Jinhai Economic Development Zone in Liaozhong County, and has a planned area of five square kilometers. 750 mu of land and a total investment of RMB 500 million were used in the first phase of its construction. Shenyang Bonded Logistics Area is a logistics distribution center connecting coastal areas and the hinterland in Liaoning province. Shenyang Jinhai Economic Development Zone, where the Area is located, is only 45 kilometers from Shenyang, close to Yingkou Port and no more than one hour drive from industrial cities such as Anshan, Liaoyang, Benxi, Fushun and Tieling. Special railways for the bonded area are currently in the works and operation of the flight route directly connecting the area with Xiantao Airport in Shenyang will commence by the end of the year. Chongqing to develop its logistics infrastructure. www.chainaonline.com NOVEMBER/DECEMBER 2009 11 NEWS Asia Logistics Costs Still Too High in Thailand Economists and business leaders are calling on the government to improve the efficiency of Thailand's logistics system to help mitigate the drop in export revenues caused by a decline in the global demand for goods and services. Export-dependent countries such as Thailand, where exports account for about two-thirds of gross domestic product can benefit from reducing the cost of their logistics systems. Economist and former finance minister Chalongphob Sussangkarn said the government should collaborate with its neighbors to develop a logistics network to connect the region's transport systems. Such a move would lower logistics costs while making Thailand-based products more competitive globally. Thailand's GDP per capita was US$8,500 last year, compared with Vietnam, $2,800; Cambodia, $2,100; Laos, $2,000; and Burma, $1,200. Thailand has a trade surplus, exporting 80-90 percent of products for consumption in neighboring countries, while importing only about 5 percent from them. Recent road projects to better connect Thailand with neighboring countries such as Burma, Laos and Cambodia have increased border trade. company continues to expand. Only about 10 percent of 85 million Vietnamese have opened a bank account but with the growing economy, consumers there are seen as a lucrative untapped market. India 3PL Logistics to Touch US$90 Million by 2012 Third party logistics business in India is likely to touch the $90 million mark by 2012 as more and more domestic companies want to enhance their efficiency, a study by industry body Assocham said. With globalisation, the demand of third party logistics business is increasing among Indian firms that want to increase their efficiency, the chamber said. The Logistics outsourcing market in India is estimated to be USD 58 million as around 55 per cent of the local firms are logistic outsourcing services like supply chain management and warehousing, which used to be between 10 and 15 per cent about a decade ago. "One of the contributing factors for this is value added tax which is expected to drive Indian industry towards using more third party logistics services," Citigroup Opens in Vietnam Citigroup has opened a retail location in Vietnam, demonstrating the interest in the growing Asian economy by western companies. The Vietnam branch will launch offering deposit services to individual customers and remittance services. Citi has an interest in the Asian market, with 32 million customers and 14 markets in the region. Recently it launched debit cards in China and SMS banking in the Philippines. It's been a tough year for Citi, but after being rescued by the US government, the Logistics Sector Gains Favour Among PE Investors in India The logistics sector seems to be emerging as the flavour of the season for Indian PE firms. About half a dozen PE investors are targeting this sector along with other industries such as infrastructure, real estate and healthcare. The Indian logistics market is estimated to contribute 13% of the country's GDP. There's little organized investment in the logistics sector, says Manas Mitra, head and chief investment officer, UTI Infrastructure PE. India's towns and small cities are set to grow significantly in the coming years, resulting in an increase in the movement of goods which, in turn, would boost the logistics business, he reasons. The logistics industry is broadly divided into ocean freight, air freight, rail freight, trucking and third-party logistics (3PL) services. The Indian logistics market is estimated to contribute around 13% of the gross domestic product (GDP). There has been a lull in deal making as the economy weathers a slowdown. A cargo truck in India. The country's logistics industry is poised for growth. 12 NOVEMBER/DECEMBER 2009 www.chainaonline.com NEWS Movers Executive Appointments With talent at a premium, CHaINA keeps an eye on which executives are moving where. Changed jobs in the past month? Hired someone new recently? firstname.lastname@example.org Lufthansa Cargo Group Appoints David Albaiceta General Manager in Asia Working with the Charter team in Hong Kong and with an additional base in Singapore, David Albaiceta will be responsible for promoting the development of Asian markets. With many years of international experience in the field of special logistics, Albaiceta succeeds Eric Erbacher. Schenker Appoints Henry Schmidl as Director of Oceanfreight, South China Effective September 21, 2009, Henry Schmidl was appointed as Director of Oceanfreight, South China of Schenker International (H.K.) Ltd. Prior to his appointment with DB Schenker, Henry Schmidl was formerly Regional Manager of Oceanfreight for a leading international freight forwarder. Bulgari Appoints Lelio Gavazza as China Country Managing Director Effective November 1, Lelio Gavazza will take the role of Country Managing Director for Bulgari. With a wide depth of experience in textiles manufacturing, Gavazza was formerly CEO of SharMoon EZ Garments CO Ltd ( Zegna Group). www.chainaonline.com NOVEMBER/DECEMBER 2009 13 PROFILE Company Frank Sutherland Sourcing Director, Asia, Steelcase an awful lot of fairly small suppliers. A lot of those suppliers are export oriented back to states (secondary markets would be Europe). This financial crisis has hit them very hard and we've tuned up our level of financial auditing to make sure we don't have any bankruptcies on our watch. How important is technology for Steelcase? What software or business applications are you using to help you in your day to day job? FS: For the manufacturing side it is SAP, and that allows us to be a globally integrated company. We have a web-based software that is integrated with SAP and allows us to share information with our suppliers in real time and give them advance notice on orders and track shipments. This is specifically Steelcase developed software. Not all our suppliers in Asia are on this but we're moving in that direction. What is the competitive edge of Steelcase? FS: Some would say that since our headquarters are located close to the heart of the auto sector in the U.S., we take a lot of the best practices from the automotive sector. Continuous learning is very important for Steelcase and our employees, and we have our own university. It's on-line and there's a physical university in Grand Rapids. Whether it is lean manufacturing or six sigma, I feel we're at the front of the latest best practices and that gets filtered down to our employees. We're talking about a possible upturn and I think the recession is behind us, so what are the major challenges that you're going to have in growing your operations in Asia in the next 2-5 years? FS: Inflation. Everyone in our industry is concerned about inflation on raw materials, on everything. We're not sure how much of our supply base has left the industry and how much is looking into other markets and how much is looking inward as opposed to export-oriented. We know our own suppliers very well, and we know the next tier well. But beyond that we don't have enough visibility so [the question is] when we try to Sourcing for Seats Furniture maker Steelcase successfully maneuvers the downturn F 14 ounded in 1912, Steelcase is an American based manufacturer of premium office furniture with approximately 13,000 employees. In Asia they have manufacturing in Southern China, Japan, and Malaysia. CHaINA Magazine sat down with Frank Sutherland, Steelcase's Sourcing Director for Asia to talk about the company's growth and future outlook. How long have you been working in sourcing or procurement? Frank Sutherland (FS): It feels like my whole life. 15 years, first in Japan and now in Shanghai. I've been with Steelcase for 8 years, all in sourcing and procurement. I was hired in Japan and I was asked to set up the Shanghai office. In the beginning, I was a one man team and now I have staff in Malaysia, Southern China, and Tokyo. How do you structure your team? We split up the supply chain and procurement so within supply chain we have approximately fifteen employees and some of them traverse over into purchasing. I think it is important to keep a definitive split between those who are paying the money and those who are negotiating for them. It keeps it clean and avoids any pitfalls. Our supply chain includes a sourcing function and a strategic sourcing function for long term strategies and then we move into the logistics side as well. We have a specific logistics group and it crosses over in our group so there's some overlap. What has been the impact of the economic slowdown? FS: There's been a lot more emphasis on reliability and risk management. We're an office furniture company and we deal with NOVEMBER/DECEMBER 2009 www.chainaonline.com PROFILE Company expand are we going to have the capacity? Have those suppliers that we relied on in past years moved on to other pastures? Can you comment on the wave of in sourcing? Are companies moving back to the US? FS: It's not happening. Continually there will be components coming from Asia, not necessarily from China. There's a lot of focus on China when I think that we should probably be focusing on Vietnam, Bangladesh and other countries coming up. Those components are going to end up closer to the market and then you'll have final assembly. In our industry the biggest market by far is the U.S. So you're going to see components coming from Asia and assembled in Mexico for quick delivery and customization for the US market. Keep in mind though there's sourcing back to the U.S. and Europe as well as the growth in the markets here. In my team there's more of a focus on the market in Asia now than there is on sourcing back to the U.S. We're not neglecting that but it's probably going to be minimized. We're currently the leader in Asia. We are only in the high end [of the market]. We only see growth. We know it's not going to be easy and it's not going to be as quick as we'd like, but we're very optimistic. What are some of the personal challenges of managing your team? FS: The biggest one is geography. We have a team that's all over Asia and we just don't have that face to face time. The other issue is keeping motivation up. Right now it's easy because we're in the You're going to see components coming from Asia and assembled in Mexico for quick delivery and customization for the US market. growth phase, but even with the global recession as we slow down, it's important to keep the team motivated and challenged. Are you worried about not being able to retain talent? FS: We're extremely fortunate. We make nice furniture and our offices are pretty beautiful and nice places to work, so we have people walk in the door and say, "Oh, I want the job." Knock on wood, I've had very few departures and I hope that's going to continue. Now hiring is going to be difficult as the economy recovers. I feel that to find the right person is difficult. www.chainaonline.com NOVEMBER/DECEMBER 2009 15 PROFILE Company FS: FS: FS: FS: : Steelcase 1912Steelcase 13,000 CHaINASteelcase Frank Sutherland Frank Sutherland (FS): 15 Steelcase8 15 Steelcase FS:SAP SAP Steelcase Steelcase FS: Steelcase 2-5 FS: 16 NOVEMBER/DECEMBER 2009 www.chainaonline.com PROFILE Individual but the hard part is waiting to unload. If everything goes smoothly then we can unload right away. But if the warehouse is full and everything's backed up, we have to wait, and then we get really anxious because we can't get off work or rest. Loading up is the same. I wish clients could manage their unloading system better. Usually it takes about one or two hours. What part of your job do you like? WZG: My favorite part is getting off work. What stresses you out? WZG: We worry most about the truck breaking down and having to pay for the repairs. It doesn't happen that often, maybe once or twice a year, but we still worry about it. Of course our trucks go in for maintenance so they're in good shape. Is there a lot of overloading that goes on? WZG: We have to be careful not to overload because it's dangerous and the fines are really high if we get caught. We don't overload too much to be on the safe side. Even if they offer money we won't do it. Are you a night person? WZG: I like driving at night. If I'm in a good mood and well rested, driving at night is much more relaxing than daytime driving. But it's really important to get rested up during the day, otherwise I can't work well. View from the Road Wang Zhao Guo talks with CHaINA writer, Rebecca Kanthor about his life as a long haul trucking driver in China. : Tell me about your job? Wang Zhao Guo (WZG): I've been driving now for more than six years. I load up at night and around midnight I set off to Ningbo. It used to take 5 � hours but now that the Shanghai-Ningbo sea bridge has opened, it takes just 3 � hours to drive the 200 km. I drive there, unload the freight in the early morning, and then go to rest. That night, I load up again and drive back to Shanghai. We drive at night to avoid the road construction. It's a constant back and forth. I do 12 return trips a month and have about five days off. How often do you see your family? WZG: My wife and daughter live in Ningbo so if I have time I go to see them, take a nap and have dinner. If I'm too busy I don't go home. My life is quite regular. We're used to this life. Does it get lonely on the road? WZG: We work in teams, two drivers to a truck. When I'm driving he can rest, and when he drives I can rest. We chat about everything- family matters, news. We're together every day, even more than with our families, so we have a good relationship. We don't switch partners often. We listen to music and the traffic report. It's part of the job. We have to keep on top of the road and weather conditions, especially now that it's getting towards winter. Do you see a lot of interesting things driving every day? WZG: Unless I'm told a different drop-off location, I drive the same route every day. There's not much interesting to see. I almost never get lost. I've been driving this route How much do you get paid and what are for years. We just pay attention to the road, your expenses? nothing else. I'd like to drive new routes WZG: I bought my truck last June and paid but it's good to have regular customers. RMB140,000. In all I make RMB20,000 a It's better for working together. I see trafmonth. But I have to pay all fic accidents once or twice a the expenses myself, like month. That's a normal part insurance, tolls, gas, and reof our job, but it's hard to pairs, so my take home pay see. It stays with you. Name: Wang Zhao Guo is RMB10,000. Age: 29 years old Do you have any hobbies? Origin: Mengcheng, What part of your job do WZG: Hobbies? Driving's my Anhui you not like? hobby. WZG: Driving is no problem, www.chainaonline.com NOVEMBER/DECEMBER 2009 17 PROFILE Individual 1 ? CHaINARebecca Kanthor 6 5 3 200 - 125 : : 29 : 614 2 18 NOVEMBER/DECEMBER 2009 www.chainaonline.com A N I N T E R N AT I O N A L B U S I N E S S A D V I S O R Y F I R M Keeping Supply Chains Strong How much would the sudden loss of a critical supplier cost you? We can tell you with confidence that it's a price you don't want to pay. As a leading provider of Supply Risk Management (SRM) services to the world's largest OEs and Tier 1 suppliers, BBK has the tools, experience and resources to help develop, refine and/or implement proactive SRM processes that keep costs down and supply chains strong. Be proactive in protecting your production. Keep moving forward with BBK. Supply Chain Expertise > Proactive Strategies > Hands-On Approach > 17/F Lippo Plaza 222 Huai Hai Middle Road Shanghai, 200021, China www.e-bbk.com Tel: +86.21.5396.5600 Fax: +86.21.5396.5602 Move Forward FEATURE Story 2009 Catalyst for Change China's Chance in the Sun 2009 will be noted both for the crisis and opportunities that it brought, particular for China, which has used the global economic crisis as an opportunity to take one step closer to ruling the world. Using the automotive industry for illustration, Namrita Chow also looks at the broader implications of these trends. A strong presence in Asia is now synonymous with intelligent strategy for the future. Blueprints that existed before to build and expand in Asia quickly transformed into strategic moves. What once were only ideas, 2009 made realities. A strong presence in Asia is now synonymous with intelligent strategy for survival in the future--and the chance for strong growth. As the remnants of the global auto industry continues to look to China for salvation, so do many other sectors. TREND 1: Building a strong base in high growth markets Contrary to most of the worlds, across Asia, investments and expansions are accelerating, spurred on by the lure of high growth. Global companies have seen sales plummet in developed markets, but not so in Asia. "China will remain a major driver of our growth in Asia," says Franz Fehrenbach, chairman of the Bosch board of management. Bosch opened its first office in China in 1909. Today China will remain a major driver of our growth in Asia Franz Fehrenbach, Chairman of Bosch board of management the company has a workforce in China of 20,000 staff � the largest outside of Bosch in Germany. While Bosch's global sales have taken a 15 percent year on year hit, sales in China are up 15 percent and so investments in China continue. In 2009 Bosch invested EUR160 million in China. Infotainment maker Harman International, which has its hands in the auto and mass consumer electronics market, is also expanding across Asia, cutting numbers in developed markets with new facilities 20 NOVEMBER/DECEMBER 2009 www.chainaonline.com FEATURE Story and expansions in Bangalore, India and also in Vietnam." This year Outrigger has Shanghai and Suzhou in China. "We lost opened one new hotel in Thailand and almost 30 percent sales last year. So yes, signed up for three more across Asia. Harman was also affected Le Meridian already has 26 [by the global downturn]," hotels in Asia but chose 2009 says Dinesh Paliwal, to add a hotel in Hoh Chi Minh chairman and CEO of City, Vietnam. Over the next Harman International three years, Le Meridian will Industries Inc. But Palliwal open five more hotels across is adamant that Harman Asia. will grow in Asia. "Right TREND 2: Optimization now China accounts for of R&D and Human Reunder five percent of sources global revenue, but we What global companies are want to make US$1 billion Dinesh Paliwal, realizing is that markets in in five years time so by Chairman and CEO of Asia are different. Goods then it will be 20 to 25 Harman International have to be targeted for the percent," says Paliwal. Industries Inc Asian consumer and have Similar growth, which might have stalled this year, is continuing to be designed and engineered with now in other sectors such as travel and the end market in mind. Simultaneously tourism. Anticipating demand for their the developed world is also demanding services, hotel groups are also expanding affordable options. "In the next decade in Asia. "To get through these challenging the automotive industry will focus on times and strengthen our company for the so-called "affordable" cars. Accordingly, future it is important to adapt our business we are intensifying our R&D localization strategy. One way to do this is to take strategy to develop tailor-made products advantage of the potential for economic for the Asian market," says Jay Kunkell, growth by expanding in markets such Continental AG's Asia president. No longer is it possible for companies as the Asia-Pacific region," says Mel Kaneshige of the Outrigger Group. "Not to build and design products thousands of stopping with the hotels we have signed miles away from the intended market. As up thus far, we are currently in discussions China's consumer tastes develop unique for more in Koh Samui and Phuket and demands, localization of R&D is a requisite to winning business. "German engineers focus on Mercedes and BMW, they have built in standards. It's very difficult to develop low cost products in a market like that [in Germany]," says Rolf Gall, head of ZF Friedrichshafen's engineering division in China. So ZF plans to push for more localized R&D specifically tailored for China. This means building up a strong local team of Chinese ZF engineers. In China the company has added 500 new positions. This example is evident in many other industries which are utilizing the large pool of fresh graduates, where they can take their pick of the best and brightest and train them up. This trend is evident in multiple sectors and is geared at products and services designed for both export and import. In line with this trend is the localization of more upper management functions that accelerated in the past year as companies looked to quick cost cutting to improve their bottom line. "Localization and having a formal policy in place was increasingly on the agenda at companies where international assignments have been the norm in the past. This is being driven by both cost cutting and the need to streamline international assignment processes and the accompanying administrative burdens," noted a survey by KPMG on International Assignments Some 2009 examples of expansions and plant openings in the auto sector: Autoliv Inc., an automotive safety system supplier, opened a new US$17.6 million (RMB120 million) plant in January in Jiading, a Shanghai suburb. Continental AG opened a new technical center in Shanghai in April and will open an automotive electronics plant in Shanghai next year. Conti has also begun production at a plant in Thailand and opened a technical center in Bangalore, India. Investment numbers not available. SKF Group added an automotive technical center to its new US$25 million (RMB171 million) plant in Jiading in January. ZF Friedrichshafen AG opened a new US$22 million (RMB150 million) facility in Shanghai inSeptember. The plant includes an engineering center to increase local product development Webasto AG, a German automotive sunroof manufacturer, has opened two new plants in China, one in Changchun and one in Shanghai, bringing total capacity here to two million sunroof sets annually. Investment numbers not available. George Fischer AG opened a new RMB320 million (US$46.9 million) plant in Kunshan, China in May. Japan Climate Systems, an automotive heating, ventilation and cooling (HVAC) system supplier, opened a new RMB68 million (US$9.9 million) plant in Nanjing in June. This is the company's first plant outside Japan. www.chainaonline.com NOVEMBER/DECEMBER 2009 21 FEATURE Story A Chinese man walks past a Mercedes-Benz dealership store in Shanghai. Mercedes will launch local production of the E Class Mercedes in 2010. Policies and Practices "Most of these exports are 2009. going to Europe and some to Asia as an export hub other Asia Pacific markets," Intense focus on quality he says. In addition, Nissan control now means that is shifting the production of parts that are made in its Micra from the United Asia meet the quality Kingdom to India, says requirements for sale back Master. in developed markets in TREND 3 Increase in Europe and North America. Guenter Butschek, contract manufacEven Mercedes cars made president and CEO of turing here could potentially be Beijing Benz Daimler Until a recent suicide of a sold back in Germany. Chyrsler worker accused of leaking For example: Mercedes trade secrets, most people Benz will launch local production of the new E class in China in had never heard of Foxconn, the company 2010, following record sales of Mercedes- that makes most of the world's iPods and Benz cars in China. Once parts reach iPhones for Apple. As the world looks for Daimler Benz requirements, these parts more affordable parts that still deliver on are also then ready for global sourcing, the high standards of quality, specialist says Guenter Butschek, president and part makers are able to offer cheaper CEO of Beijing Benz Daimler Chyrsler. prices as they produce for huge volumes Parts from China are currently exported across every industry. Martin Lockstrom of the China European to the United States and Europe. "For the new E class more than 500 International Business School says parts have been locally sourced with the long term trend is a higher degree local content significantly more than 40 of outsourcing. "Take BMW X3 as an percent," said Butschek. So as affordability example, which was developed and is key, production in low cost countries is produced by Magna Steyr in Austria," he says. "The auto industry is taking a on the rise. similar path as the apparel and consumer electronics industry." India as small car production hub Hyundai and Nissan are now using India Nearly every computer and mobile phone as a small car production hub. "Hyundai has a component made in China. "China made a conscious decision to make is definitely number one for electronics, India an export base for its small cars, consumer products etc. For textiles I'd say starting with the production of the i10 mini countries like India, Vietnam, Bangladesh car," says Ammar Master, senior market etc," says Lockstrom. analyst for India and Korea at J.D. Power. Contract manufacturing is a win-win When China Rules the World Martin Jacques Penguin, 2009 If you want more food for thought on the topic of how and when China will rule the world, you need to read Martin Jacques' new book � When China Rules the World, which skips ahead to the question- what will this future world look like? Jacques categorizes most westerner commentators as those that believe China will take over the world only through Westernization and those who think it is doomed to failure because it won't Westernize. Jacques denounces them both as wrong. China will rule the world he warns, but it won't be through adapting western ideals and ways. Evaluating China he says means recognizing this difference, and failing to do so "excludes everything... that makes China what it is." Former editor of the journal Marxism Today, Jacques argues in favor of a China developing, adapting and growing on its own terms. China's difference is a strength, not a weakness he argues. Whether he's right or wrong, the book reads as a thought-provoking look at the relationship between China and the West. 22 NOVEMBER/DECEMBER 2009 www.chainaonline.com FEATURE Story situation for all players. "I Schemes to increase taken their companies through initial think all supply chain players spending are also public offerings (IPO) of their stock in do [benefit] - final assemblers being mobilised across Shanghai, Hongkong or Shenzen, with can optimize their balance industries. One way four more planning to do so to raise cash sheets, the contract retailers are doing this for quick buys, says senior market analyst manufacturers can gain is via an increase in Tim Dunne in a report from J.D. Power more economies of scale, the voucher system. and Associates. and an overall degree of "With the effects of the If Asian automakers already have joint specialization. However, risks global economic crisis ventures, why would they need to acquire increase as transparency now felt in most Asian more technology? "In China there is a and communication becomes markets, a number of trend of foreign companies to take full harder to facilitate," he says. governments in the region control of their operations," says Ivo Songlin Mei, Philips is another company are looking to jump-start Naumann, Asia general manager of JD Power that has made a similar growth by encouraging global restructuring firm AlixPartners Asia shift, focusing on R&D and consumer spending LLC. Why? "So Chinese companies will utilizing its brand value, while through the distribution of find it more difficult to access technology," outsourcing manufacturing consumption vouchers," he says. as a non core competency. With a says Mr. Robert Gregory, a retail analyst higher value in the requirements for with Planet Retail. Governments across The future? manufacturing, it will be interesting to Asia in Thailand, Japan, China and Global manufacturers, retailers and see if the auto industry can make the Vietnam encouraged such schemes and investors caught in the sudden downsizing of markets in the developed world are shift that FMCG brands such as Nike boosting sales. looking for quick answers. Fast expansion and adidas have made, focusing on their core competency of branding and retail TREND 5: Technology Acquisitions in Asia and talk of high growth numbers distribution, over actually making the Domestic companies in Asia need is appetizing when other markets have expertise. They need technology and gone sour. But, the future has yet to be products. know-how. Rather than re-invent the seen and analysts predict a slowdown TREND 4: Governments in Asia wheel, an easier option is to buy existing in the acceleration of growth in Asia push consumer spending technology, which sometimes can be which in some cases has been prompted Markets in Asia, such as China and going cheap. For example, India's Tata by government and artificial growth India are responding well to government Motors has been acquiring technology for stimulations. stimulus packages. In China auto financing years, with joint ventures and technology "It's uncertain whether the government schemes usually penetrate close to five sharing agreements. The Nano is the will extend the tax incentive policy to next percent of car buyers. But the Chinese outcome of years of collaboration between year or carry out new stimulus measures," government's push to boost spending Tata Motors and its various foreign joint says analyst group J.D. Power in its and increase demand has changed the venture partners. China Automotive report. "We do believe situation. "Our teams have been working closely a payback is in order to compensate for "In the past few years less than five with Tata Motors right since the inception the stimulated growth in 2009." percent of car buyers in China used loans of the project, to design In fact the report states to buy cars," says Songlin Mei, China and engineer various that expectations for 2010 general manager for think tank J.D. Power components, keeping the for light vehicle sales Chinese that studies consumer trends in China. cost, superior quality and in China will match this companies "This year, 15 percent of car buyers are performance parameters in year's. "We maintain a will find it expected to use loans." mind which required design cautious outlook for 2010 more difficult with growth decelerating "In the past credit financing was not and process optimization," considered important in China," says Mei. says R S Thakur, chief to a rate of 25-3%," says to access "However with the current financial crisis operating officer at Tata the report. And as the technology the situation is changing. Now, both OEM AutoComp Systems. auto market is linked to dealerships and the Chinese government But automakers want the amount of money are promoting financing schemes to kick more. And 2009 has been the growing Asian middle Ivo Naumann, Asia start sales. Government loans for car that catalyst, pushing them classes have in their general manager of buyers are currently being offered with to buy assets faster. This pockets, it is indicative global restructuring firm zero interest rates, for repayment between year alone, 12 of China's of the scenario expected AlixPartners Asia LLC one and two years." top 20 automakers have across the supply chain. www.chainaonline.com NOVEMBER/DECEMBER 2009 23 NEWS Movers FEATURE Story 2009-- 2009 Namrita Chow " "--BOSCH BOSCH1909 20000BOSCH BOSCH 15% 15%2009BOSCH 1.6 Dinesh Paliwal" 30% Franz Fehrenbach, Chairman of Bosch board of management "Paliwal Paliwal" 5%5 10 20%-25% Outrigger " " Outrigger 3 Le Meridian 262009 35 24 NOVEMBER/DECEMBER 2009 www.chainaonline.com FEATURE Story "10" " " Jay Kunkell " " ZFRolf Gall ZF 500 -- " "2009 1 2010 E Guenter Butschek "E500 40%"Butschek i10 Micra " 3: iPod iPhone Martin Lockstrom "X3 " Lockstrom" " Lockstrom" -- " 4 5% " " Dinesh Paliwal, Chairman and CEO of Harman International Industries Inc " E 500 "Butschek 2 J.D. Power Ammar Master " Guenter Butschek, president and CEO of Beijing Benz Daimler Chyrsler www.chainaonline.com NOVEMBER/DECEMBER 2009 25 FEATURE Story 2010E-Class " " TATA " "TATA R S Thakur " 2009 J.D. Power "Planet Retail Tim Dunne Robert Gregory 20 12 Songlin Mei, 4 JD Power 5 TATA TATA NANO TATA " " AlixPartners Asia LLC. Ivo Naumann" " "J.D. Power " 2009 " 2010 " 2010 25%-3% " 26 NOVEMBER/DECEMBER 2009 www.chainaonline.com FEATURE Story China's Ports and Global Integration Where to Now? By Peter Stokes In March 2009, the Central People's Government of the People's Republic of China, endorsed Shanghai's strategic goal to establish itself as a world-leading International Shipping Centre by 2020. This envisoins Shanghai not only as a leading port, but also a leading transportation and logistics hub, with the infrastructure and IT services to facilitate multi-modal trans-shipments and global supply chain integration. It also aims to be a major centre for shipbuilding and repair services, cargo and vessel insurance, and ship financing and brokering services. A groundbreaking initiative to establish the country's first arbitration court to decide international disputes is being planned, as well as infrastructure and enticements to lure Yangtze Delta cargo owners to use more waterways instead of expensive, congestion-causing road transportation. According to the People's Daily, Shanghai cargo throughput rose 3.6 percent in 2008 to 582 million tons, making it already the world's busiest port for the fourth consecutive year. Shanghai overtook Hong Kong as the number two container port in the world with 28 million Twenty Foot Equivalent Unit containers (TEUs) in 2008, while Singapore as number one handled 29.9 million TEUs. While Singapore is primarily a trans-shipment port, Shanghai is primarily an import / export cargo port serving the Yangtze area and the hinterland beyond, with very clear potential to grow significantly as both a gateway port and a trans-shipment port. In total, according to Frost and Sullivan, China is projected to handle 107 million TEUs in 2009 with average six percent annual growth up to 2015, with a projection then of over 200 million TEUs. Economic uncertainty However, all is not rosy. China's container traffic has plummeted; container volumes were down 15.5 percent year on year for the first half of 2009. While there is much talk of "green shoots," with unemployment rates still rising in the US and Europe, there is a groundswell of opinion suggesting a double dip recession--the next one in 2010, putting 28 NOVEMBER/DECEMBER 2009 www.chainaonline.com FEATURE Story That trading is complex in China, and yet, how does the country handle over 107 million containers every year and how did Shanghai become the number two container port in the world? The shift to efficiency Part of the answer is in China's use of technology to collaborate electronically with all the port community participants � ocean carriers, Customs, Quarantine, cargo owners and so on. Let's look more closely at Shanghai as an example � it has similarities with other ports on China's east coast, but also its own unique characteristics. In 2001, Shanghai E&P International was established as a privately held, state-owned enterprise, a joint venture between Shanghai Information Investment Inc. and other governmentlinked organizations including the Shanghai Port Authority, the Shanghai Customs House and the Inspection and Quarantine Bureau. It was established to create a single window for Shanghai port, a "Three-in-One" service that integrated three disparate electronic services to provide a port and logistic information exchange platform (www.easipass.com). Shanghai E&P's "Easipass" provides a business collaboration and information exchange platform used for carrier operations, port operations, port administration, customs clearance, quarantine inspection, duty payment, and shipment bookings. Companies have visibility into port operational data, document status and end-to-end logistics information. The platform also helps carriers, forwarders and brokers comply with the advanced electronic notification requirements of Customs Decree 172. The platform handles more than 50 different document types in many different formats and processes 100 million transactions each year and more than RMB300 million electronic payments per day. A key feature of the technology is the use of client endpoints to speed the on-boarding of partners. Shanghai is similar to many other ports in China in that its port electronic collaboration platform is operated in a public-private partnership model, originally from a state-owned enterprise. Port community systems in China are evolving to provide more value-added information services, with platform governance and end-to-end visibility becoming critical tools to monitor, analyze, predict and prevent logistic chain problems before they become critical. Visibility also provides near real-time views into performance against service level agreements (SLAs), and allows for the tracking and optimization of key performance indicators (KPIs). China ports, of course, seem well positioned to weather the economic downturn, and despite the current situation, there will inevitably be a recovery. Growth has been driven by globalization, and technological innovation has enhanced the competitiveness of China's port. It is inevitable that this momentum will continue. Peter Stokes an industry veteran with more than twentyfive years of experience in trade facilitation, logistics and customs, is Regional Director (e-Trade) with Axway Ltd. more pressure on ports and ocean carriers, already with excess capacity and more coming on stream. Within this context, China ports face many of the challenges of their counterparts elsewhere in the world � how to most efficiently serve their primary customers, the ocean carriers; how to maximize the use of their terminal assets frequently; how to cost-effectively integrate with myriad global supply chains; how to protect trade chains against the threat of terrorism; and how to cooperate with the local Customs authorities in balancing the need for fast clearance of goods with the need to comply with trade and customs regulations. China ports are also different in that they need to operate within the boundaries of more complex trade, customs and security regimes. As an example, in support of global measures to combat the threat of terrorist disruptions to integrated global supply chains, China Customs promulgated Decree 172, mandating that from January 1, 2009 24-hour advanced electronic manifests and related cross-check information be submitted to China Customs in the specified format. For ocean containers coming into China, carriers are required to submit the main data of the original manifest 24 hours prior to loading at the port of origin; consignees and/or customs brokers cannot declare the goods to Customs until the original manifest is accepted by Customs. Secondary data such as house bill information must be submitted by the carriers electronically prior to arrival, and electronic tally reports are required to be submitted by companies operating customs-controlled premises within six hours of arrival. There are similar complex requirements for exports. www.chainaonline.com NOVEMBER/DECEMBER 2009 29 FEATURE Story Ports and Terminals Update � Key Points As the charts below suggest, recent statistics on throughput at China's major ports reflect the impact of the global financial crisis on the economy. While results are not out yet for 2009, most ports, while showing some improvements in recent quarters are expected to handle less capacity than last year. The big question: are recently improved GDP numbers, manufacturing capacity and exports a result of replenishment and Christmas orders or are they a false indicator, fueled by stimulus measures? The first quarter next year should paint a clearer picture. Container Throughput Volume of China Top 7 Ports 0,000 TEU 2900 2500 2172 1808 1619 1093 1002 850 503 453 1310 767 764 637 337 1847 2615 Shanghai 2000 2110 2142 1823 Shenzhen Qingdao Ningbo - Zhoushan Tianjin Xiamen Dalian 2801 1500 1000 630 526 480 334 268 770 714 595 401 321 2006 946 943 710 463 381 500 0 2005 2007 2008 2009(Jan - Sep) Shanghai Port Trade Value and Container Throughput Volume Billion USD 700 600 606.56 500 400 300 200 428.75 520.91 261.5 145.5 180.8 160.03 95.62 90.74 186.37 280.0 393.65 212.91 217.2 162.19 266.57 328.48 192.43 182.3 169.12 82.80 86.31 100 86.51 73.52 0 2004 Export Value Import Value Year 2005 2006 Total Trade Value (Billion USD) 2007 2008 2009(Jan-Aug) 2009 statistics not full year result Shanghai Port T/P Volume (00,000 TEU) 30 NOVEMBER/DECEMBER 2009 www.chainaonline.com FEATURE Story China PMI and Shanghai Export + Import Laden Throughput PMI (%) 65 60 55 50 45 40 35 30 25 20 15 10 55.1 58.6 56.1 55.7 54.5 58.4 59.2 56.1 54.0 55.4 55.3 53.2 53.0 53.3 52.0 48.4 48.4 44.6 41.2 38.8 45.3 53.4 51.2 53.553.1 52.4 MTEUs 1.9 1.8 54.0 53.3 1.7 53.1 53.3 1.6 1.5 1.4 1.3 1.2 2007 2008 2009 1.1 1.0 0.9 0.8 1.44 1.28 1.44 1.61 1.58 1.55 1.65 1.63 1.58 1.56 1.57 1.61 1.67 1.29 1.76 1.75 1.76 1.77 1.72 1.83 1.45 1.27 1.01 1.61 1.65 1.68 1.65 1.45 1.61 1.49 0 1.57 1.68 5 0.7 0.6 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 Shanghai Export + Import Laden T P (M TEUs) CFLP PMI Ports and Terminals - Fast Facts � Shanghai and Shenzhen, showed the sharpest decline relative to other major ports, although it should be noted that port throughput statistics are not just for import and export and include domestic cargo. Throughput drop in some Northern Ports are offset by domestic cargo. 2009 China PMI (a monthly index measuring manufacturing) has climbed up from a historic low recorded in November, 2008 and give hope that the decline has stabilized. � A number of large scale infrastructure projects geared at supporting logistics in the Shanghai Bay and Yangtze River region have completed and are nearing completion which gives hope for the Container Terminals, especially in Shanghai, which have suffered the most. � Cosco Pacific, the world's fifth-largest port operator, predicted container throughput at mainland ports would increase five to 10 percent next year thanks mostly to government stimulus packages. � According to many sources, the government has shifted its attention from coastal ports and is focusing their attention on infrastructure in 15 key inland cities, especially those on the Yangtze River. Some port and terminal operators, eager to win inland cargo business are following with investments. www.chainaonline.com NOVEMBER/DECEMBER 2009 31 CASE Study A Kanban-Driven Material "Supermarket" at Braun, Shanghai, Limited Lean Production Background When James Womack and Daniel Jones visThe Braun Shanghai Limited manufacturing ited the Toyota production plants in 1982 plant is located on the outskirts of Shangthey were struck by the firm's superior hai and comprises a legacy factory dating process management capability which they from the 1980s. "When I came to Shanghai dubbed "lean production." They describe in 2007, the warehouse at our factory was how this translated into Toyota's ability to traditional in its design, with corresponding manage "a series of actions conducted systems and practices," said Liam Cassidy, properly in the correct sequence at the right General Manager, at Braun Shanghai Limtime to create value for customers" (Lean ited. I wanted to implement a full program Solutions, Womack and Jones, 2005). of Lean Manufacturing Practices from supToday, as global enterprises become plier to the dispatch of our final product. The ever more aware of the strategic importransformation of our warehouse to allow tance of managing the entire supply chain, for this was critical." lean thinking is being applied There were a number outside the production shop of practical inconvefloor and into the full specLean thinking niences at the plant that trum of supply chain activipresented serious chalis being ties. lenges to achieving this This case study reviews applied goal. The long narrow an initiative at the Braun outside the shape of the factory and production plant located in production warehouse buildings gave Shanghai, China in which lean shop floor and rise to long travel disprinciples were applied to imtances from warehouse proving manufacturing inveninto the full to production areas and tory control through streamspectrum of produced congestion lined warehouse operations supply chain of traffic and materials incorporating a kanban-driven production-warehouse activities. materials supermarket. By Patrick Daly, Alba Logistics interface. Additionally, there was no dock leveling equipment for the loading and offloading of vehicles servicing the plant. Project Aims and Goals The major aims and goals of the project were to develop a design solution layout for the warehouse providing: � Easy and rapid access to all materials in the warehouse. � Improved material flow and labor productivity in the warehouse. � Improved service to production lines. � Improved inventory management across the plant. Project Challenges The major challenge facing the plant was accommodating increasing quantities of transactions during routine work as throughput volumes continued to increase coupled with the re-education of the warehouse staff to adapt to the new ways of working. On the facilities side, the major challenge was to greatly enhance the use of physical space and access to materials in the warehouse while at the same time maintaining very high level of health and safety compliance and material security. Figure 1 � Before: Work Order Based Batch Picking at Dynamic Location Figure 2 � After: Supermarket Kanban Based Pull at Fixed Location 32 NOVEMBER/DECEMBER 2009 www.chainaonline.com CASE Study Supermarket Zone Rack SM Material 1.8M Replenishment Put off Call Off Material Bulky Zone Rack Picking with Pull Card Bulky Material Bulky Zone Rack Warehouse Figure 3- Schematic Material Flow between Warehouse and Production Production Line Additionally, WMS system changes would need to be incorporated to support the new ways of working and the improvement in the control and accuracy of inventory. within about 30 percent of the floor area that was previously used for picking. The Data Optimizing the size of stock location for materials and the access routes to the locations required a careful analysis of both historical data and future case scenarios. The main items of data required were; � Stock movement transactions spanning a period of 12 months. � Material Master Data for each and every SKU item code. � Dimensional data by SKU with both supplier and issue pack dimensions and weights. � Current storage equipment type, location and capacity and suitability for reconfiguration. � CAD drawings of warehouse buildings, docks and yard. The Analysis A range of analyses was carried out and included a combined analysis of the Movements and Master databases. The daily and weekly movements per SKU were calculated both in terms of quantities and volume and a cross check done against the Planners' current schedules in order to validate figures. In addition, an analysis was carried out to identify those SKUs deemed suitable for insertion into "supermarket" shelf modules Formulation and Implementation The Approach Because the project involved the overhaul of the current state operations rather than a simple modification, the structured approach used to tackle the challenge followed the DMEDI (for Define-MeasureExplore-Develop-Implement) improvement model. The Solution The main characteristics of the solution were as follows: � Value Streams are grouped together in order to facilitate access to replenishment and picking. � SKU item codes that are common to more than one Value Stream are located in a central passageway that is always traversed by pickers. � SKU item codes with large box sizes are also located in the central passageway adjacent to the common items. � Replenishment and picking take place in mutually exclusive dedicated aisles thus ensuring that fork lift traffic and pedestrian traffic are separated. � 80 percent of picking now takes place as distinct from those deemed to be "bulky" and requiring pallet pick locations. A range of criteria including dimensions, weights and throughput were used for this distinction. Finally, an analysis was carried out to identify those SKUs that were unique to a particular Value Stream as distinct from those that were common to more than one Value Stream in order to inform the layout and flow for dedicated picking routes. Getting it Done - Production Side On the Production side the specific elements of work that had to be undertaken included determining the One-Time Picking Quantity and the related information required on the kanban pull card. It was also required to determine ideal trolley size and format to transfer issue packs back and forth to the warehouse and to implement. Getting it Done - Warehouse Side On the warehouse side, it was necessary to quantify the projected warehouse workload and compare current state operations with future options. Following on from this was the definition of the physical locations for material within the racking and shelving and setting up the beginning inventory with clear visibility of information on the rack. On the systems software and hardware www.chainaonline.com NOVEMBER/DECEMBER 2009 33 CASE Study side it was required to clarify with the system vendor the specification and functionality of the scan solution for data capture and then install, test and commission the hardware and software. A structured training programme for operatives on the new procedures was an integral and necessary component of the work. now take place from the ground. Reduce Material Issue Lead Time This was reduced from over four hours on average to less than one hour. In the previous arrangement, production was required to submit a picking slip to the warehouse one shift in advance of its requirements with resultant low flexibility. In the revamped regime, the pickers simply select the material required through kanban as a function of line demand. This provides much greater flexibility and a speedy response to changeover requirements. Reduced Inventory on the Shop Floor Previously the process orders were for one to two shifts-worth of demand. This made it very difficult to follow the 5S guidelines for an organized workplace. During changeovers there was a risk of confusion and mixing of materials. This has now reduced to two to four hours of line output. for a variety of reasons. It is therefore imperative that dimensions are verified and the necessary corrections made before proceeding with analysis. � One of the crucial challenges of the solution formulation was to strike the right balance between the travel time for pickers selecting materials in the supermarket and the frequency of replenishment into the supermarket. The larger the supermarket bin-locations the lower the frequency of replenishment but the longer the dedicated pick routes. � The final solution allowed for an average of one week's usage to be accommodated within the supermarket with all SKUs accessible by means of simple manual picking from the ground. The supermarket area now accounts for over 80 percent of all picking activity from ground level on just 30 percent of the previous footprint. Patrick Daly is Managing Director of Alba Consulting Group, which provides consulting and training to best-in-class operators in manufacturing, distribution and logistics services across Europe, Asia and North America. He can be reached at email@example.com. Results and Benefits The three major benefits obtained from the implementation of the kanban supermarket were as follows: 1. Increased work efficiency. 2. Reduced material issue lead time. 3. Reduced inventory on the shop floor. Increased Work Efficiency The overall reduction in goods issue/picking time was 28 percent and this was achieved through a combination of factors. The defined delivery routes reduced the non-value added walking and consolidated the movement activities covering all materials movements. Another crucial factor was that previously work order picking had taken place on all four storage levels in the warehouse using a turret truck/order picker. With the supermarket, almost all kanban picking could Lessons Learned � High quality systems data is an essential foundation to conduct an accurate analysis. This is particularly true of the dimensional data on supplier and issue packs held in the Master data file. � Dimensional data is often not well maintained in enterprise system databases "" -- James WomackDaniel Jones 1982 "" -- " WomackJones2005 "" � � � � 2080 Liam Cassidy"2007 " 34 NOVEMBER/DECEMBER 2009 www.chainaonline.com CASE Study 1� 2� � �SKU �SKU � �CAD SKU SKU" " SKU SKU DMEDI � �SKU �SKU � �80% 30% 1. 2. 3. 28% 4 www.chainaonline.com NOVEMBER/DECEMBER 2009 35 CASE Study 1-2 5S 2-4 SM 1.8M � � � 3 � � SKU 80% 30% 36 NOVEMBER/DECEMBER 2009 www.chainaonline.com FOCUS Green Supply Chain Management readies for a green explosion he implications of Green SCM for companies in the Asia Pacific region are wide reaching. CHaINA Magazine spoke with Nicolas Pechet, Vice President, China of GIA Group in regard to new research they have done into sustainable practices in the manufacturing and logistics industries in the Asia-Pacific region. Why is green SCM so important to international purchasing or production directors? Nicolas Pechet (NP): Ultimately, "green" supply chain management offers an expanded way to think about cost reduction and profit enhancement. We have seen how a dip in Western consumption creates severe problems for Asian suppliers, amongst both direct manufacturers and subcontractors. This creates a great deal of operating leverage between Asian manufacturers and Western markets today. Western businesses can use this leverage to push for more environmentally sustainable manufacturing, sourcing and logistics practices in the Asia Pacific region. However, pushing better green practices will require Purchasing, Supply Chain or Production directors to have a keen understanding of the local practices and unique regulatory landscape of each Asian country they operate in. T "Case studies can be incredibly insightful and yield green SCM best practices to reduce costs and increase revenues. Seasoned and well informed SCM executives study and learn from such cases continuously." explains Mr. Nicolas Pechet Asian examples of "green" best practices The Chinese sugar refinery and Indian paper firm case studies brilliantly apply the green "3Rs" principle of "Reduce, Reuse and Recycle"; with both firms diversified into related industries - sugar, paper, alcohol and cement � and utilizing waste products of the other industries as raw materials or for power generation. Case studies also highlight the importance of building effective incentives with external parties (suppliers, competitors, customers and government) to improve the robustness of the supply chain system on all levels: local, national and international. Reduce, Reuse & Recycle waste products Establish supporting network of external parties motivated to ensure sustainability of green supply chain 1.Logistical centralization for economies of scale. 2.Share logistical overhead with partners for cost reduction. 3.Optimize transportation routes to further reduce costs. Raw materials for another product Energy generation for plant Suppliers Government Customers Competitors 38 NOVEMBER/DECEMBER 2009 www.chainaonline.com FOCUS Green We are now seeing that countries worldwide are starting to harmonize their environmental regulatory regime with each other. It's becoming a global phenomenon. It started in the major market economies and the emerging economies and less developed countries are following suit. Can you give an example of different Asian environmental regulations, and their implications? NP: China for example, has passed its own RoHSequivalent regulations and has enacted a comprehensive set of laws on air, water, & waste. However, enforcement continues to be an issue and comprehensive producer responsibility legislation is still being developed. India, on the other hand, has bundled many laws into the broader Environment (Protection) Act, with less liability seen along the supply chain. Material mandates deal largely with direct health impacts and have not moved to clearly encompass a broader range of materials beyond those that are directly related to health. These issues have far reaching implications for a broad spectrum of international businesses. What advice would you offer SCM executives working on "greening" their companies' supply chain? NP: Companies need to look at successful cases where green practices have been implemented in the supply chain. While Green SCM is a relatively new phenomenon in China, there are cases of successful implementations and not just from foreign companies. More effort needs to be made to write these cases and bring them into the broader community to set a benchmark of best practices. One such case is that of Guitang Group, a Chinese state owned sugar refinery. Nicolas Pechet, Vice President of China, GIA Group China Case Study: Green manufacturing: Guitang Group has an internal GSC that allows re-use of by-products Company and Industry Background Established in 1956, Guitang Group (GG) is a state-owned enterprise operating one of China's largest sugar refineries. The company is involved in four other businesses using residue from the sugar process: 1. alcohol plant using molasses, 2. pulp & paper plants using bagasse, 3. cement mill using carbonation filter mud, 4. compound fertilizer plant using alcohol residue. The industry included >400 sugar firms pre-2001; many were non-competitive and loss-making due to the small scale of most sugar refineries in the industry, and consequent high after-tax production costs; most plants' margins were very low and their costs were very close to the international price of sugar. Consolidation in the industry is ongoing; there were <200 sugar firms across 24 provinces in 2007. Guitang Group's green manufacturing plan (3-steps) 1. Maintain close, long-term relationships with main suppliers (sugarcane farmers), to ensure sufficient supply of high-quality raw materials. 2. Produce high-quality products (sugar) using best technology. 3. Develop related industries that use sugar's co-products, by-products & residual products, leading to a "closed loop" system of material energy flows. Alcohol plant takes used molasses from sugar refinery as raw material; alcohol residue is used by fertilizer plant to make compound fertilizer. Carbonation filter mud residue harder to dispose of and normally needs treatment, but instead is used as raw material input for cement plant, thus earning extra revenues. Bagasse residue used to make paper; alkali recycled from black liquor generated in pulp process; white sludge generated is used in cement process; white liquor waste from paper process recycled. Sugarcane farmers Fertilizer sold back to farmers, closing the loop. Sugar crushed, ground & refined using carbonation process that yields higher quality refined sugar (>prices that are higher by 30-35%) instead of sulfitation process used by majority of other plants due to ease of disposal of filter mud as direct fertilizer. Sources: (1) Access Asia (2008). (2) Zhu, Lowe, Wei & Barnes (2007). (3) Zhu & Cote (2004). Pith used as fuel by cogeneration power plant (50% SO2 emissions compared to coal) with alkaline wastewater used as input to "dry" & "wet" scrubbers and gypsum produced provided to farmers; cool ash used by cement plant and for road construction. www.chainaonline.com NOVEMBER/DECEMBER 2009 39 FOCUS Cold Chain Increasing Demand for Cold Chain Logistics in China N ew research by Jones Lang LaSalle (JLL) predicts huge potential for China's cold chain logistics sector. According to JLL, opportunities exist for investors and developers due to the expected increase in demand and current lack of maturity in the market. "China's consumer food market has experienced vigorous growth in the past decade," noted Stuart Ross, Head of China Industrial, Jones Lang LaSalle. "Traditional eating habits in China are changing. As incomes rise, Chinese consumers are eating more animal protein and dairy products, as well as convenience food and snacks like frozen meals and ice cream. At the same time, Chinese consumers are becoming more aware of food safety issues. Taken together, the need to develop a more robust cold chain infrastructure has been greater than ever." However, China's cold chain market is seriously underdeveloped. It is estimated that only 15% of products that should be temperature-controlled are handled properly. Because of that, large amounts of fruits and vegetables spoil, putting human health at risk. The situation can be attributed to Millions sqm Millions cubic meter regulatory immaturity, inexperience and lack of awareness among Chinese consumers, undeveloped infrastructure, inadequate service providers, and lack of human capital. In some of the big cities in China, regional cold chain logistics systems are emerging. Increasing internationalization brought by events like the Olympics, the Shanghai World Expo, and the Asian Games in Guangzhou have been driving the development of cold chain in the Tier I cities. Tier II cities with large export markets such as Qingdao and Dalian are now seeing significant development as well. A growing number of foreign and domestic players are looking to build facilities in the country. Australia's largest cold chain logistics operator, Swire Cold Storage, entered the South China market in 2008; and recently, one of the largest US operators, Preferred Freezer Services (PFS), announced its plans for a cold storage facility in Shanghai. "From a real estate perspective, we believe that in the short term, the opportunities in the cold chain logistics market will remain in the Tier I and major coastal cities," added Ross. "Looking further ahead, we are confident that opportunities will surface across China." The report estimates that the market for 40 NOVEMBER/DECEMBER 2009 www.chainaonline.com FOCUS Cold Chain public refrigerated warehouses will grow Chinese consumer roughly 24 percent per year for the next five tastes are turning years in order to meet the demand of the towards refrigerated foods, which is growing consumer market and an increasingcreating demand ly dynamic food export sector. The growth for cold storage rate of cold or refrigerated warehouses is predicted to be even faster than that of regular warehousing space, a high growth market in itself, compared to the standard modern warehouse market (see figure 1 & 2). "The country will need a large amount of investment in training, business integration, and infrastructure, which we believe will generate considerable returns," says Ross. "Meanwhile, advanced expertise will be needed and regulatory oversight will have to be consolidated and improved. The immediate actions of operators throughout the entire chain of manufacturing, processing, logistics, and retail will be required," concluded Ross. As this magazine has reported before, China's cold chain sector has long held both opportunity and challenge. It will be interesting to see if both the government and the private sector are truly ready to make the required effort to implement a safe and efficient cold chain. 2009915 " " " " 15% Millions sqm , Millions cubic meter 2008 " "" " 24% -- " " www.chainaonline.com NOVEMBER/DECEMBER 2009 41 FOCUS Vietnam Vietnam's Textile Industry: Opportunity & Challenge Vietnam's textile industry has increased significantly since normalizing relationships with the United States in the 1990's. Vietnam was granted most favored nation status (MFN) in December 2001, which led to a dramatic reduction in import tariffs in the US market. Vietnam's induction to the World Trade Organization (WTO) in 2007 and the Vietnamese government's strong support of the textile and garment sector, have provided strong incentives to attract foreign investors. The textile industry is now the second biggest exporter in Vietnam and is expected to become the biggest in 2009. However the financial crisis has had a severe affect on Vietnam's textile industry, which has suffered from a slump in demand from key export markets in the US, Europe and Japan. Labor cost advantage In the textile industry, companies are increasingly looking for lower cost countries that can provide outsourcing opportunities. The rising cost of land and labor are diminishing China's labor cost advantage and Vietnam is increasingly seen as a low cost sourcing alternative to China. Estimates are that wage levels in Vietnam are about one third of those in China's coastal region. Companies that By Tielman Nieuwoudt are chasing lower labor costs are increasingly moving production to Vietnam. In a 2008 Booz Allen Hamilton survey, 88 percent of companies originally chose China for its lower labor costs. Of the companies surveyed, 55 percent believe China is losing its competitive edge to countries such as Vietnam. The survey also indicated that 63 percent named Vietnam as their top low cost sourcing alternative to China. However, costs may be rising. The Navigos Group, a leading recruitment solutions provider in Vietnam, announced early in the year that there had been a 16.47 percent increase in Vietnamese workers' average gross salaries between April 2008 and March 2009. Low cost location However, low cost labor is hardly a competitive advantage in the long term. Labor cost keeps changing and today's low cost location is not necessarily tomorrow's viable outsourcing location. If it is not China or Vietnam, it could be Bangladesh or Cambodia. Ig Hortsmann, a professor of business economics at the University of Toronto's Rotman School of Management notes that Nike originally off shored manufacturing to Japan. As labor costs increased, manufacturing was later moved to South Korea and Taiwan. When labor cost increased in South Korea and Taiwan, it was moved to China and later also to Vietnam. Justin Wood, a Director of the Economist Intelligence Unit Corporate Network in Singapore makes the point that in the last 15 years Vietnam has moved from a low to a middle income country. The move towards a middle income will likely put additional pressure on Vietnam's low cost labor status. The Vietnam advantage Elisabeth Rolskov, founder of ER-Couture in Vietnam, notes Vietnam is still a strong market for textile manufacturing, with some production shifting there from China. 42 NOVEMBER/DECEMBER 2009 www.chainaonline.com FOCUS Vietnam Elizabeth Rolskov says Vietnam's tradition of embroidery is a competitive advantage. that manufacturing advantages in Vietnam go beyond labor cost and the country has some competitive advantages compared to China. "Vietnam has very good embroidery skills and needle work", says Rolskov. "A lot of designers and manufacturers need embroidery skills and Vietnam has kept in touch with its traditional roots," she adds. However, for local designers, Vietnam has limitations as a sourcing location. "Sourcing material, buttons and zippers from Guangzhou is much better," says Rolskov. "In Guangzhou you can find everything in air-conditioned shopping areas and the shopping experience is less hectic." This can have a negative impact on a designer's creativity as the designer is restricted by what is on offer in the local market. Rolskov thinks Vietnam is currently a great location for smaller manufacturers as the market is more flexible. "China is more volume focused," adds Rolskov, a view supported by Rebecca Lebold, director of apparel product and technical development at Lilly Pulitzer. "Vietnam has higher production minimums than many other countries. Lower minimums would allow smaller companies to source their product in Vietnam," Lebold notes. Intellectual property threat For many companies outsourcing to Vietnam, intellectual property (IP) remains a concern. Within the fashion industry, IP is not as enforced as it is within the film and music industries. Designers can "take inspiration" and it is seen as a major driver for setting trends in the industry. The World Intellectual Property Organization (WIPO) has called for stricter intellectual property enforcement within the fashion industry to better protect companies and promote competitiveness within the textile and clothing industries. "It is a hard thing to take care of and you just have to be faster than everybody else," says Rolskov. For smaller designers and labels it is much easier to switch manufacturing. However to prevent the copying of designs is a challenging undertaking. Infrastructure development For Vietnam to advance as an outsourcing location, the textile industry supply chain needs to be considered. Local logistics are influenced by direct and indirect cost. In Vietnam's textile industry raw materials are often imported, which increases cost compared with those countries able to source locally. Managing reverse logistics can also be a challenging undertaking in Vietnam. Procedures, processes and infrastructure are sometimes not in place to manage repairs, returns and warranties. According to a new market research report from Transport Intelligence (TI) entitled Vietnam Logistics 2009, the high cost of logistics remains one of the biggest stumbling blocks in Vietnam. According to TI analyst John Manners Bell, logistics costs are estimated at 25 percent of Vietnam's GDP. Even with cheap labor cost, poor infrastructure remains a major barrier for entry. This is largely due to Vietnam being in the early stages of infrastructure development. Many experts believe that China's advanced infrastructure gives it a major competitive advantage. Electricity and transportation costs will likely come down even further and and this will have a significant impact on the total cost, even if their labor is more costly. The Vietnamese government is aware of this dynamic and has invested billions of dollars in the country's infrastructure. The government is actively encouraging foreign direct investment in the country's infrastructure. This is visible with projects such as the Cai Mep Container Port in the Mekong River Delta and the new Long Thanh airport projected to be completed by 2015. Through assessing the overall supply chain, rather than a singular focus on labor costs, it is easier to identify where Vietnam's opportunities and challenges lie in the textile industry. While small scale designers and manufacturers take advantage of a flexible environment, infrastructure and logistics processes will need further investment to make Vietnam an outsourcing destination and source for tomorrow's fashionista wardrobes. Tielman Nieuwoudt, Principal, The Supply Chain Lab www.thesupplychainlab.com www.chainaonline.com NOVEMBER/DECEMBER 2009 43 FOCUS Region Journey to China's Industrial Heartland Lying at the east of the Jianghan Plain, and the intersection of the middle reaches of the Yangtze and Han Rivers, Wuhan is the capital of Hubei province, and is the most populous city in central China. Formed out of a merging of three boroughs, Wuchang, Hankou, and Hanyang, Wuhan is known as the "thoroughfare of nine provinces" and is a major transportation hub, with dozens of railways, roads and expressways passing through the city. On October 15-16, the Global Supply Chain Council organized the first Supply Chain Road show in Wuhan with various stops at key manufacturing and logistics facilities in the city. Senior executives from these companies gave presentations to the Council group about their company's operations and supply chain. About 40 people joined the Council road show from different places. By Russel Beron Why Wuhan? The engine of the Wuhan thoroughfare is steel, supplied primarily by large state owned steel makers such as Wuhan Iron and Steel. A solid supply is a good reason for steel intensive manufacturers to set up in Wuhan and is a key reason why automotive manufacturers such Dongfeng Peugeot Citroen, ThyssenKrupp Metal Forming, Brose Wuhan Automotive Systems and Alstom invested Wuhan Boiler Company, are located in this city. Logistically, Wuhan is far enough from Shanghai and other Eastern seaboard port cities to question its suitability for locating an export focused factory. Travel distance from Wuhan to Shanghai is about 1,200 kilometers, which will take an hour and a half by plane, one and half days travel by truck, seven days by barge and about 18 hours by train. Most of the companies our group visited had a mix of an export and domestic focus to their production, which would justify the interior location. A road hub The first roadshow stop was appropriately at the TNT/HOAU road hub. Located in the Wuhan Dongxihu Bonded Logistics Centre, the TNT hub occupies an area of 46,620 square meters, and has access to 6,000 vehicles, 5,000,000 square meters of warehousing, 1,200 line haul lanes and 350 sets of loading equipment. Jeff Wang, Vice President of Network and Operations, TNT/Hoau gave the group a presentation about the company's operation in Wuhan and broader strategy for China which is essentially to become the leading nationwide provider of "day-definite" transportation services. Apparently the company is well on the way to its goal and is currently second only to China Post in terms of its national network. The problem with China, Jeff Wang reminded the group is the fragmentation in the industry: "The top 20 providers control only two percent of China's logistics," Wang said. Compare this to the U.S. where the top five providers control 60 percent and Europe where the top 10 providers control 39 percent of the market. TNT/ HOAU's key goals are to improve delivery times, optimize transportation flows and continue to grow at a rapid pace. Gateway to consumer markets Coca-Cola Bottler Manufacturing Wuhan is another company poised for rapid growth. Coca-Cola outsources much of its operations to bottlers such as CCBMC, which it has a stake in. There are 17 production sites serving 32 bottlers across China. The Wuhan facility, which makes non-carbonated beverages, a high growth product in China, is a model plant completed only months before our visit. The whole site area is 100,000 square meters including 30,000 square meters green land. Their products include: Meizhiyuan Orange Juice, QOO juice as well as their other products. Logistic Manager for CCBMC, Li Rui outlined the green focus of the operation, which was built according to LEED Silver standards, a European stand and for buildings covering various green and CSR requirements. The plant is a model facility in the Coca-Bottlers empire and no doubt will be supplying the surrounding the Wuhan area with an endless supply of soft beverages. Also serving the consumer market both in China and abroad is TPV Display Technology (Wuhan) Factory, a company you likely have never heard of, but one of the biggest manufacturers of LCD screens for TV's and PC's in the world. 60 percent of TPV's goods are produced for export, with 40 percent for domestic. 44 NOVEMBER/DECEMBER 2009 www.chainaonline.com FOCUS Region Coca-Cola Bottlers Manufacturing Company's Wuhan facility is the company's newest production center for noncarbonated Coca-Cola products. Coca-Cola has 17 production sites serving 32 bottlers across China. Cars for everyone Powering the new China The automotive industry is one of the strong points of Wuhan, with One of the most impressive factories in terms of scale and potenDongfeng Peugeot Citro�n (DPCA) a key player. DPCA is a 50/50 JV tial is the Alstom invested, Wuhan Boiler Company. Located in the between Dongfeng Motor and PSA Peugeot Citro�n. The company's East Lake Development Zone in Wuhan, with a 140,000 square memanufacturing, component and castings plants produce 178,000 ter covered area, and an office of 15,000 square meters, the state cars per year, including the Citro�n Fukang, Elysee, Picasso, Tri- of the art facility was designed and built by French design and build omphe, Xsara, and Peugeot 307 and 206. Patrice Troublanc, Lo- company, GSE. The facility is a global showpiece for Alstom, which gistics Vice Director at DPCA, told the group from 2007-2009 the first arrived in China in 1958 to supply Diesel locomotives. company will produce a whole new line of products, with the goal With the capacity to produce 600 MW supercritical boilers, 1,000 of only 5 percent of the content coming from Europe. "We want to MW ultra supercritical boilers, as well as large circulating fluidized make a 90 percent Chinese car," said Troublanc. How do they do bed boilers, the goal for the facility, Jean-Jacques Bryckaert, Industhis? "We reduce costs in technical savings and purchasing negotia- trial Director for Alstom, told the group, is to become the R&D centions," Troublanc noted. tre and exporting base for Alstom in Asia-Pacific. The boilers are Keeping DPCA and other automakers in Wuhan supplied with used to fuel steam turbines which produce electricity via coal plants, parts are companies such as family-owned Brose Wuhan, a Ger- which are being built at the rate of one a week in China. How will man auto parts supplier which makes window regulators and seat Alstom compete with lower priced competitors? "Through bringing systems for GM, DPCA and also domestic OEMs such as Geely and the most advance technology to China and being the seller of the Chery. Marc Bourgeois, Brose Wuhan's General Manager informed technology," said Bryckaert. the group about Brose's logistics processes and high targets of SEC Areva is another state-of-the art factory, completed in May tripling revenue growth by 2011. "There are lots of opportunities of 2009. Areva is proud to bill the plant, which makes Ultra High to localize," Bourgeois said, referring to the potential to serve Chi- Voltage transformers, as a benchmark for green factories in China. nese customers. One of the issues in Wuhan is "finding people with Maria Ma, Supply Chain Manager at Areva gave the group a tour certain skills," Bourgeois told the group. of the facility which was built in ac"We've had the best luck with bringing cordance with energy savings and people back from other cities that have a CO2 emission reduction specificaWuhan background." tions. Thyssen Krupp Metal Forming is anState of the art facilities such other supplier focused on the auto sector, as Areva, Wuhan Boiler Company making chassis and body parts. The comand Coca-Cola Bottlers give the impany supplies a variety of OEMs such as pression that China is much further Chang'An Ford Mazda, DPCA, SVW, BMWalong the manufacturing valueBrilliance among others. "The two Thyssen chain than is commonly believed. Krupp plants in Wuhan have a locational The impression Wuhan gives is advantage in that they are close to suppliof a strong heart pumping China's ers and customers," said Yongwei Jiang, manufacturing life-blood. Jeff Wang of TNT leads the Council group through TNT's Wuhan hub. Deputy General Manager, ThyssenKrupp. www.chainaonline.com NOVEMBER/DECEMBER 2009 45 FOCUS Event What's up with RFID in China? James L. McLean Owner, JL Mclean Consulting A ccording to James Maclean, an old hand in Radio Frequency Identification (RFID) circles who now consults to the industry, "The RFID market principally in Europe and North America, and the emerging markets in Asia, to date, has struggled to reach large scale adoption for reasons of a common standard, product performance, costs and benefits over existing methodologies." Speaking at a Council workgroup in September, Maclean gave an update to the group on improvements in RFID solutions designed for supply chain management. "If you look at the history of RFID tags," said Maclean, "One of the expectations that came out was that RFID tags would be very low cost, which hurt RFID all the way through." Past problems include a lack of materials and standards. An accepted standard was finally passed in April 2005, which covers the way data is formatted and presented. "In the past, there were problems with readers operating in close proximity," he said. Since 2005, many of the issues that have plagued RFID applications have been overcome, but there is still obviously room to improve and to apply RFID more widely across every part of the supply chain. Change has been driven by the endusers of the technology, such as Metro, who have demanded that readers and antenna companies improve their technology so that readers will be able to read multiple tags, Maclean told the group. "Projects failed in the past because of the higher cost and range of tags." Metro has demanded a reliability figure of 98 percent among RFID technology provid- ers such as Intermec, Sirit and Avery Denison. In tests that Metro has done on pallet tagging in their "Future Store," a facility designed to test for testing purposes, Metro was able to tag 99 percent of their products, Maclean said. As the range of technology continues to improve with Bi-directional phased array (BIFAR) and radar used more widely to do things such as manage inventory and plan store layouts, more widespread usage should occur. "The new innovations will help prevent shrinkage and bring much wider use for the tags," Maclean noted. RFID usage in China is also on the rise, as the Chinese government uses the technology more frequently in an attempt to comply with Western companies who need their products tagged. The government's next five year plan includes usage for RFID tags in areas such as automobile identification, vehicle plate management and other ways to manage the Chinese populace such as in ID cards. Given China's fast growing consumer market, we expect to hear a lot more about RFID in coming years. 46 NOVEMBER/DECEMBER 2009 www.chainaonline.com FOCUS Event The Search for a China Pallet Standard S Continental Automotive takes the lead on bringing pallet standardization to China. The big question is which size to use as a standard: the Euro pallet with 1200 x 800mm Euro pallet, the 1200x1000mm pallet or the 1100x1100mm pallet or one of the many others? According to Pazun, all of these pallet sizes show relatively low utilization factors in the Chinese trucks. However, there are two pallet sizes, which show very good utilization rates in sea freight containers and trucks. These are the 1140 x 980mm and 1140 x 790 mm pallets. Based on Continental's analysis, depending on the type of goods transported, either pallet achieves a high utilization in standard containers and truck cargo areas. Both also prove compatible with most Chinese trucks in current use. Pazun also notes that both of these two pallet sizes have a small difference in size to the two most common pallet sizes: 1200 x 800mm and 1200 x 800mm. ymptomatic of the fragmentation in China's logistics sector is the lack of standardization in truck and pallet sizes among the thousands of players in the logistics industry. Speaking at a Global Supply Chain Council workgroup in Shanghai in September, Farid Pazun, a logistics specialist in freight and packaging at Continental Automotive, said that "The diversity of pallet sizes and the incompatibility of pallets and containers with Chinese trucks decrease the efficiency of logistics processes." The problem As China went through an accelerated industrial revolution, foreign players arrived in droves bringing with them a multitude of manufacturing processes and standards which extended to packaging. In many cases they did not take into account local conditions. The solution "The result is a huge diversity of pallet sizes and low and improper According to Pazun, "These two pallet sizes present an opporutilization rates of pallets in Chinese trucks tunity to set a standard which is beneficial and in standard sea freight containers," Pafor the Chinese economy and different zun said. supply chain parties in terms of reducing An analysis of Continental Automotive their transportation costs, which can reach Group's tier one suppliers revealed that about 50 percent of total logistics spendseven out of nine plants in China showed ing." The recommended pallet sizes will be a packaging diversity of about 20 different implemented by Continental Asia's sourcing pallet sizes and more than 40 different box supply chain and usage will also be encoursizes currently cycling in the supply chain. aged on the distribution side. Farid Pazun The survey, conducted by the Continental Continental's pallet standardization projLogistics Automotive Asia team, revealed ect has been introduced to governmenthat among just four different automotive tal organisations such as the ministry of suppliers, there are 34 different pallet siztransportation and other automotive supReducing this es in use. "Reducing this number of pallet pliers such as Bosch, ZF, Behr and Brose number of pallet sizes in the Chinese market to just one or as well as to OEM's such as Shanghai GM two brings huge supply chain and monetary sizes in the Chinese and Shanghai VW. "The feedback has been benefits to the OEMs" said Pazun. very positive so far and the implementation market to just one in the supply chain is already in progress," or two brings huge The analysis says Pazun. supply chain and Currently used pallets, especially the Professor Qingyi Wu, the founder of the Euro pallet, with a size of 1200x800 mm monetary benefits Pallet Committee China and the vice chairshow very low ground utilization factors and man of the China Federation of Logistics & to the OEMs result in customers shipping a lot more air. Purchasing, noted that "These sizes need The utilization rate of the Euro pallet in a to be introduced to Chinese suppliers and standard 20' container is about 77 percent and in Chinese trucks OEM's to make sure it is implemented in the whole Chinese domesaverages about 80 percent. The inefficiency and cost saving poten- tic market. This increases the efficiency, supports the standardisatials are obvious. tion process and makes for a smoother supply chain." www.chainaonline.com NOVEMBER/DECEMBER 2009 47 FOCUS Expert Planning for Economic Recovery: The luxury retail industry is one sector that has weathered the economic downturn well and is now planning to grow from strength to strength. This article summarizes the experiences of a US luxury retailer as they evaluated options for establishing a Regional Distribution Centre (RDC) on Mainland China. What was the regional footprint of the business in Asia? Well-established third party manufacturers (services providers) were located in China, Vietnam and India. Related party distributors existed in Japan, China, Hong Kong, and Macau whilst third party distributors supported the remaining markets in Asia. The third party manufacturers sold and shipped products to headquarters in the US, where a global RDC existed. Headquarters then sold and shipped products to the respective related and related party distributors in Asia. With markets in the West suffering and all markets in Asia yielding revenue growth for the company, particularly Mainland China, it become imperative to reduce logistics costs and lead times by locating inventory destined for consumption in Asia nearer to distributors. What location options were considered? An internal study identified a short-list of potential locations on the Mainland, namely Futian, Yantian, and Shanghai. Hong Kong was also included in the short-list due to the presence of a mature logistics infrastructure and well established international service provides. The internal study confirmed that Hong Kong was comparatively more expensive � up to three times in storage costs � which forced further study in respect of options on the Mainland. Establishing a Regional Distribution Centre in China By Damon Ross Paling What were the key considerations when evaluating Mainland China? We recognized that the range of bonded zones available has rapidly evolved, so deciphering which zone(s) was best placed to support our business needs was the primary obstacle to overcome. Thereafter, we aimed to focus on more specific issues of comparison, such as the ease of customs clearance and management, exemption from quarantine and inspection and other nontariff barriers, relaxed foreign exchange controls, and use of Free Trade Agreements. Last but not least, we did not want to adversely disrupt or create additional costs for our third party manufacturers regarding export VAT refund and logistics costs. How was evaluation of the bonded zones in Mainland China approached? As noted above, we firstly acknowledged that the landscape in China has rapidly changed from having very few, if any, bonded zone options that may support an Asia RDC, to having several. We saw this as a risk to manage as well as an opportunity for our business. Firstly, we methodically evaluated the various bonded zones, focusing on the following: � Bonded Logistic Park (BLP) � Bonded Logistics Centre (BLC) � Bonded Port Area (BPA) � Bonded Warehouse (BW) � Export Processing Zone (EPZ) � Free Trade Zone (FTZ) � Integrated Bonded Zones (IBZ) We quickly sought to evaluate the pros and cons of the different types of bonded zones, as related to the needs of our business, experience and resources. Some key issues identified are for certain zones were as follows: EPZ � Logistics function is only newly established and underdeveloped. 48 NOVEMBER/DECEMBER 2009 www.chainaonline.com FOCUS Expert � Location is slightly inland, therefore requiring bonded transport and increased lead-times and cost for certain product flow movements. BLP / BLC � Specifically designed to support RDC operations � So-called "inbound China originating goods" qualify for export VAT refund. � Warehousing costs may be comparatively high and re-imported goods of Chinese origin will be assessed customs duty and import VAT. We also compared the bonded zone options in a number of areas, including: � Storage period � Maturity of rules � Administration of the actual bonded zone � Sea freight options in terms of frequency and coverage for intra-Asia trade � The distance from the sea/airport for bonded transfer costs and delivery times � Export VAT refund for third party manufacturers, which is particularly sensitive for the apparel and textile sector We were therefore able to narrow the list of potential zones to a BLP. The question was whether to be based in Futian, Yantian or Shanghai. How was `ease of Customs clearance and management' measured? As we all know, many statistics and reports address the question of how easy it is to clear products in and out of a country. Key indicators include declaration time, inspection rate as well as authorisation and documentation requirements. All of these need to be built into the decision making process so that no unnecessary or unexpected barriers crop up at implementation. To the greatest extent possible we benchmarked these across the different bonded zones. At the same, we also noted that an individual Customs Officer may still impact on processes, but planned for this to be the exception, rather than the rule. What concerns existed about the declared dutiable value of goods? We noted that customs valuation issues when moving goods into and out of a bonded zone can be sensitive. Depending on which entity is responsible for import declarations and regardless of whether any import taxes are due, determination of the appropriate import value can be complex. We mapped out our transaction scenarios and based on the customs valuation rules in China developed a standard operating procedure for determining the dutiable value declared to Customs and appearing on invoices. What concerns existed about quarantine and inspection and other non-tariff barriers? One the attractions for considering locating in Hong Kong were the certainties surrounding quarantine and inspection and other non-tariff barriers. However, the operating cost of being located in Hong Kong was prohibitive, hence the necessity to turn towards the Mainland. We all know that quarantine and inspection requirements are another main element to impact the efficiency and effectiveness of an RDC. Based on the HS Codes of products and the bonded zone in question we evaluated just how complex the requirements are to apparel and textile products and related accessories. We sought to establish standard operating procedures so as to ensure compliance, without putting in place too much headcount to support the operation. What concerns existed in terms of foreign exchange controls? Similar to the quarantine and non-tariff barriers, this was a concern relative to Hong Kong, but just another issue that we methodically approached. However, to enhance the privilege of bonded zones and support the development of RDC business in Mainland China, there are relaxed controls and management of foreign exchange in certain bonded zones. Were Free Trade Agreements a consideration? Absolutely. Apparel, textile and related accessories are still subject to high tariffs, so taking advantage of Free Trade Agreements was important. Asia is one of the most mature regions in terms of Free Trade Agreements implemented. We noted that shipping products through an RDC in China may cause them to lose their eligibility for reduced duty rates when imported into the ultimate destination market. If so, the additional expense of such duties may be prohibitive. We worked to identify what products and markets were key `beneficiaries' of Free Trade Agreements and validated with authorities to understand what Certificates of Origin could be granted, to whom and under what circumstances. Based on the outcome of this study, we felt that Free Trade Agreements could still be used, but subject to certain criteria being fulfilled and some administrative effort. Damon R. Paling is a partner at PricewaterhouseCoopers. Based in Shanghai, he consults on customs, trade and supply chain issues. www.chainaonline.com NOVEMBER/DECEMBER 2009 49 LIFE Cars The PORSCHE for VIPS Luxury goes local If you live in Shanghai and already own a Louis Vuitton handbag, your next aspiration might be a Porsche Cayenne. Mostly coated in government black, an ever increasing number of these cars are appearing in the streets and traffic jams of China. In a move aimed at the VIP market, the debut of the Cayenne Edition Style earlier this year added another layer of exclusivity to a market which loves VIP status. Limited to just 500 units, the Cayenne Edition Style was developed exclusively for the Chinese market, and according to Porsche, "offers drivers even greater distinction on the road." Priced at RMB976,000, Porsche bills the car as "an excellent long term investment." The exterior colours � Basalt Black Metallic or Macadamia Metallic - serve to enhance the car's undoubted exclusivity. Other than the name and the limited edition, we're not clear what exactly makes this car different, but no doubt if you wanted one, you're probably too late. Earlier this year, at their "Fascination Porsche" event in Beijing, which followed the annual auto show, the company displayed some of their vehicles including the Porsche Cayenne and the new Panamera luxury sedan. In a move noteworthy of China's strategic importance, the company chose China to launch their Panamera, a luxury sedan designed to compete against the BMW 7 series and Audi A8. Porsche is hoping to sell 20,000 Panamera's per year. Standard Equipment Highlights for China Engine 3.6 L, V6, 213 kW (290 hp) Transmission/Chassis � 6-speed Tiptronic S � Air intake grilles aluminium finish matte � 18-inch Cayenne Turbo II wheel � 18-inch Collapsible spare wheel � Wheel centres with full-colour Porsche Crest Exterior � Basalt Black Metallic Macadamia Metallic � Bi-Xenon headlamps � ParkAssist, front and rear � Air suspension � Electrically operated sunroof Audio Communication � CD auto changer (6-disc) � Porsche Communication Management � China navigation 50 NOVEMBER/DECEMBER 2009 www.chainaonline.com LIFE Cars The Executive Standard in Luxury Sedans Porsche Panamera Price: From RMB918,000 Porsche faces some solid competition with its entry into the luxury sedan market in China. The BMW 7 series (in multiple colors) and the Audi 8 (mostly in black) are de rigueur for government officials and corporate execs in China. Audi A8 Price: from RMB858,000 BMW 7 Series Price: From RMB918,000 Engine: 4.8L V8 engine, 400hp (294kW). Acceleration to 100km/h comes in 5.4 seconds, top speed is 283km/h. Transmission/Chassis: Optional rear wheel power transmitted by sevenspeed Doppelkupplungsgetriebe (PDK) double-clutch gearbox, PTM, Porsche Traction Management, high-volume adjustable air suspension, standard steel suspension Emissions: 199 g/km CO 2 Exterior: Space Frame ASF with lower weight but 60 percent more rigid than its predecessor, single-frame radiator grille Communication: Bang & Olufsen Advanced Sound System, 14-channel Digital Signal Processing platform (DSP) Transmission/Chassis: Static torsional rigidity has been increased by 60 percent Notable: Audis continue to sell like hotcakes, with 45 percent of the luxury vehicle market in China. Two of Audi's models are the best selling luxury models in China, the A6L and the entrylevel luxury A4. Notable: China is Porsche's third largest market, selling 8,000 cars last year. They launched the Panamera globally at the Shanghai Auto Show in April. Engine: 6-cylinder petrol engine (258 hp), top speed of 245km/h Communication: Digital roadmaps, Bluetooth interface, USB Audio interface Tr a n s m i s s i o n / C h a s s i s : Integral Active Steering system, integral V rear axle, self-levelling air suspension Notable: BMW sells a wider variety models in China than in any other market around the world. Most exclusive? The 760Li produced for China's 60th Anniversary celebrations. Only 60 of the BMW with Chinese characteristics were made, so you've probably already lost your chance to snap one up. www.chainaonline.com NOVEMBER/DECEMBER 2009 51 LIFE Books How China's Leaders Think The Inside Story of China's Reform and What This Means for the Future Author: Robert Lawrence Kuhn Where East Eats West: The Street Smarts Guide to Business in China Sam Goodman, 2008 Goodman cuts the crap and tells it like it is about starting a business in China. Easy to read and full of anecdotes from his own experiences as a "serial entrepreneur," his cliffnotes-esque guide to China is a fast read and has more than a few nuggets of truth. The Next Asia: Opportunities and Challenges for a New Globalization Stephen Roach, 2009 Morgan Stanley's Asia Chairman lays out Asia's importance for the global economy and where the Asian economy will take us. Covering an overview of the economic crisis, and then moving on to discuss China's economy, its relationship with the US and pan-Asian challenges, the book is a comprehensive look at what Asia has to offer. Good Value: Reflections on money, morality, and an uncertain world Stephen Green, 2009 Stephen Green, chairman of HSBC and ordained priest, muses on economics, spirituality, philosophy, and history. The result is anything but dry. Drawing on a wealth of inspirations, from classics like TS Elliot and the Bible to recent financial writings by Fareed Zakaria and Milton Friedman, Green gives an overview of the development of the global economy and asks questions about how one should ethically create wealth. Publication Date: 14 September 2009 Price: US$34.95 Length: 576 pages Published in English in time for China's 60th anniversary celebration, How China's Leaders Think � The Inside Story of China's Reform and What This Means for the Future, takes a deep look at what's on the agenda for China's leadership and what this means for both China and the world. To tackle this big subject, author Dr. Robert Lawrence Kuhn draws on personal conversations with over 100 Chinese leaders across all sectors. He then structures the book according to guiding principles he uses as a framework for the book. An odd combination of investment banker, brain researcher and public intellectual Dr. Kuhne has had a long interest in China, advising China's leadership since 1989 on restructuring, mergers and acquisitions, science and technology, media and culture, among other issues. He is also the author of The Man Who Changed China: The Life and Legacy of Jiang Zemin, a bestselling biography in China. "To understand China, especially in the light of China's resurgence and power--and in the face of media distortions--the international community needs to appreciate how China's leaders think," said Dr. Kuhn. According to Wiley, his publisher, "Dr. Kuhn asks China's leaders what they make of economic imbalances, pollution, unsustainable development, corruption, migrant workers, unemployment and crime. He also confronts China's leaders on the issues of human rights, censorship, religious freedom, ethnic clashes, international conflicts and superpower rivalries." "This book focuses on the country's most senior leaders, current and future, and on officials and intellectuals in diverse sectors, who collectively form the foundation of thought and drive the commitment to further reform in China today," said Dr. Kuhn. " My task is to portray their personas, to give voice to their thoughts and life to their feelings, as well as to describe their works and deeds." Whether or not a foreigner is qualified to understand the way China's leaders think is a good question to consider about this book. Regardless it's worth a look for the historical perspective and the insight into where China may be heading and for the business strategist to understand potential opportunities. Kuhne is decidedly respectful and admiring of China's leadership. If not it seems unlikely his work would see the light of day in China. He also holds no grudges against government censors and acknowledges that losing 20 percent is acceptable to get the book out in a country where censorship is the norm. At 576 pages, there's still plenty left to digest. 52 NOVEMBER/DECEMBER 2009 www.chainaonline.com FINAL Word When Global Manufacturing Leadership Fails By Robert Dixon A few months ago I was in Wuxi China for lunch with a long term resident. He's lived there all of his life, as did his ancestors. He told me how Wuxi has changed in the last 15 years. How multi-national businesses, large and small moved into the city for manufacturing. I expected he would describe how the lives of the residents improved. Instead, he told me about his son's wish. This wish represents a powerful message to companies and individuals who come to China in search of low cost labor and profits. His son's wish was to fish in the river next to their home, take what they caught to his mother to cook for a meal with his father. He explained to his son they could not fish in the river because the water was not safe and eating the fish could make them sick. I saw his difficulty as he told me he has fished in that same river with his father. They took what they caught home, where his mother cooked a meal for him to share with his father, creating a bond between them and beginning the ritual of passage into becoming a man. Why did this father have to tell his son they could not fish in the river? The answer describes the frightening consequences of leadership focused only on profits and not its responsibilities. His son couldn't fish in the river because of two companies that came to Wuxi, built facilities, hired employees and shipped millions of products. They failed to tell anyone they were discharging their waste into the ground. Eventually, this waste found the river. The water became polluted and anything in the water inedible. It was only discovered after people started to get sick. Like his son, this father had a wish. He told me he hoped, before he died, he would be able to take his son to fish in that river. In his heart, he knew that would never happen. His son would never enjoy what this father had enjoyed with his father. A father son tradition and legacy was broken by the actions of strangers, who came to his city in search of profits. For the first time in my life, I was unable to find a single word of encouragement or comfort for this father. I was disgusted to be part of the global manufacturing movement because that river was destroyed due to a total and complete failure of the companies' leadership as they ignored their responsibilities to the people of Wuxi and China. It was preventable by real leadership. Regardless of the country of origin, every CEO, executive and employee of companies located in a low-cost country must accept they have the same responsibilities to the people who live in that country, as they do to the people in their home country. When they leave, if the country where they were is not better because they were there, they failed in their responsibilities. As leaders they get to decide what their individual and corporate legacy will be to the people of that country. It's a personal choice as well as a corporate responsibility. They have the responsibility and power to insure a father and a son can fish any river, pond or lake in any country that they have located a facility. If they cannot make those choices or accept those responsibilities, they should stay home. Corporations should be more responsible to the communities they operate in, argues Robert Dixon. Bob Dixon is a consultant and keynote speaker to corporations, universities and organizations on topics such as; Supplier Customer Relationship Management, Asia Pacific Sourcing and Leadership. He lives in Suzhou and can be reached at firstname.lastname@example.org www.chainaonline.com NOVEMBER/DECEMBER 2009 53 DON'T MISS OUT! List your company in the most comprehensive directory of supply chain & logistics related services in China. VENDORS' DIRECTORY ON: CHINA EDITI Q3/Q4 Q1/Q2, 2010 edition to be published in March, 2010 Early bird deadline (receive a 10% discount): January 15, 2010 2009 � Logistics Services � Professional Services � Real Estate Services � IT & Software Solutions � Equipment Providers A comprehensive bilingual listing of vendors, service and equipment providers, consultants and IT solutions providers for the supply chain and logistics industry ' VENDORS Y DIRECTOR SUPPLY CH AIN & LOGI STICS n Companies are listed according to their specific service offering n In-depth company profiles including contact details and full description of services and solutions n Free and complete online access at www.supplychains.com Gazeley China Corpo ate HQ Dub i, UAE Estab ished in hina 2006 Shang hai Lega stat s in China WOFE China head office Suite 80 , Ker y Ce tre, 1515 We t N njing Road, Shang hai 200 40 1 5158 05 200040 +86 (21) 5298 6622 +86 (2 ) 5298 5098 www.gaze y.com K y Contacts Noel Gul iver +86 (21) 5298 6622 +86 (2 ) 5298 5098 Noe .Gu ive @ezw.ae Arnaud Sa tel +86 (21) 5298 6622 +86 (2 ) 5298 5098 arnau .sa te @gazel y.com Company Who should list in the VENDORS' DIRECTORY? Any company that provides services, solutions and equipment in supply chain logistics procurement should be listed. Highlights � Founded in 1987 in the UK 1987 � Acquired y EZW in 2008 200 EZ W � Oper tion l in the UK, France, Belgium, Spai Germany, Ita y, Indi , Mexic o and the UAE China, Services Gazel y is a leading real e t te develo un iva led track pe reco d we bui f sustain b houses and d cost-effe e warehouse di tribution tive and enviro . With an parks across Mexico and nme ta y e the globe. the A , we ficie t wa ePresent i have the each vices to meet our cu tome to de iver consi Europe, Chin , ndia, ' needs. tent produ Gaze ey is t and sera me ber Econ mic Zone pr vider f su tain ble Wo d (EZW) indu trial and rent portfo , which is a logi tics infra io also eading g obal tru ture so oPar , a resear inc des J fza, one tion . 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Our c t-effec tive su tainab and di t ib le warehouses tion me t the needs centres are designed to of tod y's and etai e , manu omorr w's a e a or , p oviding ture , and third-party � Gaze y's visi oparge sites and es in t egic : To be a glob wa ehousp ovider f ocations th l logi tics space and e ficie t wi l e ive t goods to delive ed in a su tainab fast age and di e tributio . w y' We unde stand the impo tance to our c tomer f i tening fer to s it their s so we can tai or our � Gaze y's su ftainable design based on flexib needs exa t y Our f cept launch coner is e lease , ed in O tober velopment uil - o-suit 2004 20 , and specu de410 l tive unit . � Su tainabi i y measures embedded in a the wareh ouse bui dings � Co -e fe tive and high-q ua ity bui dings � On-budget, on-schedu e de ive y nd Solutions REAL ESTA TE SERV ICES Who reads the VENDORS' DIRECTORY? 89 The Directory is read and used by key decision-makers in companies that regularly buy and use supply chain and logistics services and facilities in Asia. These are the people that decide which supply chain and logistics service providers to use. How is the VENDORS' DIRECTORY distributed and promoted? Targeted at qualified decision-makers, the directory is distributed free-of-charge to subscribers of CHaINA Magazine and companies based in Asia who request a copy (companies are only asked to cover the mailing cost). Copies are distributed by direct mail and are given out at more than 100 supply chain and logistics-focused events each year. To find out more about how the VENDORS' DIRECTORY can contribute to your marketing needs in China, please contact: ) +86 (21) 6280 1731 + email@example.com 8 www.supplychain.cn CLASSIFIED Listings LOGISTICS SERVICES LOGISTICS SERVICES +86 (21) 6445 1452 www.clasquin.com Deret Logistics Asia Suite 1703 Shanghai Bund International Tower, 99 Huangpu Road, Shanghai 200080 99 1703200080 +86 (21) 6306 2592 www.trans-access.com.cn DHL Exel Supply Chain 3398, Xiupu Road, Shanghai 201315 3398 : 201315 +86 (21) 3825 6585 www.dhl.com DSV Logistics 38/F, 1 Grand Gateway, 1 Hongqiao Road, Shanghai 200030 +86 (21) 5406 9800 www.dsv com www.dsv com/cn Elee 375, Kefu Road, Nanxiang Town, Jiading District, Shanghai 375 +86 (21) 3912 4360 www.eleechina com LOGISTICS SERVICES Linfox Road Transport 26-F, Cross Region Plaza, 899 Ling Ling Road, Xuhui District, Shanghai 200030 89926 F200030 +86 (21) 5150 6699 www linfox.com Linkstar Logistics 49A, 199 North Riying Road, Waigaoqiao Free Trade Zone, Shanghai 200131 19949A, 200131 +86 (21) 5046 1865 www linkstarlogistics com Logisfashion Transportation Tower, Room 1101 218, Hengfeng Road, Shanghai 2181101 +86 (21) 5180 1781 www logisfashion.com Logwin 5/F & 6/F, Ocean Towers, 550 East Yan'an Road, Shanghai 200001 55056 200001 +86 (21) 2326 2000 www logwin-logistics com Maersk Logistics 24/F, Tian An Centre, 338 West Nanjing Road, Shanghai 200003 33824 200003 +86 (21) 2306 2666 www maersklogistics.com Menlo Worldwide Logistics 13/F Tower, Golden Eagle Mansion, 1518 Min Sheng Road, Shanghai 200135 1518 A13200135 +86 (21) 6160 1190 www menloworld.com Penske Logistics Room 20A, 567, Weihai Road, Shanghai 200041 56720A 200041 +86 (21) 6288 9226 www penskelogistics.com Schneider Logistics UC Tower,Suite 1605, 500 Fu Shan Road, Shanghai 5001605 +86 (21) 5058 7970 www schneider.com SDV International Logitics 20/F, East Building, New Hualian Mansion, 755 Middle Huai Hai Road Shanghai 200020 75520 200020 +86 (21) 3395 0600 www sdvchina.com Sinotrans 7/F, Contract Logistics Division, Sinotrans Plaza A, A43, Xizhimen Beidajie, Beijing 100044 43A7 100044 +86 (10) 6229 5600 www sinotransone com LOGISTICS SERVICES ST-Anda Logistics 18/F, Times Plaza, 1 Taizi Road, Shekou, Shenzhen 518067 11801 518067 +86 (755) 2681 9188 www st-anda.com Werner Global Logistics 5/F South Harbour Building, 1 Fenghe Road, Shanghai 15 +86 (21) 3887 9520 www.werner.com Worldwide Group Room C-F 12/F and 16/F, Alison international Tower, 8 Fu You Road, Shanghai 200010 812C-F 16200010 +86 (21) 6132 2333 www.worldwide-logistics.cn Yatfai Logistics 39-H, Fortune Building, 88 Fuhua San Road Futian District, Shenzhen, Guangdong Province 88 39H +86 (755) 3336 6898 www.yatfai com YRC Logistics Room 1307-08, Lan Sheng Building, 8 Middle Huai Hai Road Shanghai 200021. 81307-08 200021 +86 (21) 6137 7668 www.yrclogistics com 120/F Broadway Centre, 93 Kwai Fuk Road, Kwai Chung, NT, Hong Kong, China 93 19 +852 2211 8721 www.agilitylogistics.com www.alls-sh.com APL Logistics 5/F Raffles City Office Tower, 268 Middle Xizang Road, Shanghai 200001 2685 200001 +86 (21) 2301 2800 www.apllogistics.com Arvato Services B-1/F XingHong Science & Technology Industrial Park, Feng Huang Gang Village, Xi Xiang, Bao'an District, Shenzhen 200231 518102 +86 (755) 3386 1666 www.arvatoservices com cn BDP International Unit 2101-2110, Shanghai Bund Int'l Tower, 99 Huangpu Road, Shanghai 200080 99 2101-2110200080 +86 (21) 6364 9336 www.bdpinternational com Ceva Logistics 19/F, Jiang Nan Shipyard Building 600 Luban Road, Shanghai 200023 60019 +86 (21) 5302 9988 www.cevalogistics.com Clasquin Room 203, Qingke Mansion, 138 Fen yang Road, Shanghai 200031 203138 200031 3 West Guangzhou Road, Taicang EDZ Jiangsu Province. PROFESSIONAL SERVICES Accenture 30/F, Central Plaza, No. 381 Huaihai Road, Shanghai 200020 38130 200020 +86 (21) 2305 3333 www accenture cn Araia Shanghai Times Square Suite 1709, 93 Middle Huai Hai Zhong Road, Shanghai 200021 93 1709200021 +86 (21) 6391 8356 www araia com Arvato Services 20/F, Cloud Nine Tower, 1018 Changning Road, Shanghai 200042 101820 200042 +86 (21) 6161 1866 www arvatoservices.com.cn Baker & McKenzine Suite 3401 China World Tower 2 China World Trade Center,1 Jianguomenwai Dajie, Beijing 100004 +86 (10) 6535 3800 www bakernet com Barkawi A 705,69 Dong fang Road, Eton Place, Pudong New District, Shanghai 200120 A705200120 +86 21 6859 9686 www barkawi.com 3 +86 (573) 8527 3072 www.fmlogistic.com Havi Logistics 6 Xingsheng Jie, Beijing Economic & Technological Development Area, Beijing 100176 6 100176 +86 (10) 6788 3335 www.havi-logisitics asia D Logistics Room 19D, Dong Tai Plaza, 309 Tanggu Road, Shanghai 30919D +86 (21) 6306 7083 www.id-logistics.com DS Logistics 8/F Tower Block, LiFung Plaza 2000 Yishan Road, Shanghai 201103 2000 8201103 +86 (21) 2416 4700 www.idslogistics.com Kuehne & Nagel Block 1, 11-16F, 1868 Gong He Xin Road Shanghai 200072 1868 11-16200072 +86 (21) 2602 8000 www.kuehne-nagel.com 3000 South Lianhua Road, Prologis Logistics Park, Minhang, Shanghai, 201109 3000 201109 +86 (21) 6309 8336 +86 (21) 3430 6999 www.dajin.com.cn www.chainaonline.com NOVEMBER/DECEMBER 2009 55 CLASSIFIED Listings PROFESSIONAL SERVICES PROFESSIONAL SERVICES 55020 2000012 +86 (21) 5158 5700 www.lr.org www.lloydsregisterasia.com Logistics Executive Suite 13G, Shanghai Ind'l Investment Bldg. 18 North Caoxi Road, Shanghai 200030 18 13G200030 +86 (21) 6427 6697 www.logisticsrecruitment.com.cn LowendalMasai 1505 Hai Tong Tower, 689 Guangdong Road, Shanghai 200001 689 1505200001 +86 (21) 6341 1255 www.lowendalmasaichina.cn Michael Page International 601-603 Shanghai Kerry Centre 1515 West Nanjing Road Shanghai 200040 1515601- 603 200040 +86 (21) 3222 4758 www.michaelpage.com.cn Positive Purchasing Lynher Building, Queen Anne's Battery, Plymouth, PL4 OLP, UK +44 845 331 3312 www.positivepurchasing com Poyry Room 809, Silver Tower, Chaoyang District, Beijing 100027 2809 100027 +86 (10) 6410 6550 www.poyry.com Procur Asia Renheng Building, Unit 14A 58 Qindian Ave, Shanghai 200120 5814A 200120 +86 (21) 6875 4993 www.procurasia.com PROFESSIONAL SERVICES 14651210-1213 200040 +86 (21) 5212 1200 www smart-sourcing.com Teamswork 23/F Citigroup Tower, 33 Huayuanshiqiao Road, Shanghai 200120 33 23200120 +86 (21) 6101 0486 www globalteamswork.com Tractus Asia Suite B, 22/F, Zhaofeng Universe Building, 1800 West Zhongshan Road, Shanghai 200235 1800 22B 200235 +86 (21) 6440 0990 www tractus-asia.com REAL ESTATE SERVICES AMB Property Suite 2908, Plaza 66 II, 1366 West Nanjing Road , Shanghai 200040 1366 2908 200040 +86 (21) 6135 1688 www amb.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 10103201 200031 +86 (21) 2401 1200 www cbre.com.cn Colliers International 16/F Hong Kong New World Tower, 300 Middle Huaihai Road, Shanghai 200021 30016 200021 +86 (21) 6141 3688 www colliers.com/china Gazeley Suite 805, Kerry Centre, 1515 West Nanjing Road , Shanghai 200040 1515805 200040 +86 (21) 5298 6622 www gazeley com Global Logistic Properties Room 2708 Azia Center, 1233 Lujiazui Ring Road, Shanghai 200120 12332708 200120 +86 (21) 6105 3999 www.GLProp.com Goodman Group 2107 - 2109, Shui On Plaza, 333 Middle Huai Hai Road, Shanghai 200021 3332107-2109 200021 +86 (21) 6133 2000 www goodman.com GSE 27C Industry Building, 18 North Cao Xi Road, Shanghai 200030 1827C, 200030 +86 (21) 6090 1388 www gsegroup.com REAL ESTATE SERVICES Jones Lang LaSalle 25/F, Tower 2 Plaza 66 , 1366 West Nanjing Road , Shanghai 200040 1366225 200040 +86 (21) 6393 3333 www.joneslanglasalle com cn Knight Frank Room 1206 Evergo Tower, 1325 Middle Huaihai Road, Xuhui District, Shanghai 200031 1325 1206200031 +86 (21) 6445 9968 www.knightfrank.com Mapletree Suite A-D,14/F, Times Square Office Building, 500 Zhangyang Road, Pudong, Shanghai 200122 500, 14ABCD200122 +86 (21) 5836 7177 www.mapletree com sg 17/F Lippo Plaza, 222 Middle Huaihai Road, Shanghai, 222 17 +86 (21) 5396 5600 www.e-bbk.com Control Risks Suite 1001 East Tower China Merchants Plaza, 333 North Chengdu Road, Shanghai 200041 3331001 200041 +86 (21) 5298 1800 www.control-risks.com Demand Management Systems 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 998 150220002 +86 21 61413955 www.dragonsourcing.com easySOURC NG easySOURC NG Hong Kong www.easy-sourcing.com ET2C International 13A, East Tower, King World Hi-Tech Building, 668 East Beijing Road, Shanghai 200001 66813A 200001 +86 21 5308 1220 www.et2cint.com Ivie Asia Room 1507, You You International Plaza, 76 Pu Jian Road, Pu Dong New District, Shanghai 200127 76 1507200127 +86 (21) 6165 9100 www.ivieinc.com Korn/Ferry International Suite 3208, CITIC Square, 1168 West Nanjing Road, Shanghai 200041 11683208 200041 +86 (21) 6256 7333 www.kornferryasia.com KLB Group Room 2205, Universal Mansion Building, 172 Yuyuan Road, Shanghai 200040 1722205 200040 +86 (21) 62480735 www.klb-group com Lloyd's Register Asia 20/F Ocean Towers, 550 East Yan'an Road, Shanghai 200001 18 Duangong Road, Nanjing, Jiangsu, 211100 +86 25 6698 8988 18 211100 +86 (25) 6698 8988 www.nsic.com.cn Realty Vailog Room 702, City Gateway, 398 North Caoxi Road, Shanghai 200030 +86 (21) 6090 5292 www.realtyvailog.com Tongsheng Logistics Park 10/F, Unit B, Shanghai Deepwater Port Business Plaza, Luchaogang, Nanhui, Shanghai 201308 B 10201308 +86 (21) 6828 1992 www.shtslp com 11/F PricewaterhouseCoopers Center, 202 Hu Bin Road, Shanghai 200021, China 202 11 200021 +86 (21) 2323 8888 www.pwccn.com Resources Global Professionals Room 2705-06, Lippo Plaza, 222 Middle Huaihai Road, Shanghai 200020 222 2705-06200020 +86 (21) 6386 8710 www.resourcesglobal.com Smart Sourcing 1210-1213 Guo-Li Plaza, 1465 West Beijing Road, Shanghai 200040 2500 200331 +86 (21) 6627 7577 www.yupeigroup.com Yupei Building, 2500 Jinchang Road, Shanghai 200331 56 NOVEMBER/DECEMBER 2009 www.chainaonline.com CLASSIFIED Listings IT & SOFTWARE SOLUTIONS Apprise Software 6009 Changjiang Science Building 40 Nanchang Road, Nanjing 210037 40 6009210037 +86 (25) 8345 5308 www.apprise.com ATMS Number One, Holt Court, Aston Science Park, Birmingham, B7 4EJ, UK +44 121 628 9000 www.atmsplc.com Barloword Optimus 15/F NCI Tower, 12A Jianguomenwai Avenue, Chaoyang District Beijing 100022 12 15100022 +86 (10) 8523 3103 www.barloworldoptimus.com BravoSolution 19F-08, Chinese Overseas Building, 129 West Yan'an Road, Shanghai 200040 12919 08200040 +86 (21) 6145 8500 www.bravosolution.com Core Solutions Unit 2903, 113 Argyle Street Mongkok, Kowloon, Hong Kong +852 2378 6300 www.coresolutions.com Epicor Software 2008 Cross Tower, 318 Fuzhou Road Huangpu District, Shanghai 200001 318 2008200001 +86 (21) 63912808 www.epicor com MagicBusCreative Grant-oh! Buchwald PLACE AN AD Tel: phone: +86 136 4165 6924 email: firstname.lastname@example.org www.flickr.com/photos/gmartini IT & SOFTWARE SOLUTIONS JDA Software 2905 United Plaza, 1468 West Nanjing Road, Shanghai 200040 14682905 200040 +86 (21) 6289 7979 www.jda com Manhattan Associates Software Unit 2110, 21/F, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 200021 333212110 200021 +86 (21) 6386 8800 www.manh com Seeburger 1409B Cimic Tower,800 Shangcheng Road, Shanghai 200120 800 141409B, 200120 +86 (21) 5835 4735 www.seeburger.cn SoftBrands Asia 4/F, The TEDA Building 256, Jiefangnan Road, Hexi District, Tianjin 300042 256 300042 +86 (22) 2320 2260 www.fourthshiftedition com SupplyOn Suite 1508, Silver Centre, 1388 North Shanxi Road, Putuo District, Shanghai 200060 13881508 200060 +86 (21) 6419 8042 www.supplyon com Tradecard F1101-02, Block A, Hailrun Complex, 6021 ShenZhen Blvd, ShenZhen 518040 6021A 1101-02518040 +86 (755) 8830 9265 www.tradecard.com EQUIPMENT PROVIDERS Anwood 3F-D4 Jiacheng Mansion, 128 Jinjihu Road, Suzhou 1283F-D4 +86 (512) 6761 5558 www.anwood com cn Chep 40/F, Suites 8-10, 2 Grand Gateway, 3 Hongqiao Road, Shanghai 200030 34008-10 200030 EQUIPMENT PROVIDERS +86 (21) 6127 2488 www.chep.com Hormann Door Production 13 Zhong He Street, BDA, Beijing 100176 13 100176 3/F, Qing Shui Wan Hotel Wing Office Building, 1309 North Kaixuan Road Shanghai 200063 1309 3200063 +86 (10) 6788 8371 +86 (21) 5251 3216 www.hoermann.cn Loscam Packing Equipment Room 508, 707 ZhangYang Road, Pudong, Shanghai 200120 707508 200120 +86 (21) 6104 8156 www.loscam.com Schoeller Arca Systems Unit 5/A, Guangdong Development Bank Tower, 555 Xu Jia Hui Road, Shanghai 200023 555,5 A200023 +86 (21) 6390 1261/62 www.schoellerarcasystems com +86 (21) 51021617 or +86 (21) 51021618 Email: email@example.com O EIGN EX HAN E Ch l d BA RA N OG S I S ZO E N l h b Ol S HE KER l t h ME GING M RK TS Mt t k S ll CO D CH IN t ld h e o n SE TEM ER OC OB R 20 8 www ha ao l ne om S 7 0 E R 5 H $ 0 R B 0 G 9 K 3 0 S 6 THE M OR G OBAL UPPLY CHAIN LEADERS Suite 2605,26/F, Hong Kong Plaza, 283 Huaihai Road Shanghai, 200021 283 262605 200021 ina +86 (21) 6103 5715 www.ddslogistics.com/cn GXS International Room 1602, 16/F, Grand Gateway Tower 1, 1 Hongqiao Road, Shanghai 200030 111602 200030 +86 (21) 6120 1088 www.gxschina.com.cn INFOR 15/F Raffles City Office Tower 268 Middle Xizang Road, Shanghai 200001 26815 200001 +86 (21) 5359 9666 www.infor.com No. 1018-A, Lane 999, Wangqiao Road, Shanghai 201201 999 1018-A 201201 / www supp ych in cn 0 US$ UR5 K$ 0 M 40 G9 0 K3 U 6 009 +65 6545-5454 www. techlinkstorageengineering. com he Fe i h i k l L h in p www.chainaonline.com NOVEMBER/DECEMBER 2009 57 COMPANYINDEX EVENTSCALENDAR adidas ................................ 23 Agility ........................... 55, 60 Airbus ................................ 10 AlixPartners Asia ........... 23,26 Alstom .......................... 44, 45 AMB Property Corp ........... 13 APL Logistics ....................... 2 Apple ............................. 8, 22 Audi .............................. 50, 51 Autoliv ................................ 21 Avery Denison .................... 46 Avichina Industry & Technology ........................ 10 Axway ................................ 29 BBK .............................. 19, 56 Behr .................................... 47 Beijing Benz.................. 22, 25 BMW ...................... 21, 50, 51 BMWBrilliance ................... 45 Booz Allen Hamilton .......... 42 Bosch ..................... 20, 24, 47 Braun Shanghai ........... 32, 34 Brose ................................. 47 Brose Wuhan ................ 44, 45 Bulgari ............................... 13 CB Richard Ellis ................. 14 CCBMC .............................. 44 Chang'An Ford Mazda........ 45 CMR Group ........................ 12 China Post .......................... 44 Citigroup ............................. 11 Coca-Cola .................... 44, 45 Continental AG .................. 21 Continental Automotive ...... 47 Cosco Pacific ..................... 29 Dajin Logistics ................... 55 DDS ................................... 57 Diesel ................................. 45 Dongfeng Motor ................. 45 DPSA ............................ 44, 45 EIU Corporate Network ...... 42 ER-Couture................... 42, 43 Flextronics ............................ 9 FM Logistics ....................... 55 Foxconn .............................. 22 Gap ................................. 2, 12 George Fischer AG ............. 21 GIA ............................... 38, 39 GM ....................................... 9 Goodman ........................... 27 GSE ................................... 45 Guitang Group ................... 39 H&M ................................. 2, 8 Hafei Aviation ..................... 10 Harbin Aircraft Group .......... 10 Harbin Development Zone Heli Infrastructure Development . .................... 10 Harman Intl ............. 20, 21, 25 HSBC ................................. 52 Hyundai ............................. 22 Ikea ...................................... 2 Intermec ............................. 46 Japan Climate Systems ..... 21 J.D. Power ............. 22, 23, 26 Jones Lang Lasalle ...... 40, 41 KPMG ................................ 21 Le Meridian .................. 21, 24 Lilly Pulitzer ....................... 43 Louis Vuitton ...................... 50 Lufthansa Cargo Group ..... 13 Magic Bus Creative ........... 57 Magna Stey ....................... 22 Manhattan .......................... 36 Mercedes ..................... 21, 22 Messe Munchen International ............................................ 37 Metro ................................. 46 Morgan Stanley ................. 52 The Navigos Group ............ 42 N ke .............................. 23, 42 Nissan................................. 22 NSIC ................................... 56 Outrigger Group............ 21, 24 Penguin ............................. 22 Philips ................................ 23 Planet Retail ................... 23 2 Porsche ....................... 50, 51 Preferred Freezer ......... 40, 41 PwC ........................ 49, 56, 59 DPSA ............................ 44, 45 Schenker Intl ...................... 13 SEC Areva ......................... 45 SharMoon EZ Garments..... 13 Shanghai E&P Intl .............. 29 Shanghai GM ..................... 47 Shanghai VW ..................... 47 Sirit .................................... 46 SKF Group ......................... 21 Steelcase ................ 14, 15, 16 SVW ................................... 45 Swire Cold Storage....... 40, 41 Taobao .................................. 8 Tata AutoComp .................. 23 Tata Motors .................... 23 26 Techlink............................... 57 Toyota ........................... 32, 34 Transport Intelligence ......... 43 The Supply Chain Lab ........ 43 Thyssen Krupp ............. 43, 45 TNT/HOAU ..................... 2, 44 TPV (Wuhan) ...................... 44 Unicom ................................. 8 Unilever ................................ 9 U.S. Steel Corp..................... 7 UTI InfrastructurePE ........... 11 Vertical Retail ..................... 12 Webasto AG ....................... 21 Yuguang Gold and Lead ....... 9 Yupei Group........................ 56 Wuhan Boiler Co........44, 45 Zara ...................................... 2 Zegna Group ...................... 13 ZF Friedrichshafen ....... 21, 47 58 NOVEMBER/DECEMBER 2009 www.chainaonline.com Land of Opportunities Offshore Sourcing and Supply Chain Management China has emerged as one of the leading low cost markets for global sourcing. However, the recent economic downturn has created unprecedented risk for businesses and their supply chain managers. Companies that are sourcing offshore have always needed to consider procurement holistically to be successful. Today, supply chain managers must be cognizant of a large number of risks that are difficult to detect in any market � but even more so in less developed markets. Gaining insight to and mitigating risks in this market requires a different set of tools than in a past. However, if managed effectively the opportunities and benefits remain achievable. With our global insight and local knowledge, PricewaterhouseCoopers provide innovative and practical solutions to address these key business challenges and turn them into opportunities to expand your business and result in sustainable growth. To find out more on how we can address your needs, please visit pwccn.com or contact: Robert Barrett Tel: +86 (21) 2323 3818 Email: firstname.lastname@example.org Damon Paling Tel: +86 (21) 2323 2877 Email: email@example.com � 2009 PricewaterhouseCoopers. All rights reserved. "PricewaterhouseCoopers" refers to the China firm of PricewaterhouseCoopers or, as the context requires, the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. pwccn.com Robert Barrett :+86 (21) 2323 3818 :firstname.lastname@example.org Damon Paling :+86 (21) 2323 2877 :email@example.com