CHaINA Magazine March-April 2011

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A Goodyear for...

Labor Shortages

HIGHER Education

Virtual Goods sales

march/april 2011

The Rare Earth Empire





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

Office and Team: Publisher Max Henry Editor Kevin Foehner Junior Editor & Translator Sharon Lu Contributing Writers

Graphic Designers Cherry Chen Kimi Yu Photographer Jimmy Kim

Michael Zakkour, Kevin Tilstone, Tom Ballantyne, Renaud Anjoran, WR. Lu, Roger Bate, Michael Cole, Dr. Armin F. Schwolgin, Ted Sorom, Dan Steinbock, Trish Gyorey, Matt Jochim, Sabina Norton, Josh Green, Michael Kleist, Chris Beukenkamp

CHaINA Magazine is the only bilingual supply chain and logistics magazine in Asia with a strong focus on Greater China. In every issue, we write about the news, trends and best practices that will help manufacturers, retailers and distributors make better business decisions with their sourcing, production, logistics from, to or within Asia. CHaINA是亚洲地区唯一一本专注于中国的供应链和物流行 业的双语杂志。在每一期,我们通过刊登新闻,行业动向 和实践经验来帮助制造企业、零售商和发行商进行亚洲内 外的采购、生产和物流形式的选择。

Distribution: 10,000 copies on print (6 times a year) CHaINA Magazine is offered FREE of charge by direct post mail to qualified readers in Greater China who are involved in all aspects of supply chain management. It is also distributed through selected locations in major Chinese cities, including hotels, restaurants, service offices/apartments, business centers, airport lounges and other key locations. 发行量:一年六期,每期一万本 CHaINA杂志通过直接向中国各供应链管理的专业读者发送 邮件来提供免费的阅读机会。同样也分发到中国的主要城 市并在酒店、服务楼,商务中心,机场大厅或其他中心地 带免费赠阅。

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

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


As analysts predicted, and foreign business feared, China’s labor did not all return to their posts after Chinese New Year. The result has been a large-scale scramble for factory managers to locate thousands of workers to fill vacant manufacturing positions. Most media outlets are calling it a “labor shortage”, but it looks to be more of a re-organization Kevin Foehner of the current labor pool. Yes, many factories are struggling to find Editor people to work for them, but many laborers CHaINA Magazine are holding out for positions closer to their hometowns. The demand and the supply are there, but what each party can’t agree on is the location. Government programs are giving workers incentives to stay inland and as a result, it’s now very reasonable for a migrant worker to receive comparable wages in the inner provinces, where most of them call home. The question is: How long will they hold out for that inland job they truly desire? The labor struggle is just one of the many issues in China’s quickly changing business landscape explored in this edition. We also focus on other major changes in China’s rare earth metal quotas, the changing currency policy, and the challenges ahead for supply chains. Learn how Goodyear and Unilever are coping with the changes, what Apple and HTC are up to, and much more in the March/April issue of CHaINA Magazine. 行家之所测,企业之所惧——春节之后,大批民工一去不返——工 厂老板都成为热锅之蚁,四处奔走,力补空缺。众多媒体称其为“劳动 力短缺”,可它实际重整了中国的劳动力市场。 工厂急补空缺,工人只求就近。政府大力推动内陆发展,工人在家 附近便可获取同水平的工资,何必再离乡背井。 结果尚未见分晓,但实际上,内陆企业数量有限,一些民工无奈之 下还得朝太阳升起的地方走,可是太阳重要还是家重要呢——他们不久 之后还是会回家的吧? 中国进来市场波动频频,劳力风波也只是本期杂志涉及的一个方 面;我们还探讨了中国的稀土配额问题和人民币政策,当然还有供应链 面对的挑战——对此固特异和联合利华跟我们分享了自己的策略、苹果 和HTC也都热血加入表明了自己的观点。更多精彩,尽请参阅CHaINA新刊 (三、四月)!

DISCLAIMER Editorial and advertising are independent and do not necessarily reflect the views of the Council, the board, its members or the staff. While every efforts has been made to ensure accuracy, the publisher is not responsible for any errors. Views expressed by writers or contributors in this magazine are not necessarily those of the publisher. The publisher is not responsible for product claims and representations. @ Copyright China Supply Chain Council Ltd. (Hong Kong). All rights reserved The contents of the magazine may not be reprinted in whole or in part without the permission of the publisher. No part of this publication may be reproduced without written consent of the copyright holder. CHaINA is a registered trademark of the Global Supply Chain Council. 3



26 30 44


march / april 2011

Shanghai’s Mushroom Source Meet Shanghai’s link to fresh mushrooms

上海鲜蘑从哪儿来 独家专访沪上鲜蘑大王

China’s Labor Shortages A massive shortage in labor is affecting China’s manufacturing

中国兔年用工荒 用工荒影响中国制造业

The Year in Virtual Goods By The Numbers How much is a virtual hotdog really worth?

虚拟产业的真实数字 知道虚拟热狗的价值吗?


China’s Changing Currency Policy: Something to Fear?


The Rare Earth Empire


How will China’s currency policy change businesses?

中国人民币政策:你怕了吗? 中国币值政策将如何影响企业?

China cuts Rare Earth Metal Quotas and rattles the world

稀土帝国 中国削减稀土出口配额——悸动四起

Webinar on India Logistics Wednesday, March 16th, 13:00 (HK time)

Webinar Series 2011 -

Moving up! Increase productivity with your Asian suppliers Supply chain risk: the Asian perspective Capitalizing on China's inland markets: a focus on domestic distribution Latest tools in Supply Chain Finance in Asia

Supply Chain Networking Mixer Thursday, March 17th, start from 6:00 pm – 9:00 pm

For more information, please visit:

CHaINA Magazine Content

march / april 2011



Big photo 14 News Bites 16 Lost in Translation 18 In & Out 20 M&A 21 The Heartthrobs of Supply Chain


12 大事件

23 凯文食品:我的开始

14 行业新闻简讯

25 轮胎巨擘专访

16 译网恢恢 疏而有漏

26 上海鲜蘑从哪儿来


How I Got Started: KTech Foods 25 A Goodyear for Sourcing 26 Shanghai’s Mushroom Source

18 斗转星移

FEATUREs 48 Challenges Ahead for Supply

Chain 供应链挑战前伏

52 China’s Changing Currency

Policy: Something to Fear? 中国人民币政策:你怕了吗? 54 The Rare Earth Empire


20 企业并购资讯 21 心动供应链



29 Does

your China Factory sell your goods on Taobao? 30 China’s Labor Shortage 32 Made in India, Faked in China 34 What’s Apple’s Big Deal?

37 The

29 卖东西——您上淘宝了吗?

37 强强联合

30 中国兔年用工荒 32 印度制造,中国伪造

38 零售增长:上海仓储缺氧

Mega-Merger 38 Retail Growth Creating Warehouse Shortage in Shanghai 40 Higher Logistics Education in China


Product Study 44 The Year in Virtual Goods by the Numbers 46 HTC Expands

59 On

44 虚拟产业的真实数字 46 HTC扩张计划

Next Five-Year China Plan and What It Means For You

Michael Zakkour


43 老干妈辣酱

22 The

40 中国高等物流教育

34 苹果玩的神马?




Are Manufacturers under too much Pressure?

Tom Ballantyne the Road with Victor Mok 47 Who Will Win the 60 Having fun with CHA1N Global Mobile Rivalry? 61 Top Supply Chain Books Dan Steinbock 62 The State of SaaS 64 Seen on CHA1N/LinkedIn 70 Unilever prepares 58 Social Media and Sourcing to Grow Michael Kleist


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Socialize, network and interact with Supply Chain Professionals from around the globe! Why haven’t you signed up for CHA1N?


Check out the photo gallery from The Council’s 3PL luncheon with Victor Mok, CEO of DHL Supply Chain North Asia



upcoming events

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Beyond Expectations

Logistics from a different angle Pressure to be more efficient, cut costs and eliminate waste increases every day. This is why we build continuous improvements into everything we do. At CEVA, we are supply chain experts who we continually review and streamline our processes, eliminating defects, raising productivity and reducing energy usage. And everything we learn is replicated across our global operations. Our Operations Excellence approach is one of the ways we exceed our customers’ expectations, each and every day. Isn’t it time to see your supply chain from a different angle? We think so. Find out more about our Operations Excellence program at



FRONTLINES Follow-up Update: diy, Electronics and Port


HaINA Magazine gives you an update on stories from our January/February issue. Home Depot continues to struggle while B&Q finds a little success. Best Buy bows out while Jiangsu Five Star does battle. And finally, China partners with the unlikely North Korea to get things moving in Jiling Province.

Goodbye, Best Buy


e st Buy made the surprise announcement on February 22nd that they were closing all nine of their lackluster China stores to focus on “a change of business strategy”. Was anyone actually surprised? Just a few weeks ago, Kal Patel, Best Buys Head of Asia Operations, went on record with Bloomberg to state that Best Buy stores were purely experimental in China. Well, that was an expensive experiment. When Best Buy opened their first location in Xujiahui, they thought they could pick off customers from the neighboring Xujiahui Electronics Market. Instead, they had customers coming into Best Buy to test the products and to get advice from the less-aggressive sales staff, only to stroll over to the electronics market next door and bargain hard for a better price. This was a good indicator of Best Buy’s initial take on the China market. What had been keeping them afloat was their acquisition of Jiangsu Five Star Appliance, a Chinese retailer which has an established network of over 160 locations in Zhejiang and Jiangsu provinces. Five Star is the third largest electronics retailer in China, but is way behind Gome and Suning in terms of reach and presence. The two powerhouses are set to have a combined 40% of China’s electronics retail market share by 2015, and currently combine for 2500 locations across China. Beyond their high concentration in Jiangsu and Zhejiang province, Five Star lacks retail presence in the big cities where the retail battle is won and lost. Five Star’s management has announced that 50 new Five Star stores are slated to open, with a possibility of a few Shanghai locations. The big question now is: Can the Best Buy brass take Five Star and compete with the stiff retail-competition in China? If you take into account the booming online retail presence in China, all of these traditional brick and mortar stores need to prepare for a fierce battle. Many Chinese consumers now go into stores just to test, then go home and buy the product on or, usually for 20-30 percent less. Additionally, MediaMarkt’s management has got to be watching these events unfold closely. The German retailer recently entered China with high hopes, but with Best Buy’s exit, is MediaMarkt next in line?

Home Depot Exits Beijing


ome Depot has surrendered their final store in Bejing, effectively removing the US-Retailers presence in China’s capital city. Home Depot, which entered China in 2006 with a 12-store purchase of local retailer Homeway, has been struggling to find a suitable model for the China market. Many analysts cite China’s lacking DIY culture as the major reason for its struggles, which has forced Home Depot to close five of its stores in the last two years. The final seven stores are located in two cities: one in Xi’an and the remaining six in Tianjin, where the company’s headquarters are located. Down, but not quite out. The Home Depot brass has made it clear that they will be focusing on the tier two and three markets, which are growing at tremendous speeds. Price point and customer education will be the key areas of focus for developing the market. With hundreds of small construction and renovation companies currently available at cheap rates, Chinese consumers simply don’t choose to DIY. These companies take care of sourcing the products, negotiating the price, and installation. At present, the Chinese don’t see the purpose in DIY. Can Home Depot change this? B&Q, the other major foreign player in China’s DIY retail market, has finally found a bit of success. Chief Executive Ian Cheshire suggested that the retail chain has finally broken into the black after three years of losses. Despite the new found profits, the fate of the 43 B&Q outlets will be decided later this year. 10 MARCH/APRIL 2011


China expands port in North Korea


Chinese officials have come to an agreement with North Korea to expand the Rajin Port in the north-eastern corner of the country, near the Russian and Chinese border. An estimated US$2 billion has been invested to expand the Rajin Port from an unnamed Chinese company via the North Korean Investment and Development Group. The warm-water port will reduce transportation costs for heavy industries in Jilin Province. Currently, all production from the region must be shipped south by rail, but with the port expansion, industries would have direct access to the Sea of Japan. China is hoping that its efforts to further solidify economic ties with North Korea will allow it to eventually gain access to the DPRK’s vast and untouched mineral resources. Iron, coal, gold, and several rare earth elements are just some of the rich deposits found in North Korea, and an expansion on the Rajin port would allow China to quickly and easily ship the minerals.

We Want to Hear From You!

We invite you to share your thoughts and opinions regarding all of our articles. We will publish selected readers’ comments in future issues of CHaINA Magazine. Correspondence may be edited for clarity or for length. Email us:

Advice into Action To help you navigate the complex issues that come with working with suppliers and customers in China, we will assemble an experienced team around you to get the results you really need.

For more information or enquiries, please contact: Mark Gilbraith Tel: +86 (21) 2323 2898

Robert Barrett Tel: +86 (21) 2323 3818

Ryan Dourado Tel: +86 (21) 2323 3571

2011 PricewaterhouseCoopers Consultants (Shenzhen) Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Consultants (Shenzhen) Limited, which is a member rm of PricewaterhouseCoopers International Limited (普华永道国际有限公司), each member rm of which is a separate legal entity.




Seeking: - Apprentices - Four-color press operators

Recruiting: - Paper folding worker - Finisher

Recruiting: -Laminators -Operators -Indent Workers -3 Apprentices -General Laborors -1 “Cutter”

Salary Negotiable! Seeking: -“Flat cut” labor -Knitting labor -Mechanic -Overlock machine operator


Handuo Jewelry Company seeking: Drill workers: 50 (no exp req.) Plastic engineer: 1 Mounters: 15 (no exp. req.) Stock Workers: 5 Packers: 15 (no exp. req.)


Hiring one plastic color printer, One engraver and one apprentice

Hunting For


Don’t let your eyes fool you, this is not a protest. Just one of the many recruitment tactics being used to find labor for China’s assembly lines.

Wanted! Driver: 3 Product handlers: 3

Warehouse workers: 3 Receptionist (>high school level): 1


Frontlines NEWS BITES

Quick Bites

China and India took 32 spots (16 each) on Forbes Asia Fab 50 list, which included companies like Lenovo Group and Bharat Heavy Electricals. u

The trade gap between India and China has widened to more than 10 times in favor of China according to Reserve Bank of India chairman D. Subbarao. u

Negotiations between General Motors and Piaggio Vehicles, the Indian Subsidiary of Piaggio & C.s.p.a of Italy, have ceased after a deal could not be reached to source engines for GM’s passenger and commercial vehicles. u

Consona Corporation released the first Simplified Chinese version of its AXIOM ERP solutions software designed to meet requirements for the metal, wire and cable industry. u

Air Freight Asia Conference & Exhibition

Asia’s foremost conference and exhibition for air cargo and supply chain executives is slated for March 8th to the 10th at AsiaWorld-Expo, in Hong Kong. Attend, meet and benefit from key exhibitors and company figures while learning about the latest industry trends and issues impacting today’s supply chain in Asia.


Coach production on the move

Coach Inc, the popular upscale handbag company, has announced it will reduce production in China due to rising costs. Vietnam and India are slated to benefit from the move, as they can offer the company lower rates for production. China has been very good to Coach, being the company’s fastest growing market, however the rising labor costs have had a negative impact on margins.

Esprit exits China Factories

Clothing giant Esprit has announced plans to move its sourcing from China to Bangladesh after posting a 21% drop in first half profits. Like many of the garment manufacturers in China, Esprit is facing the challenge of rising raw material and labor costs, and are pursuing new, lower cost countries.

Boeing eyes India

Boeing has committed US$2.3 billion to India with the hope of spurring technology and job development, and to establish India’s position as a major player in the global aviation supply chain. Boeing estimates that India’s aerospace market is valued at US$31 billion over the next decade.

Kao builds second plant

Kao Corporation has spent several billion Yen to build its second manufacturing facility in Anhui province. The 125,000 sqm facility will help boost the company’s presence in the region and ease pressure on the Shanghai plant.

“Made in China” a winner in London

The London Olympic commission announced that China will be the key supplier for roughly 65% of the products for the 2012 Olympic Games. The UK, will only produce 9% for their Olympics. It’s interesting to note that a Birmingham company which made the badges for 1908 London Olympics, lost their bid to do so again to Bejing Huajiang Culture Development Company. Sorry mate.



What else is Apple up to? P.34 Logistics

Shandong to invest US$7.6 billion

Shandong Province has laid out plans to invest RMB50 billion (US$7.6 billion) for various shipping and port projects over the next five years. Overall cargo tonnage is estimated to exceed 1.1 billion tons by 2015. The investments fits nicely into Shandong’s plan to develop into the largest handling hub, shipping container hub, as well as a critical oil and coal hub for China over the next decade.

Metro chooses Shuanghui

Biggest Chinese Modern Steel Logistics Project

The largest modern steel logistics project has been launched by Shagang Group, called the Jiunong Steel Logistics Project, with total investment valued at RMB30 billion (US$4.5 billion). The deputy board director of Shagang said that the company’s agreement with Shuanghui planning for annual sales between Logistics, to become the ex- RMB200 to 250 billion (US$30clusive cold-chain logistics 37billion). provider for the German food retailer. Shuanghui will provide cold-chain coverage to 48 Metro stores in 35 cities.

Legal Matters

Apple under fire

As Apple begins a major retail push in China, the popular tech company has been hit with accusations by several Chinese environmental groups of ignoring safety concerns. A report entitled “The Other Side of Apple” ranked Apple as the least responsive of more than 20 tech companies to health and safety issues at manufacturing facilities. Other companies accused:

Metro group has signed a muchsought-after


7Eleven makes big plans for China

The popular American convenient-store chain plans to open up two stores in Chengdu, Sichuan Province and additional 50 stores by yearend. Over the next five years, 7Eleven hopes to have more than 350 locations in Chengdu alone, with more targeted openings in West China to come.

Japanese Cosmetics Company Shifts Focus Despite recent reports that the low-end consumer mass market in China is set to undergo tremendous growth for the next 2 years, Japanese Cosmetics company Shiseido Co. hs revealed plans to target China’s middle Class. Sales in Japan haven’t been impressive, so the company plans to release a line of lower-cost products to capture the 60 million strong Chinese cosmetic market.

Busted! Walmart and Carrefour punished

China’s National Development and Reform Commission (NDRC) has made formal accusations against 11 Carrefour, three Wal-Mart, and one domestic supermarket for quoting misleading prices. The NDRC is encouraging local governments to seek maximum fines of RMB500,000 (US$76,000) against the retailers. This is particularly damaging to the reputation of foreign retailers, as they are usually trusted over domestic stores regarding their pricing.

High-level Railway Executive Under Investigation Luo Jinbao, the former chairman of both the China Railway Container Transport Corp. Ltd. and China Railway Tielong Container Logistics Co., Ltd. has been detained for “violations of discipline” or involvement in a mining accident that took place in Datong, Shanxi province.



Frontlines Lost in translation

The 2nd Largest Logistics Park in the works

Ningbo’s first 3PL medical logistics hub


he second largest logistics park – Xiang-Gan Logistics Park – will be built on the border of Hunan and Jiangxi with a total investment of RMB600 million (US$91 million). The site will cover 1300 acres with construction beginning this March and will include warehousing, distribution, and processing facilities. The annual sales revenues are expected to reach RMB3 billion (US$45.6 million).

evelopment of the first 3PL medical logistics hub in Ningbo kicked off on January 12th with a total investment of RMB72 million (US$11 million) and is expected to begin operations before July 2011. The logistics hub will support delivery work among more than 6,000 end-customers in Zhejiang Province and the annual distribution is forecasted to reach RMB2 billion (US$30 million).

Shenyang now Top 5 for Cold-Storage

Chongqing to Open 4th Logistics Channel



he latest cold-storage warehouse with a 3,600 ton-capacity, constructed by Shenyang Nonstaple Foods Group, began operating last December. The latest cold-storage warehouse improves the total capacity of cold warehouses in Shenyang to more than 300,000 tons, making it the 5th largest in China. Several other major cold warehouses are under construction from companies like Tawan Cold Warehouse, Bajiazi Cold Warehouse, Baitabao Cold Warehouse, which will bring an additional 60,000 tons of storage capacity to Shenyang.


hongqing will open up an additional logistics channel to add to the current three major international logistics channels it already operates. The new channel will have a total length of 18,000 km and will connect Chongqing to South-East Asia, the MiddleEast and end in The Netherlands. On completion, freight from Chongqing will take just 30 days to reach Rotterdam.

The biggest luggage and bag logistics mall in south-east China


he biggest luggage-&-bag logistics mall in south-east China will be built in Quanzhou, and will be an important hub for luggage manufacturing and export. The local government, the Association of Raw Material Luggage and Bags of Fujian, and the Luggage-&-Bag Association of Quanzhou jointly invested RMB2 billion. It is planned to cover 300,000 sqm and begin operations by the end of 2012.

Nanjing Signs a Good Deal with Taiwan


he Nanjing Economic and Trade Delegation (NETD) has signed coordination agreements with Taiwan External Trade Development Council to source US$845 million worth of goods from Taiwan. The NETD includes companies such as Suning Appliance, the largest electronics retailer in Mainland China, as well as Yuruan Group, the largest meat processor in Mainland China, and Lopal Petrochemical Co. Ltd. A US$500 million portion of the deal was strictly for Acer products for Suning Appliance.



Guizhou Yibai Pharmaceutical invests RMB2 billion


uizhou Yibai Pharmaceutical, a pharmaceutical company with revenues of RMB2 billion in 2010, plans to invest RMB2 billion to build an industrial park. The plan includes construction of an R&D center, logistics hub and new drug manufacturing line. The park will cover 600 acres in Guiyang city, which will help form a regional industrial cluster for traditional medicine and pharmaceutical R&D, and manufacturing

Chang’an automobile to build “Motor City”


hang’an automobile has plans to build a grand “Motor City” in Dujiangyan near Chongqing, with a total investment of more than Ex-Factory Prices RMB30 billion (US$4.5 billion). The planned coverage of 10,000 increasing in China acres will include headquarter everal beverage manufacturers have announced they have raised for Chang’an automobile, R&D center, logistics hub, processing ex-factory prices. Manufacturers and manufacturing hub. The annual like Wahaha, Coca Cola, Pepsi, and comprehensive output Nestle’s, have raised ex-factory value of products is prices by RMB 1-3 per case for their expected to reach major products. The reason stems RMB 100 billion from increases in raw materials (US$15 billion) in prices like sugar and fruit. Sugar 2015. prices have risen by 160% over the past year.


Xu Liuping, President of Changan Auto

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Need a job?

in & Out James Jin President of Asia Pacific

James Jin has stepped up to take the position of President of Asia Pacific at MGC.Com, the largest global online marketplace for the manufacturing industry. He will be responsible for business strategy and operations in the APAC region. Previously, Mr. Jin was Vice President and GM for MFG. com APAC. Michael Zakkour Prinicipal Technomic Asia

Michael Zakkour, an expert in strategic market planning and sourcing, has joined Tompkins Associates as a principal through its Asian and European division, Tompkins International, and its subsidiary in China, Technomic Asia. Zakkour is the former Managing Director of ChinaBright Star LLC and was Vice President of BeijingGongmei, a manufacturing conglomerate in China. Anne Rey Director of Supply Chain in Demand Planning Philips Lighting Asia

Anne Rey has become Director of Supply Chain in Demand Planning at Philips Lighting Asia Commercial. She previously held the psoition of Head of Supply Chain at Philips Lighting China Sourcing Group. She has worked in the industry Donghong Zhu Strategic Procurement Manager Agilent Technologies


Donghong Zhu, the former Materials & A/P Sourcing Manager at Agilent Technologies Shanghai, has moved to Agilent Technologies Singapore to become the Strategic Procurement Manager. Mr. Zhu has more than 10 years of experience with Agilent Technologies, and has previous industry experience with Hewlett-Packard. MARCH/APRIL 2011

Steve Chen CEO Tommy Hilfiger China

The Tommy Hilfiger Group has announced the appointment of Steve Chen as Chief Executive Officer of Tommy Hilfiger China. Mr. Chen joins Tommy Hilfiger with almost 20 years of fashion, brand management and retail experience in China. David Wei CEO

David Wei, CEO of Alibaba, has resigned from his position after an internal audit revealed that the company’s website had been used to defraud global buyers. Both Mr. Wei and COO Elvis Lee were not accused, however resigned to take responsibility for the incident the company is calling a “systematic breakdown”.

Gary So Former Managing Director, North Asia Menlo Worldwide

Gary So has also left Menlo Worldwide at the same time as former colleague Jess Goldberg. Mr. So has reportedly left Menlo to pursue other business interests.

Philip Zhang Former General Manager SEEBURGER Inc.

Philip Zhang has left his post as General Manager of SEEBURGERS Inc. Mr. Zhang spent a little over 2 years working for the company, and has previous experience at companies like Infor and Mapics.

Frontlines Frank Deiss President and CEO Beijing Benz Automotive

Frank Deiss will replace Gunter Butschek as President and Chief Executive Officer (CEO) of Beijing Benz Automotive Co., Ltd, a joint venture between Daimler AG and Bejing Automotive Industrial Holding. Deiss joined Daimler-Benz AG in 1984 and had held positions in various departments. In 2005, he was appointed as the Head of Global Procurement at Mercedes-Benz Cars and Vans (PMC).

John Hong Global Supply Chain Manager Infineum

John Hong is the new Global Supply Chain Manager at Infineum. Mr. Hong will be responsible for managing a global team which oversees logistics operations, development of supply chain solutions and customer servicing activities. Previously, Mr. Hong worked as the regional Supply Chain Director for Asia & Pacific at BP.

Rinaldy Sudyatmiko Senior Director of Automotive BD APL Logistics

Günter Butschek Executive Vice President of Operations Airbus

Günter Butschek has been appointed as Executive Vice President of Operations and will take up this position on March 1st. He replaces Gerald Weber, who will leave Airbus after successful completion of his contract. Mr. Butschek will also become a chairman on the Board of Management of Airbus in Germany.

Rinaldy Sudyatmiko has joined APL Logistics in Singapore as Senior Director of Automotive Business Development. He’ll be part of the automotive unit which provides supply chain management support to many of the world’s largest car makers and parts manufacturers. Sudyatmiko has more than 15 years of experience in the industry.


High speed cross belt DEMATIC Carton Sortation Systems Now surplus due to business growth, one system in Melbourne, one in Sydney. Immaculate condition with full complement of spares. Melbourne: Dematic Cross Belt Sorter DCS-60-80-75; 182 Cells, each cell 590mm x 800mm, 48 declines, three in-feeds, capacity 90 cartons/minute, Data-logic scanners, available in May, see running now. Sydney: Dematic (Colby) Cross Belt Sorter; 283 Cells, each cell 590mm x 800mm, 168 declines, three in-feeds, capacity 90 cartons/minute, available in May, see running now. For details contact Adam Noakes on +61 400 989 632 or





Mergers Acquisitions

US$46bn 1

2 US$5.4bn

AMB Property and ProLogis will unite in an all-stock deal to form a powerhouse in warehousing and industrial real estate. The newly formed company will own or manage US$46 billion inn assets and will have operations in 22 countries. The merger is estimated to create savings of US$80 million annually.

US$400m 3


4 US$375m

US$190m 5

6 US$190m

2 PetroChina, the largest enUS$9.5m 7 ergy producer in China, has come to an agreement with Encana Corp.’s to purchase a 50% stake in the company’s Cutbank Ridge gas assets. The deal is valued at US$5.4 billion and is part of a string of ongoing energy deals by Chinese companies currently totaling US$46 billion. 3 Tencent, the highest valued Chinese online gaming company, has purchased a majority stake in USbased Riot Games for approximately US$400 million. The move comes as the US market for social media and games continues to grow in leaps and bounds. 4 Global Logistics Properties Ltd. has acquired a US$375 million controlling stake in Airport City Development Co., the company that developed the cargo handling area for the Beijing Airport. Cargo demand through Beijing Airport is slated to increase by 15% yearon-year for the next five years. 5 Intermec Inc. has successfully purchased Vocollect Inc., a voice technology company, for US$190 million in an effort to further the reach of its voice solutions technology. There are currently no plans to rename the company, or to relocate more than 400 Vocollect employees. 6 Zebra Technologies, a manufacturer of thermal barcode label and receipt printers, RFID and other solutions, announced it will sell its Navis business to Cargotec Corporation. The deal will provide Zebra with US$190 million in cash, and an estimated aftertax savings of US$30-40 million.

Goodman Group has acquired the Kangli Warehouse Facility for RMB62.5 million (US$9.5 million). An additional 48,000 sqm is developable, and has a forecasted value of RMB150 million. 7

Join the discussion on....

The Supply Chain Social Network



THE HEART THROBS OF A few professional faces that will make your heart race!

Joseph Huo Commercial Director IDS Group May Zhao Market Development Manager, Asia Pacific at Synthes

Pamela Pung General Manager, Group Relations, APAC A.P. Moller Maersk Group

Hong Yang Beijing Morale Furniture Co.Ltd. Supply Chain & Logistics Ops specialist

Wendy Torres Alamilla

Global Commodity Director Compressors Electrolux

Lukasz Muzyka

Huimin Wang VP Hercules Logistics and Forwarding

Benjamin Revah

Project Manager Dajin Logistics

Supply chain expertise from strategy to execution

Marc Fontaine

Procurement Manager Asia Pacific ExxonMobil

Marketing Manager Spaceframe Construction & Engineering

We’re pleased to announce the expansion of our office in Shanghai. At CGN, we use our broad experience and deep knowledge of supply chain, operations, and enterprise management to solve complex business problems. What answers can we find for you? Harsh Koppula, Managing Partner No.93 Huaihai Zhong Road 26/F Shanghai Times Square Office Tower Shanghai 200021, China. Tel.: 021-5117 6377 E-mail: Business Performance Consulting United States | Europe | India | China 21



The Next Five-Year China Plan and What It Means For You


By Michael Zakkour Principal at Technomics Asia

ncient Chinese leaders used Oracle Bones (bones with inscriptions of divination) to tell the future and guide them in important matters. Today, modern businessmen can look to China’s January 1 implementation of its 12th Five Year Plan to guide them in important cross-border business matters. The five-year plans have been a staple of the People’s Republic of China since its founding in 1949. This year’s version is pretty clear about what China views as vital to its continued growth but reading between the lines and finding the right guide is key to making it work for your business.

Green Means A Cleaner, Richer China China sees alternative energy development and a cleaner environment as integral to the growth and health of its society and economy. It’s well known that China’s water, air and land are polluted almost beyond compare. The Central Government in Beijing knows that for China’s growth to be sustainable, a nationwide effort to combat existing pollution and to prevent future pollution is a matter of national interest. Beijing also realizes that in a world beset by expensive and diminishing fossil fuels, green technology will be a future moneymaker. The plan calls for an increase in wind energy to produce 90 Gigawatts (GW) of power for the country by 2016. For comparison, the United States, the world leader in wind power production, currently produces 35 GW of power from wind energy. The plan projects seven major new 10 GW wind power construction sites to help achieve the targets in the five-year plan according to China’s National Energy Administration. Takeaway: If you are a foreign company focused on or with ties to green and clean tech, China is likely to be your fastest growing market over the next five years. Health Care Reform with Chinese Characteristics The five-year plan continues its focus on the health and well-being of the Chinese people. A major objective is building a modern healthcare infrastructure which will benefit the health of the country’s people and China’s financial health as well. The modern health care industry is still in its adolescence in China; the population is aging and people are demanding better and more comprehensive care. All this means that China is a top destination for pharma, bio-tech, medical equipment and device makers, elder-care specialists and healthcare companies across a wide array of fields. The government will also be focusing on improving the social safety net so that Chinese consumers do not

have to save as much for health care costs and can open their wallets wider to consumer goods. In other words, the investment in healthcare has a three-fold positive effect: A healthier populace, the chance to become a world leader in health and life sciences and to help with the transition to a more consumer, and a less export oriented economy. Takeaway: China realizes that sustainable growth requires not only a healthy environment, but a healthy population as well. Foreign companies stand to realize huge gains by strategically entering or expanding in China. Rising Wages and Inflation This is the area where much of the media has focused its attention, and it would be remiss not to mention it here, albeit with some context. The five-year plan clearly seeks to increase people’s income across China’s population, especially for low-income earners. The plan seeks to create a “balanced economy” in which the growing disparity between the elites and the average wage earner is addressed. China cannot sustain itself on a “rich coast – poor interior” paradigm. This is a double-edged sword for China in that as it increases the wages of workers, it will be in jeopardy of losing its “low-cost” manufacturing base. This is a trade-off China must and wants to make. As it moves up the value chain and derives more of its wealth from innovation, R&D, marketing and sales, the low-margin manufacturing that built the new China will move offshore. Takeaway: Increasing disposable income, a fast growing elite class and a middle-class population approaching that of the total population of the United States is the growth many companies are banking on for their nearand long-term growth. The tenets of the plan should increase these opportunities.


Contents How I Got Started Ktech Foods /23 Shanghai’s Mushroom Source/26 凯文食品:我的开始 /24


A Goodyear For Sourcing/24

上海鲜蘑从哪儿来 /26


How I Got Started: KTech Food


n the summer of 2003 I arrived in China as a part of a group hoping to establish an agricultural production project in Jilin and Heilongjiang Provinces. Over the summer I began to develop a big interest in all things food related within the China supply chain. I made a decision that my long term interests lay within China. On completion of the agricultural project, I looked at various options that would allow me to stay in China and pursue my career goals. Initially, I began part time work helping a Jilin trading company to develop their overseas market and manage the supply chain. I also spent some time working in Chinese universities teaching English and Science. Then I moved to Qingdao in Shandong province and took a job as a Supply Chain Manager for an international trading company specializing in fresh and frozen food products. During this six year period, I spent countless hours and days researching the business environment in China, the opportunities for conducting business, the potential dangers and threats, the culture and how the financial matters are dealt with. Around the middle of 2009, I began to put in place my long term strategy for establishing my own foreign investment company in China. I began writing a five year plan and what initial investment I would need. Later, I began contacting potential clients and business people that could help me to

develop my plan. On February 23rd, 2010, I formally registered my business with the Qingdao Free Trade Zone government. Qingdao KTech Food Consultancy Co., Ltd was born. My first assignment was a factory audit in South East China on behalf of a well known European supermarket chain. I then went on to conduct further audits and some separate project work. The company was also featured in the October 2010 publication of the Beijing based journal, China Food Safety. In recent years, China’s food supply chain has been negatively impacted due to adverse food quality and safety issues, resulting in many consumers becoming wary of Chinese products. My aim is to establish methods of sourcing, training and monitoring reliable China based suppliers to ensure that the product meets international standards on quality and safety. Then to seek out

supermarkets, catering supply companies, manufacturing companies etc. that wish to procure quality assured Asian food commodities. My aim is not to become an agent or a trader but someone that can manage supply chains on behalf of western based procurement professionals. To maintain a level of focus, I decided to limit my business scope initially to agricultural commodities such as fruit and vegetables but develop a significant interest in seafood and fish products. In the future, I see the seafood business as a lucrative sector in my business plans as huge quantities of aquatic food products are already exported from Shandong and other adjacent coastal areas. I have sought out a Chinese partner with significant experience of seafood trading already. This is something we plan to develop together. 23



for A Sourcing H H

Manoj Mehta, General Manager of Global Sourcing Solutions at Goodyear discusses success, challenges, and the future.

ow is Goodyear’s sourcing activity progressing in China? On the sourcing side, we’ve very much benefited from the infrastructure that we set up five years ago in 2005 to source raw materials, capital equipment, finished goods and indirect. The Global Sourcing Office in Shanghai (GSS) assists Goodyear’s global operations in sourcing from China and other low cost countries in Asia. Goodyear with the help of GSS started at essentially zero and in 2010 we assisted in the sourcing of over $1billion from China and Asia.

固特异在中国采购现状如何? 在采购方面,我们五年前就建设基础设施设备以采购原材 料,引进资本设备和成品、间接品, 这让我们颇为受益。我们 在上海的全球采购办公室(GSS)协助公司的中国及周边低 成本国家的采购计划。一切几乎从零开始,2010年我们在中 国及亚洲的采购量超过10亿美元。

What are some of the main products that Goodyear is sourcing in this region? We look at an array of direct and indirect products. Our operations look to procure products ranging from manufacturing equipment to advertising materials at the lowest cost possible. One of the benefits of our organization is that we look at all areas of procurement spend to see if we can help reduce the cost through a qualified and Goodyear approved lower cost supplier. 固特异在本地区采购的主要产品有哪些? 从直接产品到间接产品,我们都会考虑,从制造设备到广 告材料,成本要尽可能低。我们采购办公室对于采购原材料 的参考范围很广,关键是成本,基于此我们再选择可信的供 应商。

How are you managing your partnerships with suppliers in China? We work closely with our suppliers and seek to build long term business relationships with them. As we grow, our suppliers business grows with us. It creates opportunity for both of us. The key for us is based on two main criteria. One we need to have faith in our suppliers that

they can deliver upon our request when asked. Second they must continue to meet or exceed our stringent specification for the products we source from them. We talk about long term business relationships because as our specification evolve we require our suppliers to meet the new standards to remain part of the team

你如何处理与中国供应商之间的伙伴关系? 我们同供应商关系紧密,并且致力加强合作。公司成 长了,供应商也随之进步。两方受益。不过对于供应商 我们有两个关键点。一是我们对其有足够的信任。第 二,现有供应商也会不断接受我们的审批,供应商清单 虽是动态的,但我们致力发展长期合作关系,希望供应 商能与固特异同进。

How much is inflation affecting the sourcing activities of Goodyear? Inflation has been a challenge in this part of the world for years. Any recent changes has not had an impact on our sourcing strategy 通货膨胀率影响了固特异的采购活动吧? 通胀一直以来就是这个行业的难点了。其实游戏规则 没有变,它并未真正影响到我们的战略。

Does Goodyear have a plan if the Yuan is revalued? Goodyear is an international company that operates in multiple countries around the world. Currency values are always fluctuating, and there’s a set of professionals in Goodyear who try to minimize the impact of these currency changes. 人民币汇率如果降到一个至低点,固特异是否有个应对 计划? 固特异公司是一家国际性公司,在世界各地的数百个 国家都有运作点。货币风险总是起伏不定,但固特异的 专员们协助减少币值风险带来的影响。

Is the pressure to revalue the currency affecting sourcing plans in China for Goodyear? There are some suppliers who are bringing it up as more of a “what if it happens, how would we deal



US$ 1 Billion+

Amount of global procurement/sourcing from Asia


Percentage of global spend done in 2010 via the Shanghai Global Sourcing unit


Amount of savings achieved on ocean freight cost on an annual basis.

US$ 700,000

Savings in Asia-Pacific ocean freight costs in 2009

with that situation” and frankly a lot of the goods that we are sourcing get affected by global commodities. For example oil, natural rubber, steel etc… all these commodities are traded in US dollars, so on one side the Yuan gets more expensive, but now with the same Yuan, you can buy more of the items we need. There’s a little bit of a natural hedge that controls the excessive impact of the currency risks. 固特异中国的采购计划受到了货币升值压力的影响吧? 一些供应商总是担心“如果币值如何如何,我们又该怎么 办”,坦白说,采购全球商品像石油、天然橡胶和钢材等, 我们是受到影响,这些商品都是以美元交易,所以人民币更 昂贵,但以美元购买就能得到更多产品。这个自然对冲减少 了货币风险带来的影响。

Can you share some of Goodyear’s plans for sourcing the upcoming year? We expect to continue our strong growth in the next 5 years. Goodyear is committed to China and this region, not just from a sourcing perspective, but as a company that does business throughout China. Goodyear is building one of its largest and most modern tire factories in the world outside of Dalian, in Pulandian, which will start production this year. Having that brand new factory, where millions of dollars of investments is going in to support the local industry, shows that Goodyear is here for the long-term. 您能分享固特异来年的采购计划吗? 我们期望在未来5年内保持强劲增长态势。固特异选择了中 国,不仅是考虑到采购方面,也是想在当地市场发展自己的 公司。固特异正在大连建设世界上最大的轮胎厂家之一的普 兰店,不久就会投产。我们建设新工厂、投入巨资,当然会 长期驻足此地。




How many kinds of mushrooms are you sourcing? I have nearly one hundred different kinds of wild and farmed mushrooms. 现在进的蘑菇有多少种? 野生蘑菇、人工种植蘑菇加起来约100种。

Where are you sourcing them from? Most are from Yunnan, some from Tibet, some from Changbai Mountain in Northeast China. My supplier in Yunnan has been in business for 10 years, specializing in supplying fresh vegetables to Shanghai. 采购源是哪里呢? 大多来自云南,那儿我的合作公司经营了10多年蔬果供应业 务;有些蘑菇从西藏采购,经云南再到上海;还有些蘑菇来自长 白山。

How are they shipped to you? My partner company in Yunnan sends those mushrooms to us by air - usually with China Eastern Airlines or Spring Airlines - almost every day to Shanghai. Most of the time, they arrive at Hongqiao Airport before 3 am. 这些蘑菇是如何运到您这儿的? 这 些 蘑 菇 每 天 空 运 到 沪,通 常 是 东 方 航 空 和 春 秋 航 空 ,凌 晨 三 点 前 到 虹 桥 机 场 。蘑 菇 都 是 分 类 与 干 冰 装 在 小 泡 沫 盒 内,从 机 场 运 回 我 们 再 据 客 户 需 求 分 包 。

How big are your daily orders? We can sell 150 kilos of fresh mushrooms like Porcini and Chanterelle every day. For farmed mushrooms, every day we sell at least 100kg of the Portobello and at least 40 kilos Golden Thread mushrooms. For frozen and dried mushrooms, we just get 20-30 kilos every day.

For fresh truffles, we sell at least 8 kilos every day in Truffle season (from end October to next March). 现在日需求量大概有多大? 鲜蘑如牛肝菌、雞油、松茸和羊肚菌都是大厨最爱,大宴时 通常是首选,每天大约可卖出150公斤;养殖蘑菇如大花菇每天 可卖100公斤,金线菇每天40公斤;冻蘑、干蘑大约每天二三十 公斤;松露旺季(十月底到次年三月)日销量达8公斤。

So how do you deliver those mushrooms? We’ve got one car and a driver who also helps us with the packaging and we also have two motorcycles for emergencies. The driver starts to deliver before 6:30 am in case there’s a traffic jam and all the deliveries are done before 3pm. 如何配送呢? 我们有一辆车和一个司机,司机帮忙打包,每天早上6:30 之前开始配送,下午3点之前完成所有工作。另外还有两辆应急 摩托。

Who are your main customers? Most of them are hotels and restaurants. We supply to roughly 30 hotels like the Ritz Carlton, Peninsula, and nearly 70 restaurants like Madison and M on the Bund. We deal with some online shops like and of course some personal customer, local celebrities, investors, bankers, etc. We supply to some of the Chambers of Commerce as well, like the French Chamber. 主要客户有哪些? 大多是餐馆酒店。沪上30多家酒店如半岛、丽嘉等都是常 客;餐馆更多,有70多家,如Madison,M on the Bund等;另外还 有飞蛋等网上超市以及个人客户——有很多名媛、银行家什么 的;使馆商会也有,比如法国商会、西班牙领事馆。


PROCUREMENT What kind of problems have you encountered? There are problems regarding the quality. Some mushrooms are big, some are small. I can’t control the size, which I have to explain to the chef. Depending on the weather, the mushrooms might be covered in mud and it takes a long time to clean them, which affects delivery time. Sometimes the mushrooms are broken during delivery. Sometimes the airplanes are delayed due to the weather, that’s another thing that we can’t control. But luckily the airplanes haven’t been delayed more than four hours, so it hasn’t been a serious problem yet. 通常会遇到什么麻烦? 质量——我们不能控制蘑菇大小而且空运时蘑菇容易断, 所以有时我得跟厨师解释;雨天蘑菇烩捣上一身泥,清洗很费 时费力,也会延误配送时间;飞机延迟也没办法,但还好,一般 不会超过四个钟头。

太影响了!很多蘑菇价格都涨了,松露的零售价从300500元/公斤涨到800-1200元/公斤。丽嘉、M on the Bund这些酒 店餐馆都少了松露菜系。可是个人需求增加。是增加了!

What are you plans for expansion? Our business is growing well and our revenue has doubled since last September, to RMB500,000-600,000. We want to expand around the Yangtze River delta region. And for next step, I want to go to Beijing, the capital! We have launched to help attract more people and promote our business. 未来有何打算呢? 从去年九月到现在营业额翻了一番,已经到五六十万了。 我们建了QQmushroom.com借以吸引更多个人客户;下一步 想延伸到长江三角洲;然后到首都北京去!我希望国外来宾 能在国宴上品尝到中国的蘑菇!

How has the recent inflation affected your business? It has affected it a lot. The price for many wild mushrooms has increased. For example, truffles’ retail price has gone from RMB300-500 per kilo to RMB800-1200 per kilo. Hotels like Ritz Calton, and restaurants like M on the Bund and Johnson have removed truffles from their menu. 通胀影响了您的生意吧?

Sales Contact Jellis Kan, T. +852-2965-1668, Contact Reed Exhibitions

The right place. The right time. The right people. The interactive global platform where East meets West for business. AsiaWorld-Expo, Hong Kong




Are Manufacturers under too much



lmost every major multinational company with branches in China is beginning to look at the next steps that will push its China supply chains to the next level, both domestically and internationally. The market is more demanding, prices are going up, and it’s time to factor organizational and flow technology into the equation. In order to help with the efficiency and the sustainability of their business, Bosch China is in the process of rolling out SupplyOn solutions in their purchasing, logistics, and quality departments as part of a greater global initiative. Bosch, which already has 15 departments and plants in China using the SupplyOn platform, operates 47 entities in he China and sees theirfailure branches as the uncontained of here a Rollsnext important node of modernization. “Our purchasRoyce Trent 900 engine on a Qantas ing has alreadyA380 reached economy scale in China,” lastan month wasofa stark reminder says Huang Bin, Corporate Purchasing Director, Asia that even the newest airline equipment Pacific at Bosch (China) Investment Ltd. “At this point, is not immune from danger. There are it’s very important thatabout we have clear purchasing serious questions howa very it happened, given strategy and a well structured organization.” the British engine-maker had already modified later


models of the engine. Purpose Using It Airlines (SIA) and Lufthansa Qantas,forSingapore With these goals in mind, rolling outmodification a new IT platform were apparently not aware of this and was the next step in streamlining purchasing continued to operate the aircraft unaware apractices potenfor China. are many different forms tial Bosch problem hadWhile been there identified by Rolls-Royce. that SupplyOn can take when dealing with a company, in Around 40 engines will need to be “fixed”. QanBosch’s case the solution acts as a web-based platform tas and SIA will undoubtedly expect Rolls-Royce to between suppliers, on which they they can share foot the Bosch hefty and bill for the revenue losses have purchasing information and delivery forecasts order incurred as a result of the grounding of theinA380s. to help may the transparency of procurement transactions. Airbus also seek compensation if there are de“It’s really important to use modern technology in orlivery delays. derThankfully, to secure information and to establish a standardthe Qantas incident did not end in ized process,” Huangraises Bin. “IT is increasingly tragedy. But says the Mr. situation wider questions important through all of the supply chain, especially in about the whole process of manufacturing modern the logistics and purchasing areas.” jet aircraft. Rolls-Royce may be at the centre of this At the Automotive branchtwo in Suzhou, Supissue, butBosch the aviation industry’s newest complyOn WebEDI works to shorten the communication mercial products, the A380 and Boeing 787 have length betweeninBosch and thethat suppliers, which saves had problems production highlight the comboth Bosch and the suppliers a lot of time. Charling plexities of turning out a new aircraft type. Shen, of Bosch Automotive First,Production the A380 Planner was delivered more than two Prodyears ucts (Suzhou) Co. Ltd, also says that for his department, late as a result of production problems, which SupplyOn helps toelectrical ensure accuracy of mainly involved wiring.and Thetransparency B787 Dreameach data transfer. Bosch has also recently promoted liner’s progress has become almost nightmarish. a new business SupplyOn entitled–Vendor Now threemode yearsviabehind schedule Japan’sManAll aged Inventory (VMI). 28 MARCH/APRIL 2011


TOM BALLANTYNE Chief Correspondent for Orient Aviation Magazine

Because of these new implementations, Charling says that the platform has optimized the process of procurement planning in his department while increasing work efficiency. “Before, we got purchasing orders from our suppliers by email or fax, which wasted time and couldn’t ensure 100% data transfer,” he said. “Now the data can be delivered accurately on time, and suppliers can also download our procurement plan at fast speed.” For the suppliers, advantages of a new platform mean that they can see order requirements on SupplyOn immediately. The Bosch system will get Advanced Shipping Notification (ASN) automatically. There is no manual operation during the process, which means less chance for human error and less need for re-confirmation of data. There is no manual or entrance of data Nippon Airways is the operation launch customer - because during the process, so the data becomes more credible. of supply chain issues and other problems, Boeing

last month suspended test flights after an electrical Set fire up forced one test aircraft to make an emergency In terms effort,ItBosch working to slowly roll this out landing in ofTexas. is notis yet known whether this system to all of its largeand small-scale suppliers. will cause another delay in the launch of the airliner During their kick-off introduction meeting with suppliinto commercial service. ers,The theyquestion do initialmust training monitor the suppliers until be:and were the production schedthey get the hang of the system. Charling says that from ules for these aircraft and their associated equipstart finish,astheengines, rollout process a total ment,to such simply normally far too takes ambitious? of one month. The advantage of this system is that new Is the pressure placed on manufacturers by airline users only need short-term training. Thomas Fendt, customers to produce better, more economic, fuelSenior of Supplier Quality and Supplier saving Manager and environmentally friendly aircraft,Develat a opment at Bosch Power Tools (China) Co. saysprothat lower price, forcing the airframe and Ltd. engine people can be fully trained and ready in a matter of half viders to bite off more than they can chew? a day, can of alsoit,bethis applied to new entering On which the face appears to users be the case. the company. The most difficult part of this whole With each new commercial aircraft developedprothe cess seems toofbethe making sureand new users understand the complexity design functionality increasconcepts behind SupplyOn, not the actual mechanisms. es exponentially, adding to the risks of incidents To this issue, Bosch does regular check-ups on forhelp the with manufacturers involved. theNow, process, and SupplyOn offers andother help questions will likely bemaintenance asked about desk services for users who run into trouble. key developments, such as the far greater use of One huge concern in about platforms for many carbon composites newonline jets and their operating suppliers is information security. To mitigate this, Bosch safety. If such delays and problems become the Global recently signed a non-disclosure agreement norm it may deter investors, whose cash is required (NDA) SupplyOn. SupplyOn also has very limited in largewith quantities to fund expensive aviation proaccess between Bosch and individual suppliers; in other grams, to invest in new aircraft types. words, to evThereSupplyOn needs toassigns be a different rethink authorization of future aircraft ery user ID to ensure data security. development programs and how they are handled so airlines can realistically expect to be delivered a product as promised - and on time. Influencing Suppliers

Contents Does your China factory sell your goods on Taobao?/29 Made in India, Faked in China/32 What’s Apple big deal?/34

China’s Labor Shortage /30





苹果玩的神马? /34

Does your China factory sell your products on


Renaud Anjoran

China factory


had an interesting discussion a few days ago with the manager of a factory in China. He has big plans for selling on Taobao. com. Selling what? The same products he manufactures for one of his American customers… His customer orders large quantities of garments, mostly in small amounts. This was already intriguing to the factory. The products have to be delivered to a warehouse in China. An employee from the warehouse told the factory’s truck driver that 90% of the products would be


sold on the Chinese market. The factory manager connected the dots. Of course it can be sold in China. He even found where it was sold, and for how much. His next step? Using some slightly different fabrics (to cover his a** in case the buyer finds out and investigates this situation), designing a logo that is relatively close to the buyer’s brand identity, and pushing it on Taobao. A few notes about Taobao: it is the sister company of Alibaba (the famous B2B directory), and it was launched as a response to eBay’s en-

try on the Chinese market. It takes no fees on transactions–only on advertisement. It has grown considerably, and most urban and connected Chinese have already purchased something on Taobao (even I did it…). Could this happen with consumer goods sold in Europe or in the US? With many of them, yes. Sometimes they will use your brand name. It is actually very easy to figure out whether it is already the case… Go to, type your brand and search. You might be surprised.

29 29



China’s Labor Shortage


he Year of the Rabbit is upon us, and with it has begun a dramatic battle to find labor for China’s factories. Before Chinese New Year, many migrant workers made their annual plans to return home for the celebrations, with bosses becoming more and more aware that many workers would not be returning to their posts As expected, many Chinese laborers shrugged off the 10-15% higher salary they were promised by their former employers, which has left a severe shortage in manufacturing factories, especially in the southern and eastern regions. The headlines in local newspapers are laden with cries for help. “The Pearl River Delta encounters a massive labor shortage”, “Enterprises in Ningbo are plagued with labor shortages…” It’s also affected common greeting in the regions, which are now more like: Happy New Year…Have you got any referrals for labor? “Less than 50% of workers have gone back to their original factories – this happens in many small labor-intensive enterprises in Wenzhou” according to Wang Hailong from Aokang Group. “Roughly 80% of workers in Aokang went back home before the Chinese New Year and only 100-200 have not returned, which is somehow not that bad.” Facing major labor shortages on their assembly lines, manufacturers have enacted solutions to combat the “60%-back-to-factory-ratio”. Incentive programs with catchy names like “Back-to-factory bonus” and “Back on

time! Lucky Pocket” give bonuses ranging from RMB400700 per worker. Other incentive systems like referral programs can deliver RMB500-1000 per new worker found. Salary and benefit increases have also been reported, with offerings like free time increases by 10% and wages raises of 15-20%. In Wuhan, factory wages for general labor now range from RMB1600-2800, compared to those who work in the booming service industry where minimum wage is now RMB1200. Many governments have also increased their minimum wage to lure people to their regions. Beijing now has a minimum wage of RMB1160, Jiangsu is now RMB1140, and RMB1300 in Guangdong. Shanghai has yet to increase its minimum wage; however it’s scheduled to rise in April by 10%, from the current RMB1120. The fight for labor has begun between factories looking to fill positions on their assembly lines. Several high-tech manufacturers including Foxconn set up signs at railway stations to direct workers to employment registration desks. On the other side of the fight are inland governments, who are pushing new policies to keep their local workers in local factories. Provinces like Sichuan and Hubei, which are famous for exporting labor to neighboring provinces, have unveiled their own incentive programs to keep their laborers. Wuhan’s government has placed “Spring Breeze Cards” (brochures that provide job offer information and hiring details) at railway stations, bus terminals and local labor markets.

Labor Shortage by Industry in Fuzhou (2010 Q3) Sales Textile Electronics Assembly Shoes/Hats Rubber Products Manufacturing Labor


0 5000 10000 15000 20000 25000 30000 35000 40000 45000 Workers Needed Job Seekers

30 30 MARCH/APRIL 2011

Company Recruitment Stats in the Pearl River Delta




Moving Inland March, 2010, Electronics the labor shortfall in the Electronics IndusAssembly trial Park in Suining, Sichuan reached 30%. In Jintang, anChinese workers are known to be other Sichuan county, 12000 new jobs are waiting to be quite attached to their hometowns, which Shoes/Hats filled.With the development of manufacturing inland, fachas played a factor in the shortage of labor in many regions. tories in coastal regions are slowly closing down and movGovernment and company policies have also provided new Rubber Products ing towards the cheaper labor pools. Workers who were incentives to stay closer to home. Mr. Xie, a manager from originally forced to travel and find work in the coastal reXingchao Textile Factory, claims that the labor shortages Manufacturing Labor gions, now have the opportunity to get equivalent or even stem from emerging manufacturing in Inland China. The government realized the -------------------------------------------------------------------------------------------importance of stimulating higher wages, closer to their hometowns. So why not stay? 0 10000 15000 30000in35000 45000 An increase salaries40000 will help retain workers, but in the domestic demand when economic 5000 recovery began after 20000 the 25000 Workers Needed Job Seekers end the consumer will be the ones who lose. Higher wages global financial crisis. Last year, the state council issued a will force companies to raise their prices to compensate bill to encourage industries to shift towards Central and for the increases. When you Western China to aid in the add the additional cost of hirdevelopment of the infrastrucing new workers, profits start ture, and make use of labor in Company Recruitment Stats in the Pearl River Delta to wither away. Analysts are the regions. In 2010, 26 statenow predicting that salaries owned enterprises, under direct Company Hiring NO Job Basic Salary in China will increase by 15supervision of SASAC, signed Mgmt+Gen. Labor 20% annually over the next 50,000 1,500 Foxconn (Shenzhen) 46 large-scale project contracts few years, which will force with total investment valued at BYD (Shenzhen) >10,000 (New Mgmt+Gen. Labor 2,000(New Grads manufacturers to shift their RMB109 billion (US$16.5 bilGrads 8,000) 3000 + bonus) assembly lines inland and furlion) in Sichuan. The “Move Luzhou Shoe Manufacturing 1,800 6,000 ther west, or to pack up and West� began to accelerate led (Dongguan) Operator leave China altogether. by the electronics industry, so Huabao Shoe General Labor 1,800 6,000 much so that labor resources (Dongguan) could not meet demands. In




Made in India Faked in China


llegal Chinese manufacturers are faking drugs, endangering patients’ lives, and undermining legitimate brands, especially those from India. Bian Zhenjia, deputy commissioner of the Chinese State Food and Drug Administration (SFDA), told a news conference last year that reports claiming the country was a major exporter of fake drugs were unfair. “I don’t agree with what the foreign media has been saying. The Chinese government has always paid great attention to cracking down on fake drugs.” But new data from the drug samplings that my research team has undertaken show that China is largely responsible for the fakes attributed to India. The sample sizes are small but

indicative of a larger problem, a signal that New Delhi has every right to pressure Beijing to act on rogue manufacturers within its borders. Indian companies provide vast amounts of generic drugs to midincome and developing nations. By some estimates, 80% of HIV drugs for the developing world come from India, and probably half the antimalarials and antibiotics too. Counterfeiters copy popular brands even when they’re not the most expensive, since the market accepts a familiar product more easily and without suspicion. This means many fakes may be sold before they are detected. And since Indian generics dominate many therapeutic categories of these markets, it is not surprising that they are the ones faked.

My research team collected drugs from 22 cities in 20 countries over the past four years. Of these, 911 antimalarial and antibiotic products were, according to their packaging, made in India. They were procured from 14 countries, mainly in Africa, but also in Thailand and India. Of those products, 79 (or 8.7%), failed basic quality control tests and hence were unfit for their intended use. Of these 79 products, we were able to establish that 37 were counterfeits. More products may have been counterfeit, but without responses from the manufacturers or regulatory agencies, it was not always possible to be sure. Of the 37 counterfeits identified, 22 were definitely faked in China and delivered straight to African nations from China. Hence, from our small sample, over



half (59%) of the fake Indian drugs were actually made in China. Dr Paul Orhii, head of Nigeria’s anticounterfeit drug agency NAFDAC, helped us track where some of the alleged “Indian” fakes had come from. He told us of the astonishing Chinese criminal counterfeiting drug networks his investigators had unearthed. The networks are run from China and employ Nigerians and people of other nationalities. They have successfully infiltrated the entire supply and distribution chains -from producer to patient- across continents. Orhii said they either bribed employees of customs departments, or, in numerous instances, had their own personnel apply and get jobs in places ranging from Nigerian and Chinese customs to two Middle East airlines, which then unwittingly transported the fakes from China to Nigeria. Each compliant official had responsibility at key parts of the distribution system, starting with manufacturing in the Chinese Shenzhen free-trade zone until they arrived in Lagos, Nigeria’s largest city. Remarkably, legitimate or unbribed officials had very little chance to spot the fakes being transported. In one instance, the drug traded by a gang was a fake of an Indian antimalarial drug called Lonart DS. The proper drug is made by Bliss Gvs Pharma Ltd, of Mumbai. The fake didn’t contain any of the correct active ingredients and had it been distributed, might have left untreated thousands of malariastricken children. Fortunately, this shipment was caught through routine surveillance work. But this was not the only example in 2010 where a Chinese-made fake was passed off as an Indian generic in Nigeria, said Orhii. His department has clamped down on those selling fakes from China and now it inspects factories exporting drugs to Nigeria. As a result, Beijing has sentenced six Chinese nationals to death over their part in selling fake antimalarials. The sentence is yet to be carried out. In 2009, our Nigerian colleague

Thompson Ayodele came across another fake of an Indian drug, this time an antibiotic. Later, we found out that it, too, had been made in China. But Chinese gangs do not discriminate whose drugs to fake. Indeed, every major drug company and every country has probably had drugs faked by the Chinese. They’ll fake anything popular. Take Artesunat, the brand of a Vietnamese antimalarial, made by the Ho Chi Minh-based Mekophar Chemical Pharmaceutical. Ongoing research shows that fake Artesunat was found in Nigeria, Ghana, Kenya, Uganda and Tanzania, and also in Thailand- all the handiwork of Chinese counterfeiters. India has a problem with counterfeit and substandard drugs. Many are made by Indians for India’s market. But it may be less India’s fault than we thought. In addition to the examples discussed above, in our ongoing research, we have even come across Chinese fakes in India that sported “Made in India” labels. Obviously, Beijing needs to improve oversight of drug production within its borders, but India must also act. Through the World Health Organization, it must push for strengthening of public health laws against trading fake drugs. It is in India’s interest, and of patients globally, to do so.

US$75-200 Billion The estimated size of the global counterfeit drug industry

1 Million Annual death toll from fake drugs

1039 Number of incidents and arrests in Asia (2009)

10%-15% Percentage of fake drugs in developing nations

50% Percentage of the time that fake drugs are purchased online




What’s Apple’s Big deal? The tech-giant shows supply chain prowess


Apple keeps making innovative and creative products that everybody wants

or a few months now, bloggers and geeks have been speculating on what the uber-popular tech company Apple Inc. had spent US$3.9 billion on. Guesses ranged from liquid metal to new 3D technology.

Kevin Foehner

The speculations can finally cease as Apple announced it has secured suppliers for its display panels for the next 2 years. It’s uncertain who the three suppliers actually are at this time, however based on past cooperation, LG Display, Sharp Corp. and Toshiba Mobile Display are cited as the likely partners. All three companies have had previous access to the intellectual property, licensing and technology of Apple, so the choice in partnerships is a logical move. The Apple Way In 2005, Apple made waves by signing a US$1 billion dollar agreement with Samsung to buy NAND flash memory for use in the iPod. Then in 2008, they signed another deal with Samsung for the iPhone, which forced the Korean tech company to focus on Apple above all oth-

er companies. In 2009, Apple had a US$500 million deal with Toshiba to provide screens. These strategic and large scale deals have worked heavily in Apple’s favor. Not only have they ensured that their productions needs are met, but purchasing large volumes of components, Apple usually ends up setting a benchmark for technology in the industry. The latest and greatest multi-partner deal will ensure that component supplies are fulfilled for the next two years of production for their highdensity display panels. This US$3.9 billion deal will provide Apple with a comfortable buffer for display panels to be used on future generations of the iPhone and iPad.

flux of companies are trying to enter the tablet and smart-phone market. “In the era of the iPad and iPhone, the user interface - particularly the display and touch screen - has become the most critical competitive differentiator for tablets and smart phones,” noted Vinita Jakhanwal, director for small and medium displays at IHS. There are two different technologies which are used to create the high-resolution screens we all know and love, which Apple calls its Retina Screens. In-plane switching (IPS) and low-temperature polysilicon (LTPS) technology are used to create the high-resolution screens. The pixels are so small that they are not clearly visible to the naked human eye.

All about the Screen Apple’s move is very strategic and comes at a time where a massive in-

Limiting the supply Since IPS technology is quite difficult to come by due to a license that


In 2008, they signed another deal with Samsung for the iPhone

In 2009, Apple had a US$500 million deal with Toshiba to provide screens

restricts the number of manufacturers and LTPS technology at very limited production (likely due to very low margins) levels, the global demand will far outweigh supply. Samsung, one of the bigger rivals to Apple and its tablet, has chosen to invest in a different technology called active matrix organic lightemitting diode (AMOLED) displays. So, with Apple having bought up capacity from arguably the three largest manufacturers, and Samsung investing heavily in the major alternative, the swarms of manufacturers now jumping on the tablet bandwagon will find it very difficult (and expensive) to acquire the components they want. Apple’s Leverage How does Apple keep cornering the market on the components every company wants? Well, as the most cash-rich tech company today, Apple is able to negotiate huge volume discounts with its suppliers. With 50 billion dollars in liquid assets at Apple’s disposal, the company can pretty much be certain that they’ll get the supplies they need at scale. They also leverage more than ten million advance orders with partners like Foxconn to ensure that margins on their hardware remains high. According to the latest iSuppli teardown, Apple pockets roughly 50% in gross margin

on the iPhone, while competitors settle for anywhere between 20 and 40 percent. Final thoughts The iPad has yet to celebrate its first birthday, but rumours surrounding production of the second generation iPad are fuelling internet news sources. Sales for the first generation iPad totalled 4.6 billion in the final quarter of 2010 alone, which is only 17% of Apple’s total sales revenue! A lighter, faster iPad, will make its way to retailers in the next few months. Even with all the new gadgets that Apple has added, the retail price is still lower than HTC’s, RIM’s and Motorola’s first tablet offering. The news should definitely have the competition concerned. As long as Apple keeps buying up global capacity, setting high industry-wide standards, and making innovative and creative products that everybody wants, don’t expect them to budge from the position in the market. They’ve got a mountain of money, the right technology, the coolest products, and most importantly, the right ideas about their manufacturing. They are currently sitting as the number two purchaser of semi-conductors, and are on pace to reach number one in 2012. When that happens, they’ll further tighten their stranglehold on global tech components.


The 2011 Apple Supplier Responsibility progress report was released to give the world an update on its contract manufacturers. Although the title reads “Progress Report”, few experts see it that way. Here are some thoughts and opinions on Apple’s development: Richard Brubaker - Founder of Collective Responsibility, Adjunct Professor of Sustainability & Responsible Leadership at CEIBS …what this document shows is that their supply chain is rotten in many areas and that they have yet to invest in processes to address these issue…I looked at a few [statistics] and they don’t improve in many areas… including the fact that only 32% of this year’s groups were compliant in the areas of working hours (vs. 46% the year before), involuntary labor (80% compliant in 2010 / 76% in 2011), and underage labor (74% in 2010 / 73% in 2011)… The biggest “cover-up” I feel that occurred is in relation to the n Hexane case, an issue that to their credit they did spend one page on. However, it completely glosses over the facts by saying 137 employees “suffered adverse health effects following exposure to n-hexane” when it should say that more than 137 workers were HOSPITALIZED for suffering neurological disorders as a result of the exposure, including complaints of physical weakness, mental fatigue, and even temporary paralysis. It is an issue that they claim occurred in 2010, but Nokia (also a client of Wintek) released a statement as part of the Hexane case detailing a July 2009 audit that was conducted as a result of rumored Hexane usage. C J NG - Executive Director at Directions Consulting The problem Apple has is it’s trying to optimise its profits by squeezing suppliers, and at the same time trying to get suppliers to comply with the CSR as defined by developed countries. Bernard Gore – Project Manager at ACC Apple fully knows that the rates they pay such overseas manufacturers are likely to induce such behavior. Brian Wood - Project Manager at TransGrid Much like western countries 100 years ago, workers in emerging economies have no organized representation to promote their rights. This is exactly what attracts corporations to manufacture there in the first place. Let’s be honest, organized and legislated worker rights create costs in the supply chain, so they have a vested interest in suppressing these rights. 35



此番神马 非浮云

苹果玩的 神马? 科技巨头的“威猛” 供应链 三十九亿美元,苹果出手不凡,顿时一波三 浪!坊间众说纷纭,网络传闻不断 —— 液态金 属、3D科技……亦真亦幻


面— —即苹果定义的视网膜显示



屏— —要想提高必须仰赖两类科

因此得到大批量购买的折扣— —试想


技— —平面转换(IPS)和低温多晶矽












获取IPS技术并非 易事,因为生 产



商执照 是 有限制的;LTPS技术因为低



收益所以生产量很小— —全球需求会








定 五亿 美 元显 示屏采购协议。这 些 大

主 动 矩阵 式 有 机 发 光 二极体(AMO-



iPad周岁即至,但是网络上又疯传 二代iPad即将出炉的消息。仅在2010

生产需求不会被 拖后腿;第二,如此以

所以苹 果 联 手三 大 生 产 商增强自


往,苹 果 的领 先 科 技 玩 家 地位日益稳


46亿美 元,而这不过是苹果收 益的冰



山一角: 仅占17%。轻便快捷的iPad在



接下来几个月中会在各零售商处 露面







垫也会为其提供更多缓冲的空间。 全都为你——显示屏

众 多 公司 有意 的产品市 场 频 频 被 苹果套牢,何解?其 实明显,拥坐金山

平板电脑。 苹果继续“蚕食”着世界市场的份

各 种 公 司 疯 涌 而 至,力

额,不断促 进 提高行业标 准,

图在 智能 手 机市场抢占一席

频 频 推 出 众 人皆 爱 的 创 新 产


品,其 市 场地位 不 可 撼 动。盆




除 此 之 外 最 为紧 要 的 还 有 适

Jakhanwal 说:“现在是iPad


和 i P h o n e 的 时 代,用 户 界

界第二大的半 导体购买商,并

面— —尤其是显示屏和触摸

在 冲击2012年 排 行榜 的 第一

屏— —已成为智能手机和电

名 — — 就 算 这个 梦 想 照 进 现


实,他们也 不会对全球科技零



人 见 人 爱 的 高 清 界 36 MARCH/APRIL 2011

Contents A Mega-Merger? /37 Retail Growth creating Shanghai Warehouse Shortage /38 Higher Logistics Education in China/40 零售增长:上海仓储缺氧 /38


中国高等物流教育 / 40


A Mega-Merger?


merger of epic proportions has been agreed upon between logistic real-estate giants AMB Property Corporation and ProLogis. The deal will effectively merge more than US$46 billion in gross assets owned or managed. William Sullivan, the CFO of ProLogis, estimates the merger deal will cost roughly US$150 million, however will produce US$80 million in annual saving effective immediately. ProLogis, valued at US$8.7 billion before the merger, operates in 105 countries in 19 countries; while AMB Property, valued at US$5.5 billion before the merger, operates in 48 markets in 15 countries. Coming together will give the company 5.4% global market share, a bigger piece of a very fragmented pie. The details of the deal swing back

and forth, and it’s difficult to determine whether or not this a “merger of equals” as the official press release claims. The company will operate under the ProLogis name, and shares will be transferred to AMB shares, but traded under the ticker sign PLD (Prologis’ ticker). The existing CEOs will become Co-CEOs for the time being, while Sullivan (ProLogis) will take the CFO position and former AMB CFO Thomas Olinger will become Chief Integration Officer. It’s interesting to note that both ProLogis executives have announced they will retire at the end of 2012, leaving AMB’s top executive to run the mega-company. The deal will also allow ProLogis to re-enter China, after selling its assets to GLP and exiting in 2008. Prologis has been burdened with debt for the past several years, which forced their former CEO, Jeffrey Schwartz,

to resign in 2008. Since then, Prologis has been refinancing and raising capital to pay off its debts. ProLogis is the larger of the two companies; however has a weaker financial situation. AMB’s properties are much more valuable as well, due to their locations near ports and airports, so the merger seems to be more of a purchase. “This is two parties coming together and saying how can we make this work in a way that’s beneficial to both, even though AMB is buying ProLogis,” said Ian Goltra, portfolio manager with Forward Management. CHaINA Magazine asked AMB executives in China for their perspective on the merger, however they declined to make any comments at this time. What do you think? Email: editor@ 37



Retail Growth Creating Shanghai Warehouse Shortage


Michael Cole, Research Director,Colliers International Shanghai



he surge in economic of the financial crisis, the success ing incomes among the populagrowth that has fol- of China’s economic stimulus was tion. lowed China’s stimu- leading to a boom in consumer And, all of this retail growth lus measures of 2009 spending and retail development. requires warehouse space so that drove consumer retail Through November 2010, while new products can be shipped, The Total Stock of Warehouses by District in Shanghai spending in Shanghai up by more Shanghai’s warehouse space grew stores can be refilled, and consumMillion than 17% in 2010, increasing deby 4.5%, the city’s retail sales grew ers can keep spending. 1.6 -----------------------------------------------------------------------------------------The Total Stock of Warehouses by District in Shanghai mand for warehouse spaceMillion and at an annual rate of 17.6%, nearly 1.2 -----------------------------------------------------------------------------------------1.6 -------------------------------------------------------------------------------------------putting pressure on logistics de- equaling the November 2008 high Vacancy Rates The result of this retail boom 1.2 -------------------------------------------------------------------------------------------velopers to bring new 0.8 projects to of 17.7%. -----------------------------------------------------------------------------------------is that there is very little grade A market. This retail growth is attributable 0.8 -------------------------------------------------------------------------------------------warehouse space available for lease Prior to the global0.4economic to a number of factors, including -----------------------------------------------------------------------------------------in the Shanghai area. According to 0.4 -------------------------------------------------------------------------------------------crisis, the market for investment the country’s rapid urbanization, a survey by Colliers of distribution grade distribution centers that the strength of the RMB, and ris0 ----------------------------------------------------------------------------------------0 -------------------------------------------------------------------------------------------Qingpu Songjiang Minhang Fengxian Fengxian Putuo Baoshan in the Pudong Jiading area, centers Shanghai Qingpu Songjiang Minhang Putuo Baoshan PudongvaJiading could service the needs of interThe Total Stock of 2009 The Total Stock of 2010 The rates Total Stockin of 2011{Projected) cancy the city are currently national clients was dominated by The Total Stock of 2009 The Total Stock of 2010 The Total Stock of 2011{Projected) averaging less than seven percent. international logistics developers This very high rate of absorpsuch as AMB, Gazeley, Goodman, --------------------------------------------tion means that retailers are lining --------------------------------------------ProLogis and others. In particular, ----------------------------------------------------------------------up for space in the best locations, these primarily publicly-traded de1 RMB/sqm/day ----------------------------------------------------------------------while developers are now scram0.95 --------------------------------------------velopers had been able to rely on --------------------------0.9 RMB/sqm/day --------------------------------------------bling to bring new projects online 1 --------------------------their superior access to capital to 0.85 0.95 08Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 before their competitors and to se0.8 --------------------------dominate the market for distribu(Projected) 0.75 0.9 --------------------------cure sites for future development. tion centers built to lease out on 0.7 0.85 2008 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 (Projected) the open Q3 2010Q1 2010Q3 2011Q1 market with their only 0.8 Q1 Rental Rates (Projected) significant domestic competitor 0.75 The lack of available space has being Baowan Logistics (BLogis). 0.7 enabled logistics developers to do RMB/sqm2008 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 However, as the world economic Industryial Land Price 16000 Q1 (Projected) away with rental incentives such as 14000 Logistic Land Price crisis deprived the international rent-free periods in most areas of 12000 Residential Land Price developers of their access to capi10000 Shanghai, and driven rents steadily 8000 tal, the existing order of China’s RMB/sqm upwards. On average rental pricing 6000 Industryial Land Price logistics real estate market began 16000 4000 for grade A warehouses in Shang2000 14000 Logistic Land Price to change. hai increased by 5.71 percent from 0 12000 Residential Land 2008 2009 Price 2010 2009 to 2010, rising from an aver10000 Growth in Consumer Spending age of RMB 0.89 to RMB 0.96 per 8000 Fueling Demand 6000 sqm per day, and by January 2011, At the same time that capital 4000 average rentals in Pudong are alsources for most international 2000 ready at RMB 1.00 per sqm per warehouse developers were still 0 day. As the amount of new space 2008 2009 2010 being restricted by the after-effects coming online is still expanding -----------------------------











LOGISTICS -----------------------------

The Total Stock of Warehouses by District in Shanghai

Million 1.6 -------------------------------------------------------------------------------------------1.2 -------------------------------------------------------------------------------------------0.8 -------------------------------------------------------------------------------------------0.4 -------------------------------------------------------------------------------------------0




The Total Stock of 2009





The Total Stock of 2010



The Total Stock of 2011{Projected)

much less rapidly than the demand from the region’s retail sector, these rates are projected to rise another five to seven percent during 2011. 1 RMB/sqm/day -----------------------------

creased dramatically. While the As the advantage in securing sites rental yields available on ware- often goes to domestic developers house developments in the Shang- with stronger ties in the local govhai area still average around 8%, ernments, international developthe return to the developer for a ers will be pressured to offer high new logistics project is still not enough prices to secure sites with0.95 Competition for Sites sufficient for them to outbid a re- out driving up their costs to levels 0.9 During 2011, the 0.85biggest chal- tail developer putting up a 30 story that reduce the current 8% average lenge for logistics developers will apartment block which they can yields that Colliers estimates these 0.8 be access to sites, 0.75 particularly begin pre-selling as soon as the developers are currently earning in in prime locations0.7accessible to structure is topped off. Shanghai. 2008 2008Q3or2009Q1This 2009Q3 2010Q1 2010Q3 2011Q1 downtown shopping districts means that logistics devel(Projected) Q1 near major manufacturing centers. opers are having to search for sites Developer Outlook Given the ongoing increases in This is due to the overall growth in more distant locations and has demand for warehouse space, it of the real estate market which is increased the level of competition is clear that developers who were pushing residentialRMB/sqm and retail de- for strategically placed plots. able to maintain their access to Industryial velopments into areas which mightLand Price 16000 Demand to Continue Increascapital through the credit are now 14000 Logistic Land previously have been available for Price ing in the best position to profit from 12000 Residential Land Price distribution sites. According to a recent PriceWacurrent demand, and other devel10000 According to Shanghai governterHouseCoopers study, China’s opers who gave up too many sites ment data, from 8000 2008 to 2010 retail growth is slated to reach 14% during the downturn will now 6000 while the average prices paid for in 2011, despite the recent cutstruggle to bring enough stock on4000 land to be developed for logistics backs in stimulus measures by the line to maintain market share. 2000 down by purposes actually went This 2.6%, from RMB 6000 per sqm to government. 2008 2009 2010 ongoing growth in RMB 584 per sqm in the outlythe country’s retail ing districts of Baoshan, Jiading, should Qingpu, and Songjiang. The resi- spending RMB/sqm/day 0.98 0.77 Baoshan continue along with dential market in these same areas Jiading boomed. In these outer districts the retail trend. With this ongoof Shanghai the price paid for ing demand for City Center residential land increased by 206% 市中心 warehouses, and the 0.90 during the 2008 to 2010 period, Qingpu rising from an average of RMB scarcity of sites, the 1.05 Pudong 4932 per sqm to RMB 15129 per edge should belong 0.92 浦东 Minhang to logistics develsqm. 0.93 Songjiang As China’s retail and residential opers which have invested in their loreal estate sectors have boomed 0.85 during 2009 and 2010, the amount cal networks so that Fengxian 奉贤 Jinshan of sites being snatched up by de- they can gain access 金山 velopers in these sectors has in- to new sites as they become available. ---------------------------------------------------------------










Higher Logistics Education in

China By Prof. Dr. Armin F. Schwolgin

Baden-Wuerttemberg Cooperative State University Loerrach, Germany


u Liu, pinyin for the modern word “Logistics”, is starting to gain importance in China, mainly due to the relocation of production facilities from western countries to the Far East. Many foreign forwarding companies in China are looking to recruit local staff that have an academic degree in logistics. Current State When assessing the current state of logistics education at the undergraduate level (i.e. Bachelor) at universities in China, several observations can be made. First of all, the number of schools that are offering a major in logistics and the number of logistics programs have been greatly increasing since the first logistics department in China was set up in 1994 by Beijing Wuzi University. Today there are 284 universities offering logistics management and 58 universities providing classes in logistics engineering. Secondly, more students are beginning to study logistics. There are six universities in Beijing offering

logistics programs. The largest logistics faculty is at Beijing Normal University with 1,990 students. (See chart). Also, the curriculum content has been improving. The majority of logistics departments or institutes have also launched logistics labs. In these logistics labs, “students get to know the technology, such as: forklifts, high-rack stackers, high-bay racks, pick by light or pick by voice”, said Prof. Dr. Armin F. Schwolgin from Baden-Wuerttemberg Cooperative State University Loerrach. Now Beijing Wuzi University has the biggest logistics laboratory in China that cost about 2.4 million

Euros (US$3.2 million). The logistics laboratory at Beijing Transportation University is only half the size. Other than logistics labs that have been applying advanced technologies, more and more universities have begun collaborating with foreign universities to broaden students’ horizons - like Beijing Wuzi University and Baden-Wuerttemberg Cooperative State University’s (DHBW) collaboration on their bachelor program. Each year more than 10 Chinese students go to Loerrach for a full year. The proficiency in logistics nkowledge and technology has increased significantly, especially at

Total enrollment of logistics students in Beijing 300

1: The University of Science and Technology 2: Beijing Wuzi University


3: Beijing Transportation University


4: Beijing Normal University

1990 300

5: Beijing University of Posts and Telecommunication 6: Beijing University of Chemical Technology

600 200

7: Beijing University of Aeronautics and Astronautics

Source: Prof. Zhang Xufeng, Beijing Wuzi University


LOGISTICS practice in the logistics industry”, Mrs.Yang told us.

the postgraduate and PHD level. “The advanced international logistics technologies have been applied in some projects for frontier studies in postgraduate studies or PHD studies“, suggested Mrs. Deng, a lecturer from the Logistics department at Beijing Normal University. Still Lagging behind... However, logistics education in China still fails to compete at the same level as other foreign universities. The frontier research and theoretic studies are quite restricted by the country’s reality, especially for undergraduate studies. “It is not advanced as those in many foreign countries like America, Japan, etc, because theoretical studies should always be lead by real-world practice,” commented Deng. Logistics appeared as an academic discipline in China just 20 years ago, and until 2001 Beijing Wuzi University remained the only university that offered a major in logistics. The next two departments for logistics engineering were founded in 2002 at Shanghai Maritime University and Wuhan University of Technology. Many logistics institutes or departments were transformed from former departments of transportation, delivery, communication, etc. Currently

there is hardly any university or logistics institute in China that can penetrate into every aspect of logistics education. The programs are quite focused on one, or several aspects of logistics. For example, if the institute was originally a transportation department, then it will focus more on delivery of logistics. “…Tsinghua University’s strength lies in industrial technology, so in its logistics program, it focuses more on equipments/facilities or logistics engineering,” explained Deng. For logistics education out of Beijing, according to Mrs. Yang, a professor assistant from Wuzi University, the majority of teachers don’t really come from a logistics background. “Most of them were studying transportation or engineering before and they haven’t got enough

Outlook Based on the analysis and experience in foreign countries, there is still room to improve higher logistics education in China. First of all, the public awareness of logistics as an academic discipline has to be increased. Also, it is crucial to continue to push logistics knowhow and to strengthen the teaching quality of all staff, not only their proficiency, but also the practical capability. “It would be great if educators could go abroad to visit foreign logistics institutes. They could learn more, bring back advanced theories and have more oppotunities to develop exchange programs.” Furthermore, it is necessary for universities to implement their experimental classes. In addition, Chinese logistics professors believe that a standardized logistics curriculum would be extremely helpful. Chinese professors, as a group, should work on a standard curriculum and syllabus, as it is seen by most them as a necessity. It is also becoming more popular for universities to coordinate with logistics companies. Take Wuzi University as an example, it has been coordinating with almost all of the logistics companies in the south-east coastal area of China, such as PGL, and this has enabled both teachers and students to get more involved in actual logistics practices. Last but not least, “teachers believe that the relationship between logistics engineering and logistics management should be clarified. In addition, we believe that the management aspect (finance, controlling, risk management, compliance management. etc.) should also be emphasized,” added by Prof. Dr. Armin F. Schwolgin.

Warehouse model in the logistics laboratory of Beijing Wuzi University 41


Education Quickfacts 114 Number of academic logistics staff in Beijing. 50 Lecturers 38 Associate professors 26 Professors. 47 Number of professors and lecturers holding PHDs. 25 Number of Chinese Logistics Lecturers The Academics Opinions As “Wuliu” gains importance in China with local professionals and talent becoming one of the top priorities for the region, Chinese educators and governments are beginning to realize the significance of being more specialized in logistics on a global scale. The ability to be more tech-savvy and more international will allow educators to keep pace with the quick development of the industry. Logistics labs have been launched which feature the latest in advanced technology. Schools are also grabbing at opportunities to coordinate with foreign schools and logistics companies, in order to broaden students’ horizons and provide more chances for practice. For example, Shanghai Maritime University has several projects with Shanghai Container Terminals Ltd, which gives teachers and students chances to gain practical experience. CHaINA received comments from several Chinese professors in logistics institutes regarding the development of logistics education in China. Most of the professors share in the belief that, although there have been many improvements in school facilities, curriculum, as well as awareness of logistics education, the level in China still remain in the early stages of development. Professor Deng, from Beijing Normal University, believes that frontier research and theoretical studies in China’s logistics education is equivalent to that of the development of logistics in China. Therefore it cannot compare to the levels of advanced nations like America or Japan. “Theoretical studies should always lead the practice”, Deng continued, “Yet in China, theoretical studies are quite restricted to the reality.” Currently, China does not have any school that can benchmark its logistics program at close to a five star level.

Logistics education really began to develop in the early 1990s. Since then, logistics education started to be pushed by some universities and colleges in China. Some logistics departments were actually transformed from other faculties, like the communications or transportation department. If the original curriculum consisted of studying transportation, the focus would be shifted more towards delivery. “Tsinghua University, which is good at industrial technology, focuses its logistics education on equipment and facilities, or logistics engineering”, suggested Deng, “but it’s hard to say which school can be considered the best.” It seems to be even harder to determine a top school if you involve postgraduate studies and PHD programs, since “they are much more focused on certain aspects of logistics, instead of studying logistics as a whole”, explained Yang, an assistant professor at Beijing Wuzi University. Shanghai Ocean University offers a program which specializes in education for food logistics in international urban cities, which is an important, however a very specific field of study.

To really take the overall logistics education in China to a world-class level, there are many aspects which remain to be implemented. Many Chinese professors believe that a signifcant improvement in the quality and standards of teaching staff is required. “In many schools out of Beijing, teachers in logistics departments don’t come from a logistics background. They originally studied transportation or engineering, etc. More qualified teachers are needed,” commented Professor Yang. In addition, it is also necessary for teachers “to improve their expertise in theoretical and practical studies,” comments Professor Deng. “They will benefit from visits to logistics schools abroad to learn more and in turn will be able to introduce advanced technology and projects.” The road to improving China’s logistics education has yet to come to a close, nor will it be easy to accomplish. With the support of the logistics industry and passionate educators, the evolution of China’s logistics education is sure to take place in the near future.


Late deliveries Contents

Lao Gan Ma Chili Sauce /43

Poor quality products

老干妈辣酱 /43 虚拟产业的真实数字 / 44



The Year in Virtual Goods by the Numbers /44


HTC扩张计划 / 46

Custom delays


Products not built to specs Higher total costs

HTC Expands/46



LAO GAN MA Chili Sauce

Loss of intellectual property


Other problems


No problems


Market Facts l l l

RMB 2.5 billion: Annual sales worldwide

Tao Huabi

RMB 0.95: Net earnings per bottle

“The Empress of Chili Sauce”

RMB 8: Retail price per bottle (250g)

Annual Volume =RMB200million













60% of bottles are made

by The 2nd Glass Factory of Guiyang.

75% of its manufacturing lines

operate 24 hours-a-day. Sourcing Facts

All ingredients sourced from Guizhou

- 30 tons of dried chili per day

70% market share in China

- 80 tons vegetable oil per day -

40 tons of soybean per day




Virtual Goods Goods The Year In Virtual By The Numbers


he global virtual goods industry put up some very impressive numbers this year. From special Easter eggs to virtual ad campaigns, virtual goods sales have grabbed their share of headlines over the past twelve months. Now with social gaming on the rise and everyone from your teenage nephew to your grandma to your old rugby teammate buying a “little something” to sweeten their online game, here is a look a back at the year in virtual goods sales. By: Ted Sorom

US$7,300,000,000 Expected global revenue generated by the virtual goods industry in 2010. This is huge, considering the $60 billion generated in 2009 by the video game industry as a whole, and clearly shows that browser-based gaming is making great strides.

4,000,000 Total number of items in IMVU’s virtual goods catalog, making it the world’s largest. Based in Silicon Valley, the company runs a hybrid chat, gaming and avatar site. There are over 5,000 new items added every day, primarily created and uploaded by IMVU’s own user community.

220,000 Number of “Summertime avatar baseball caps sold in Roblox, a blocky MMO playground. These hats were available for tickets, a free currency that all players get for logging in and which can be traded for Robux or vice versa. Rest, Relaxation and Roblox: gotta keep those virtual “rays” out of your eyes!

20% Percentage of Electronic Art’s overall revenue generated by digital sales. These aren’t just avatar items and XP boosts; the figure also refers to full-game downloads and downloadable content (DLC) to enhance console games. EA’s CFO Eric Brown notes that their “digital sales usually start with the sale of a physical disc, especially on the current generation of consoles.” But the upcoming Star Wars MMO is guaranteed to boost DLC consumption; want a blue double-ended light saber? It can be yours, if the price is right.


retail ravenwood-fair products


10% (and growing)

Number of virtual hot dogs eaten by non-playable characters in LOLapps’ Ravenwood Fair (nom nom). The Facebook game saw huge growth last year to over 100 million monthly active users (MAU), and recently released an interesting infographic detailing their rise. For instance, 2 billion quizzes have been taken and 8 billion gifts have been sent!


US$2,100,000,000 The projected size of the US virtual goods market in 2011.

The factors that drive players to buy upper-tier items in online games, as opposed to just spending $0.99 here and there. The first is Value: Net Dragon’s value packs deliver the same bulk discount that players might find in a real-world big box store. The other big factor is Rarity; limited supply drives up demand. This often comes in the form of a “box” (such as the VIP Box in GameCampus’ Shot Online golf) which contains a wide range of items plus a chance to uncover the game’s rarest and most valuable equipment.

Percentage of overall item sales in OurWorld generated by the resale market. The multiplayer gaming destination aggregates hundreds of third-party games into a virtual world with over 16,000 virtual items. OurWorld’s CEO, Derrick Morton, states, “In the last half year, we’ve seen our resale market explode. We think that a healthy secondary market is key to running a good virtual economy. If the players can’t trade amongst themselves, the virtual goods really have no value.” Think of it as virtual Craigslist.

US Virtual Goods Market 2008 to 2011 Billions ,USD

$2.5 $2.0 $1.5 $1.0 $0.5 $0.0






80,000,000 The all-time high number of Farmville players. The ubiquitous title for social gaming the world over, FarmVille surpassed its 2009 high mark of 50 million monthly active users, hitting this new peak in early 2010. You can now stop pretending you’re not addicted to your precious online farm. It’s ok… you’re among friends. Oh, and now CityVille is larger than FarmVille and approaching FarmVille-MAU over last 31 days 90,000,000 FarmVille’s all-time high with 75 mil72,000,000 lion monthly active users. 54,000,000

New world record for the single largest purchase in an online game, in this case a virtual intergalactic resort in Planet Calypso. A few years ago the same seller, Jon ‘Neverdie’ Jacobs, sold $635,000 worth of virtual real estate in Entropia Universe. While the majority of microtransactions cost just a few dollars, there are rare occasions where individuals spend serious money on virtual goods. Clearly, the virtual “Club Neverdie superdome” was a sound investment for Jacobs; the new owner (Yan Panasjuk) anticipates that the property will continue to grow in value. He is now dedicating 40 to 60 hours a week to the game, and has been playing MMOs for over a decade. Both parties are serious about their virtual worlds. Mr. Jacobs, also a career gamer, has already made over half a million dollars in online realestate.



0 1/21













The HTC store in China Too little, too late?


TC has blossomed into a power-brand for mobile devices. The Taiwanese company has grown by 111% year on year since 2009, and netted revenues of US$9.5 billion in 2010. Smartphone sales in 2010 totalled 24.7 million, with most of the growth coming in Europe and North America. Profits also surged by 75%, to cap off an extremely good year. Switching to the Android platform has allowed the company to expand quickly, but the company still struggles to catch up to the Apple powerhouse. A lack of retail presence has been cited as a reason for their rank, and the company recently announced plans to address this issue. Over 100 HTC stores are scheduled to open in Taiwan, Hong Kong and Mainland China, with the flagship store has already in operation in Taipei’s 3C Center. HTC is the latest tech-brand to attempt what Microsoft failed at and what Apple has flourished with. They have clearly taken note of Apple’s success, and signs point to the HTC Store being remarkably similar to The Apple Store. The stores will stress customer interaction with the products, and will hold regular classes to educate consumers. These tactics are directly out of Apple’s playbook, but will it work for HTC? An interesting report released by the Gerson Lehrman Group (GLG) details seven reasons why HTC will

not find success in China. One of the reasons outlined was due to its lacking retail presence. HTC can now scratch that off the list, but the six other reasons still remain. The big reasons A major factor affecting HTC, has been their focus on the highend market, which has burdened their par t nersh ips with the major carriers in China. The low to midrange end of the market has experienced tremendous growth, and China Telecom, China Unicom, and China Mobile are demanding products to meet those demands. As a result, they have provided subsidies to all of HTC’s major rivals, like Nokia, Samsung, Motorola, Sony Ericsson, and LG. If these carriers are not pushing their products in the thousands of locations they have across Greater China, HTC will struggle to compete with the bigger and more established competition. Another factor heavily affecting is the stiff competition it faces from its foreign rivals, and also the strengthening domestic brands. Lenovo, Huawei, and ZTE also have a decent share in the cellular

market. HTC will also face their own brand as competition, due to an enormous grey and clone market already in China. According to GLG’s research, the majority of Chinese consumers are accustomed to purchasing HTC phones through grey market channels.

Enough to compete? There is an overwhelming amount of competition currently in the Chinese Market, and HTC is bringing their A-Game a little bit late. Is it too late? It’s uncertain, but it will be struggle to catch up to the strong competition which is already established. Opening retail outlets will help ramp up its legitimate presence, but these stores to always receive the desired response. Just ask Microsoft... HTC has enjoyed excellent international success, but as many foreign companies have discovered, this doesn’t always translate into success in China.


Opinion Dan Steinbock



hen Nokia announced its broad partnership with Microsoft in February, the industry entered a new era. In the past, dominant firms competed with each other. Now dominant ecosystems, driven by one or more dominants firms, are challenging each other. Who will win the global rivalry? Will Google dominate first the smartphones and then the global handsets? Or can Apple leverage its U.S. leadership worldwide? Or will Samsung extend its handset strengths into the smartphone space? In the fourth quarter of 2010, global handset shipments grew 16 percent to reach 400 million units. Global handset shipments reached a record 1.36 billion units for the full year of 2010, driven by sales of smartphones in mature markets and multi-SIM models in emerging markets. For global handset shipments, there were only three players in the 100-million-plus-units category, according to Strategy Analytics: Company Units Share Nokia 453m 33.3% Samsung 280m 20.6% LG 117m 8.6% RIM 49m 3.6% Apple 48m 3.5% Others 414m 30.4%

In the coming years, the role of traditional handsets will rapidly decline, while that of the smartphones will rapidly increase. For the global touch-screen smartphone rivalry however, the market share differs drastically from that of global handset shipments. In this growth segment, Google leads, while LG and Samsung are in the “others” category, according to Canalys estimates (Q4 2010): Company Units Share Google 33.3m 32.9% Nokia 31.0m 30.6% Apple 16.2m 16.0% RIM 14.6m 14.4% Microsoft 3.1m 3.1% Others 3.0m 3.1%

In early February, Nokia announced that it plans to use Microsoft’s operating system in its smartphones. The two companies are prepared to challenge the dominance of Apple’s iPhone and Google’s Android operating system in the smartphone arena. In the global touch-screen smartphones rivalry, a combined Nokia-Microsoft would have accounted for a market share of 33.7% in the fourth quarter of 2010 – more than Google. Winning the future in the mobile rivalry requires at least three things: a thriving global ecosystem, a rising market share in global smartphones, and leadership in both advanced and emerging economies. There are three viable contenders: Apple has a thriving ecosystem in the U.S., but not worldwide. It has enjoyed extraordinary growth in America, but lacks production worldwide. Given Android’s dramatic growth, Google and Samsung are well positioned, but face significant challengers. In the global handset market, Samsung remains behind Nokia. In the smartphone segment, Google is the dominant singular company, but Samsung would have to achieve substantial gains worldwide to become a leading contender. For global handsets, Nokia remains the global leader. For smartphones, a Nokia/Microsoft partnership is the leading contender. Despite dominant market shares, the combination is coping with slow growth, weakness in the high-end category (Apple), intense rivalry in the middle segment (Android), and aggressive challengers in the low-end (Chinese and Indian low-cost players). Today, Apple owns the U.S. market, while Google seeks to leverage its ecosystem worldwide, relying on Korean contenders. Nokia and Microsoft are thriving in the traditional markets, but must prove themselves in the growth markets. Only one thing is certain. The future will not be won in the U.S. market – but in China and India and other large emerging economies. Dan Steinbock is Research Director of India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China). 47



The challenges ahead for supply chains Trish Gyorey, Matt Jochim, Sabina Norton McKinsey & Company


s economies around the world step back from the financial brink and begin adjusting to a new normal, companies face a different set of supply chain challenges than they did at the height of the downturnamong them are rising pressure from global competition, consumer expectations, and increasingly complex patterns of customer demand. Executives in this McKinsey survey are divided on their companies’ preparedness to meet those challenges, and fully two-thirds expect supply chain risk to increase. What’s more, the survey highlights troubling signs of struggle associated with key, underlying supply chain processes and capabilities, including the ability of different functions to collaborate, the role of CEOs in supply chain planning, and the extent to which companies gather and use information. Emerging from the downturn As companies have managed their supply chains over the past three years, the challenges they faced and the goals they set have reflected a single-minded focus on weather-

ing the financial crisis. The most frequently cited challenge of the past three years is the increasing volatility of customer demand. This is no doubt a result of the sharp drop in consumer spending that has reverberated throughout all sectors across the globe. Looking at challenges over the next five years, though, the focus shifts: respondents most frequently cite increasing pressure from global competition. Some issues that receive a lot of public attention, such as climate change and natural-resource use, have remained a low priority since our 2008 survey. Still, the share that identify environmental concerns as a top challenge in the next five years nearly doubled, to 21 percent, over the proportion saying it was a top challenge during the past three years. This suggests that companies anticipate returning to a new normal, wherein they can focus on issues other than cost at least some of the time. With regard to goals for supply chain management, the results show a similar shift between past and future, perhaps another indicator that companies are focusing on pursu-

ing growth in addition to cost containment. Of course, executives are not ignoring supply chain costs altogether; after weathering a downturn, they know their companies can manage and control future expenses, now that this issue has been on their radar consistently. Indeed, reducing operating costs remains the most frequently chosen goal over the next five years -as it was over the past three- followed by customer service. In a 2008 survey, 43 percent of respondents said improving service was one of their companies’ top two goals for supply chain management, and though it fell as a priority during the crisis, it is now number two for the next five years. Executives also indicate that many of their companies have met past


Read how Unilever is preparing its supply chain for the future on Page 64


goals, with supply chain perfor- (global competition, rising consumer also report that the managers who mance improving in both efficiency expectations, and complex patterns make decisions about supply chain and effectiveness as they come out of customer demand), the highest trade-offs are well informed. of the downturn. For example, near- shares of executives say their comYet the cross-functional discusly half say their companies’ service panies are prepared to meet those sions that companies need if they are levels are higher now than they were challenges. The bad news is that the to make informed decisions are not three years ago, 39 percent say costs shares saying their companies are happening often. For each of the six as a percentage of sales are lower, well prepared are still below half. trade-offs the survey explored, reguand 45 percent have cut inventories. Most executives recognize the im- lar cross-functional meetings are citWhat hasn’t changed much, portance of managing the functional ed as the most common process for though, is the amount of supply trade-offs related to these challenges making decisions, but between 31 chain risk that executives and 40 percent of responforesee. More than twodents say their operations thirds say risk increased in the Continued risk teams never or rarely meet past three years, and nearly with sales and marketing Increase Increase No change Decrease Decrease the same share see risk conto discuss supply chain significantly somewhat somewhat significantly tinuing to rise. Respondents tensions. Furthermore, How has supply chain risk changed in developed Asian countries respondents across funcover the past few years? report more concern than tions say sales/marketing those in any other region: 82 has the most difficulty col2010, n = 639 , 53 17 10 2 16 percent say their companies’ laborating with other func2008, n = 273 15 6 1 44 33 supply chain risk will increase tions, with 23 percent cit42 26 7 2 23 2006, n = 3,1722 in the next five years. ing a problem between that group and manufacturing, How will supply chain risk change Managing challenges and over the next 5 years? and 21 percent between it trade-offs 2010, n = 639 49 14 11 3 19 and planning. Additionally, Though the strategic goals one-third of respondents executives are setting sugand think that their companies are say the biggest barrier to collaboratgest a hope that more predictable effective at doing so. Among trade- ing when managing trade-offs is that business conditions will prevail over offs, the highest share of respon- functional areas don’t understand the next five years, respondents are dents -85 percent- say balancing cost their impact on others. divided over how well their compato serve and customer service is imThis disconnection is likely exacnies can manage the challenges. This portant to their companies’ supply erbated by the relatively low levels finding holds true for large and small chain strategy. The lowest share (59 of CEO involvement reported: the companies alike and among execupercent) say balancing centralized vast majority of CEOs do not actives in different functions. production against proximity to cus- tively develop supply chain strategy The good news is that on the three tomers is important. Respondents or work hands-on to execute it. Rechallenges cited most frequently New challenges lie ahead

Over the past 3 years

Companies’ challenges in supply chain management

Over the next 5 years

Increasing volatility of customer demand Increasing consumer expectations about customer service/product quality Increasing cost pressure in logistics/transportation


21 32 28 25


Increasing financial volatility (eg, currency fluctuations, higher inflation) Increasingly global markets for labor and talent, including rising wage rates


Growing exposure to differing regulatory requirements in the areas where we operate


Increasing complexity in supplier landscape

14 15

Increasing pressure from global competition


Increasing volatility of commodity prices

25 24

Increasing environmental concerns

Increasingly complex patterns of customer demand

24 27

Geopolitical instability


22 24


23 24


2 7 49



spondents do, however, expect more CEO involvement over the next five years- a hopeful sign for companies aspiring to mend key cross-functional disconnections. Knowledge is power The results show a similar disconnection between data and decision making: companies seem to collect and use much less detailed information than our experience suggests is prudent in making astute supply chain decisions. For example, customer service is becoming a higher priority, and executives say their companies balance service and cost to serve effectively, yet companies are most likely to take a one-sizefits-all approach when defining and managing service-level targets. Half of the executives say their companies have limited or no quantitative information about incremental costs for raw materials, manufacturing capacity, and personnel, and 41 percent do not track per-customer supply chain costs at any useful level of detail. Many of the future supply chain challenges will require companies to keep better information on individual costs and customers. Yet only about a quarter of respondents ex-

pect their companies will invest in IT systems over the next five years, and only 10 percent of respondents say their companies currently use social media to identify customers’ service needs. Looking ahead • In our experience, senior-executive involvement, including hands-on attention from the CEO, is pivotal in managing the cross-functional tradeoffs that underpin many supply chain decisions. Yet the role of CEOs at many companies we surveyed is limited or nonexistent. Companies that can bridge the functional divides that thwart collaboration will have an edge in creating competitive supply chains capable of fulfilling business strategy requirements. • Addressing the challenges companies have identified -improving service and responding to new expectations and patterns of customer demand- requires more and better information, regardless of the geographical scope or the length of supply chains. As the marketplace becomes increasingly fragmented, keeping better track of customer information and costs, which can inform and support interpersonal,

cross-functional discussions, will help companies prepare for the supply chain uncertainties that lie ahead. • Despite the importance of volatile commodity prices as a supply chain challenge, just 28 percent of respondents say their companies are prepared to manage that volatility. One way to cope with this uncertainty: view supply chain assets as a hedge. By considering investment in production resources that aren’t necessarily lowest-cost today (but soon could be), companies can position themselves for greater flexibility in the future. • Executives expect environmental concerns to be a more significant issue for supply chains in the years ahead, yet relatively few consider it a priority today. Given that up to 60 percent of a company’s carbon footprint can reside upstream in its supply chain, companies would be wise to pursue economically attractive opportunities that address environmental impact in the near term and prepare to respond quickly to any sudden shifts in environ-mental expectations and requirements.

Shifting priorities Companies’ top 2 goals for supply chain management

Reducing operating costs


Reducing overall inventory levels



Improving the quality of products or services

25 21

Improving customer service Getting products or services to market faster


Reducing capital costs


Reducing risk Reducing carbon footprint/creating a ‘greener’ supply chain

Percentage-point change between responses on past and future goals

Over the past 3 years Over the next 5 years




–20 +4

Of respondents said improving service was one of their companies’ top two goals

+15 36


+2 +13



14 16




41% do not track percustomer supply chain costs




供应链挑战前伏 作者: Trish Gyorey, Matt Jochim, Sabina Norton 公司:麦肯锡咨询公司 经济动荡后新秩序的建立让公司在供应 链领域面临更多的挑战,国际竞争加 剧、消费者期望值上升,消费者需求模 式更为复杂,压力重重。这次麦肯锡调 查的管理者可据其公司如何面临挑战而 分类。他们之中有三分之二认为供应链 风险会增加。这次调查还体现了供应链 流程和能力方面的问题,包括跨职能协 作、CEO在供应链规划中的角色地位以 及公司对信息的采集利用程度。





信息就是力量 调查结果发现数据信息和决策之间存 在脱节:制定精准的供应链策略必然要收

迎接挑战 全面权衡













或者信息有限;而41%的受访者表示没有 追踪每位客户的供应链成本。


















• 高级执行官的参与程












务需求。 向前看










• 很多公司将提高服务质量,加强对












• 尽管商品价格波动影响不小,只有












• 决策者们认为环境问题将会成为供













年中,供应链风险有所增加,而近乎相 51



Josh Green CEO of Panjiva


hina’s currency is a tangled debate that’s mak ing players on both sides – East and West – sk ittish. At stake are potentially rising costs on goods bound for America and an increasingly tenuous marriage bet ween the world’s superpower and its largest creditor. America’s blissful trade relationship with China – where cheap labor, bargain-basement costs and a stable currency have been the norm – is souring. Coming between them are soaring wages, intense foreign pressure to

strengthen the Yuan and a looming trade war. While this is not great news for C h i n a- de pe ndent sourcing executives and suppliers, it’s not the end of the world either. With some careful planning, resourcefulness and creativity, sourcing professionals and suppliers can help each other survive – and thrive – in a new era.

to work and ready to scapegoat China for “stealing jobs.” But China is none too impressed. Its Ministry of Foreign Affairs opposes the bill, deeming it an act of “protectionism” that could fray US-China relations and damage both countries’ – if not the world’s – economies. In addition, China is just as eager to score its own domestic points by standing up to foreign “bullying,” especially since aggressive currency reform would slash profit margins in China and inflict tremendous stress on the country’s export-driven economy.

The Politics of Currency Change While the Treasury Department postponed its decision to label China a “currency manipulator” in its semi-annual currency report, the House approved a bill in September authorizing duties on imports from countries with “undervalued currencies.” (The last time a country was cited for currency manipulation was in 1994. The accused? China.) A tough stance against China may sit well with a recession-weary American public, eager to get back

The Impact of Currency Change With all the posturing and finger pointing, it’s not certain that overhauling China’s currency policy will benefit the American economy in a meaningful way. In reality, it could do more harm than good. In the first place, China controls its exchange rate by buying massive amounts of US Treasury notes and bonds. Should the Chinese government allow the yuan to float, interest rates would likely rise Stateside, putting a crimp in America’s prospects for a ro-


FEATURE bust recovery. Furthermore, most American businesses have supply chains that are heavily concentrated in China. A stronger yuan means their costs will rise, and, eventually, it’s the already overextended American consumer who will pay the price. The Challenges in China Of course, currency appreciation is not the only thorn in sourcing executives’ sides. There is a black cloud on the wage horizon in China, too. In the past few months – in response to worker unrest and a spate of suicides – Chinese companies have been doubling, even tripling, their employees’ salaries. The impact has been significant for American importers, who must choose between two unpalatable options: stomach shrinking profits or pass their rising costs on to consumers. A stronger yuan will exacerbate the pain, but truthfully the bigger threat is that heated discourse over currency policies could spark an ugly trade war between the US and China. That would cause major headaches for everyone – supplier, sourcing executive and consumer – as new duties are imposed, cost structures change and pricing be-

Questions to Consider when Sourcing from a New Country:

What are the country’s manufacturing capabilities? Does its labor force have experience producing my desired product? If you’re cost sensitive – What will my costs look like when manufacturing in this country? What are wage levels, productivity levels, transportation costs and duties? If you’re risk sensitive – What are the risks surrounding this country’s wage rates, exchange rates and trade policies? Am I willing to take those risks? comes unpredictable. What Can You Do? Here are two essential strategies for prospering in a manufacturing world that is in flux: Short-term strategy: communication. As in any relationship, communication is critical, but it just became the Holy Grail in the symbiotic sourcing-executive/ supplier relationship. No longer able to take predictably low costs for granted, sourcing professionals must speak openly to their suppliers to understand what new cost burdens, challenges and vulnerabilities they face given China’s wage increases and impending currency fluctuations. Find out how your suppliers’ cost structures are changing, and model

how these changes are likely to impact your own cost structure. Then, assuming costs are going up, address how you can manage those increases. Who will absorb the hit – you, your supplier, or both of you? Frank discussions like these will help you – and your suppliers – better cope with the impact on your respective bottom lines. Long-term strategy: diversification. If you’ve limited your sourcing to China, sprout wings and explore other geographies. But be sure to do your homework before rushing into new regions – and once there, don’t stop researching. Countries’ policies and economies are in constant flux, so thorough and ongoing regional analysis will save you major grief as you diversify. And, of course, as you scout new geographies, make sure you have the information you need to evaluate suppliers using the “Four Cs” criteria: capabilities, customers, certifications and credit. The China ride was euphoric while it lasted, spoiling us with a seemingly inexhaustible supply of cheap labor and rock-bottom costs. But with so much at stake now, it’s important to think outside the China box.

(This article first appeared in Supply and Demand Chain Executive) 53



The RARE Earth Empire China cuts Rare Earth Metal Quotas and rattles the World


on’t let their name fool you, rare earth elements (REEs), sometimes called rare earth metals, are quite abundantly found on our beloved planet. Cerium, for example, which is used in numerous commercial applications including glass tinting, catalysts and as a fuel additive, is just as readily available as copper. The term “rare” was added because when found, they’re usually not in abundant quantities. Given their abundance, it’s difficult for the uninformed to figure out why concerns are increasing about their supply. It stems from two particular reasons: 1. Our demand is far greater than our ability to supply them. Over the next few years, the demand for rare earth metals is estimated to exceed supply by 40,000 tons annually. 2. Procuring these metals is becoming more and more difficult due to new restrictions. China has been, for a long time, the place for sourcing REEs, currently providing more than 97% to meet world demand. Even more shocking is that China is the source for 99% of the least common REEs, such as Lutetium which is used in making special types of glass and PET scanners. “China managed to first bankrupt rare earth extraction companies or mines in other parts of the world by selling at low prices for many years,” claims Gustav Uffe Nymand, a quality engineer. China has significantly less restriction on mining operations for REEs, which has caused most of the competition to fold. This has allowed the country to position itself as the low cost supplier of these metals to the world, but

By Kevin Foehner

times are now changing. In 2009, China announced plans to reduce their export quotas to 35,000 tons annually between 2010 and 2015. In late 2010, China stunned the world by announcing plans to further reduce the supply of REEs by 35% for 2011. The Environment Supplying REEs to the entire world has certainly taken its toll on the environment in Inner Mongolia where most of the mining activities occur. The government has cited environmental concerns as the major reasoning behind the reduction in quotas. “China actually makes more effort to be environmentally friendly than any other single nation, in terms of number of programs, investment, and actual successes,” says Bernard Gore, a Senior Project Manager at ACC. “Mining for rare earth elements is indeed a generally very nasty activity and slowing this down will have a positive environmental impact.” The Economics As time has progressed, it’s become clear that China’s actions are much more economically motivated than they’ve lead on. “The people controlling the mining industry have found themselves to be very much in favor of a market based economy,” suggests Greg Poulos, President of Bluefin Productions. What we appear to have here is a case of simple economics. “They have a fairly tight stranglehold on the market and can reduce supply to drive up cost - any business would do the same,” states Mr. Gore. The price for REEs has skyrocketed since China made their announcement and the nation is now positioned, in the short-term, to turn















2010 2010 89.2 89.2



2009 2009 82.3

87.6 20082008 87.6

47.0 59.6


87.0 2007 87.0 2007 -------------------------------------------------------------------------------------------20.0 40.0 60.0 80.0 --------------------------------------------------------------------------------------------





New Rare-Earth Projects 〶ൕᔶ䟽᯦亯ⴤ 〶ൕᔶ䟽᯦亯ⴤ New Rare-Earth Projects

࠰ਙ䞃仓 ࠰ਙ䞃仓

30.3 30.3



⭕ӝ䞃仓 ⭕ӝ䞃仓


ѣള〶ൕ⭕ӝ ѣള〶ൕ⭕ӝ Export Quota Production Quota Production Quota Export Quota


China Rare Earth Production China Rare Earth Production



a healthy profit on exports. If international REEs after China, regarding niobium and companies want to continue producing any of scandium resources. the millions of products that require these metals to “China only has one third of the worlds known function, they’ll just have to pay the higher price. rare earth reserves that can be mined with current Over the past several months, the Chinese technology” says Mr. Nymand. Exploration programs government has also been developing warehousing for new deposits are underway in several countries such facilities in Baotou, Inner Mongolia, for the purpose as Australia, South Africa and even Afghanistan. The of stockpiling REEs. No reports have been publicized, Afghan government has proudly stated that new data but according to research in a recent Wall Street Journal indicates that the war-torn country is sitting on US$3 article by James T. Areddy, “storage facilities built in trillion in REEs, which should provide even more recent months in the Chinese province of Inner reason for Western countries involved in the region to Mongolia can hold more than the 39,813 metric tons.” secure peace. The warehousing facilities are estimated to eventually With prices hitting all time highs, it is once again have capacity for 100,000 tons. viable to restart operations in countries which were Creating a domestic supply of REEs would support bankrupted by the Chinese years ago. The Molycorp the government’s domestic plans to build green power Minerals’s mine in California has been waiting for this networks, electric vehicles along with car charge points. moment, and Rarity hopes value to have mining operations back 〶ᴿ૷ԭ‫ٲ‬ Global Consumption of Rare-earths price index,January 2002=100 Rarity value 〶ᴿ૷ԭ‫ٲ‬ It will also encourage foreign companies to either move online in March. Quest Rare Minerals Ltd, a 1,200 Canadian 124,000 TonsRare-earths price ᒪ ᴾ〶ൕԭṲ᤽ᮦ Global of REEsConsumption (2010) ‫〶⨹ޞ‬ൕ䬶䠅 2002=100 1,200 operations 124,000 Tons mining company,index,January their operations to China, or have them contracted hopes to have their ‫〶⨹ޞ‬ൕ䬶䠅 REEs (2010) 1,000 ᒪ ᴾ〶ൕԭṲ᤽ᮦ there. China can then reap the benefits of higher online in the province of Quebec 1,000 by 2012. The 800 GlobalorProduction priced exports, enjoy of andof increase in domestic Steenkampskraal mine just north of Cape Town, South 800 Global 114,000 Tons REEsProduction (2010) ‫〶⨹ޞ‬ൕ⭕ӝ manufacturing operations. Africa is also slated to go online after being closed for 600 114,000 Tons REEs (2010) ‫〶⨹ޞ‬ൕ⭕ӝ 600 nearly 45 years. 400 The Reaction Demand for REEs (2012) 400 World leaders have reacted by threatening to take Demand for REEs (2012) 180,000 Tons Japan, Korea and the US have looked to create large ‫〶⨹ޞ‬ൕ䴶≸䠅 However 180,000 Tons matters to the World Trade Organization. 200 ‫〶⨹ޞ‬ൕ䴶≸䠅 200 100 stockpiles of their own, in reaction to China’s quota many professionals see Beijing’s move 100 as 0perfectly 0 cuts. Japanese companies stand to suffer the most, acceptable. “When OPEC meets regularly Annual Shortfall for the to increase Annual Shortfall for the 2002 03 04 05 06 07 08 09 10 40,000 ᵠᶛӊᒪᒪൽ䎚ᆍ next 5 years as they next currently account for more than half the Tonsdecrease 03 04prices, 05 06it 07 08 09 10 routine. So we is considered ᵠᶛӊᒪᒪൽ䎚ᆍ 40,000 Tons or 2002 5 years world’s consumption outside of China. Japan has been will have to just accept this too. In today’s world, if a scrambling to meet their demands, and has recently country has something special, be it space technology, announced plans to purchase metals from Vietnam. rare earth or oil, it is accepted that they have a right to The country is also looking to create a long-term exploit it (economically),” argues S.S. Marthandam, a partnership with Australia which has known supplies freelance sourcing consultant. of 1.6 million tons, and has had talks with Russian officials. Japanese trading companies recently met with Russia, which has the second largest known supply of




Kazakhstan Sumitomo,Kazakhstan Toshiba U.S. Toshiba embarkingSumitomo, on rare-earthU.S. Molycorp Minerals embarking on rare-earthextraction projects setMolycorp to resumeMinerals extraction projects set to resume 䓂䇲㩭㬣᷍ Ⰼ䐆䊻⪬㪉䇱㻂 mining operations 䓂䇲㩭㬣᷍ Ⰼ䐆䊻⪬㪉䇱㻂 mining operations 㵢㋋⤪㼏㚠 in Califormia 㵢㋋⤪㼏㚠 in Califormia 噃⹌㯟ゴ䐾㋋⤪䔘䄖 噃⹌㯟ゴ䐾㋋⤪䔘䄖 䐹㩰㼀 䐹㩰㼀

VietnamVietnam Japanese firms in talks to Japanese acquire firms in talks to acquire mining rights mining rights 㦶⡟⹌㯟䊻⪬ 㦶⡟⹌㯟䊻⪬ 㣃㲙㋋㌔㬣䄬 㣃㲙㋋㌔㬣䄬

Australia Lynas set to launch country`s Australiafirst rare-earth production/export ops Lynas set to launch country`s first rare-earth production/export ops Lynas㛃ㅉ㦌⺛⭻䄜⷗㻂㵢㪛⥛ ⨗㋻⮄ Lynas㛃ㅉ㦌⺛⭻䄜⷗㻂㵢㪛⥛ ⨗㋻⮄



FEATURE The Opportunity

Even though the short term looks pretty bleak for a long list of industries, there is an opportunity being created by China’s actions. “Every time that someone tries to hoard some supply of a supposedly "critical" or "strategic" material, really innovative people have found ways around the problem,” says Raymond Mignogna, a Metallurgical Engineer and Statistician. “I suggest that is what's needed in this case, rather than a lot of hand wringing over our dire predicament.” Regardless of the amount of metals being bought, mined, or exported, it’s a fact that these REEs are not renewable, and like many of the resources we rely on today, they will inevitably run out. China’s reductions may very well be the catalyst which inspires scientists and researchers around the globe to reduce our current dependence on REEs. “The reductions in export quotas are convincing governments and businesses of the need to invest in research for alternatives to rare earths and infrastructure to increase rare earth reclamation from scrapped equipment,” states Mr. Nymand.

Conclusion In June 2010, Li & Fung president eluded to the low cost era ending in China. That statement definitely -------------------------------holds true in this case. The situation is another example Global Consumption of REEs (2010) ‫〶⨹ޞ‬ൕ䬶䠅


124,000 Tons





Demand for REEs (2012)

















Annual Shortfall for the next 5 years ᵠᶛӊᒪᒪൽ䎚ᆍ

200 100 0





都大为受挫”,一位叫Gustav Uffe Nymand的高级质量工











稀土资源的需求量每年可超过4万吨。 China Rare Earth Production

和行业便炸开了锅,而在2010年末,中国再度让世界咂 New Rare-Earth Projects 〶ൕᔶ䟽᯦亯ⴤ

ѣള〶ൕ⭕ӝ 2.稀土采购越发困难。印度、巴西、加拿大和美国都有不 Export Quota Production Quota







中国稀土资源向来丰富。全球95%的稀土资源都来自中 89.2 50.1 2009 国;更令人震惊的是,常见的稀土资源至少有99%都是中国 82.3

47.0 供应的,如常用于特殊玻璃和正子断层扫描仪(PET扫描 87.6 2008




87.0 “中国供应价一直都非常低,这让很多的稀土开采国



400 Tons



‘10 proj




‘09 proj

ᒪ ᴾ〶ൕԭṲ᤽ᮦ

114,000 Tons

全球恐慌— 180,000 中国减少稀土出口配额40,000


Rarity value 〶ᴿ૷ԭ‫ٲ‬ Rare-earths price index,January 2002=100


Global Production of REEs (2010) ‫〶⨹ޞ‬ൕ⭕ӝ


of being over-dependent on China-sourcing, be it for garments, tech products or rare earth metals. As long as the prices were low, the world never reacted, and China was able to position itself to become the overwhelming choice for supply. Now, REE demand has reached an all-time high, and China controls most of the current supply. Wouldn’t any business limit supply to drive better profit on what they currently have?







Vietnam Japanese firms in talks to acquire 稀土开采显然要赔上环境,内蒙古的情况就不容乐 mining rights Kazakhstan 㦶⡟⹌㯟䊻⪬ Sumitomo, Toshiba 观——绝大多数采矿活动都在那儿进行。政府称削减稀 U.S. 㣃㲙㋋㌔㬣䄬 embarking on rare-earthMolycorp Minerals extraction projects set to resume 土配额主要为环境着想。ACC的一位高级项目经理Bernard 䓂䇲㩭㬣᷍ Ⰼ䐆䊻⪬㪉䇱㻂 mining operations 㵢㋋⤪㼏㚠 in Califormia Gore表示支持中国的做法:“实际上中国比其它国家都注



䐹㩰㼀 Australia 重项目、投资等对环境的影响,开采稀土资源对环境极为

Lynas set to launch country`s first rare-earth production/export ops Lynas㛃ㅉ㦌⺛⭻䄜⷗㻂㵢㪛⥛ ⨗㋻⮄



































出。但是华尔街日报的James T. Areddy报道“中国内蒙最



一位叫Raymond Mignogna的冶金工程师兼统计员很乐观地说




























据表明,自己虽遭战争蹂躏,但仍坐 -------------------------------------------------------------

est of the world

拥3万亿美元稀土资源——这也许可 -------------------------------------------------------------


Global Consumption of REEs (2010) ‫〶⨹ޞ‬ൕ䬶䠅

124,000 Tons

Rarity value 〶ᴿ૷ԭ‫ٲ‬ Rare-earths price index,January 2002=100 ᒪ ᴾ〶ൕԭṲ᤽ᮦ






















40,000 Tons

200 100 0


Annual Shortfall for the next 5 years ᵠᶛӊᒪᒪൽ䎚ᆍ




180,000 Tons



Rare Minerals这

Demand for REEs (2012)



‘08 ‘09 ‘10 重新启动;Quest proj proj

114,000 Tons



Global Production of REEs (2010) ‫〶⨹ޞ‬ൕ⭕ӝ








Social Media and Sourcing

Wedding Bells?


ike any disruptive technology, once it gets hot it spawns new businesses. Facebook is a good example. It’s obviously hot, sizzling actually, and has led to new businesses from social gaming to social coupons. For supply chain professionals then, the question is probably not when this social media trend will move into international trade, but rather how it will work. The area of trade where social media tools can probably have the greatest impact is in online sourcing. The reason for this is that sourcing, by its nature, is a networking activity. Suppliers, buyers, and trade service providers already mingle at trade shows, conferences, and various other events trying to expand their base of potential connections. These are the types of activity where social media thrives best. Kind of like the way college activities propelled Facebook, or the way business networking events helped grow LinkedIn as a tool for job searching. Social media works by allowing a person to use their existing network to grow their contact base. In a perfect world, an importer of bicycles would be able to verify a bicycle factory by asking another importer of bicycles in their network about the factory’s quality and service. Thus, good recommendations within one’s network would help the better suppliers get more business and bad recommendations would drive the poor suppliers to either improve or shut down. Unfortunately, we live in an imperfect world. We also live in a competitive one. Most buyers wouldn’t share this type of information unless they were in different industries or in different markets. Therefore, under this skewed logic, a buyer of bicycles could probably find out more information about a seller of fruit from his network then he could about bicycles. So social media for sourcing is doomed to fail, right? Not quite. Actually, it is destined to help third party logistics and other trade service providers play a more prominent role in online sourcing. While two buyers may not “connect” with each other (social media speak for “join each other’s network”),

Michael Kleist is a founder of, the social networking site dedicated to global trade.

they would be likely to connect with a logistics or other service provider online. The same goes for suppliers. They may not connect with each other, but they would certainly feel comfortable joining their network with an inspection agent, for example, which makes them look more reliable to others viewing their products online. Thus, the rise of social media may actually become one of the most important upcoming trends for thirdparty logistics and other service providers. It has the possibility to become the “killer” sales tool for trade service providers. It puts them smack dab in the middle of their customer base in a role that lets them serve as an arbiter. A trusted trade partner. Think of a typical buyer search online in a non-social media setting. In a web 1.0 directory, a buyer searches for bicycles and finds a list of hundreds, even thousands, of suppliers ranked by how much the supplier paid the website. Not ideal for the buyer right? In a social model, however, those search results would be returned in order of “connections” and “shared connections”. In other words, the bicycle suppliers appearing on the top of the list would be ones that the buyer can verify through their network. They are either already “connected” to the buyer online or are a “shared connected” to someone the buyer knows. Someone the buyer can contact and ask for more information or a reference; for example, a third-party logistics provider. Since trade service providers are neutral parties between buyers and suppliers, they can comfortably appear in both networks. As a member of both parties’ networks, they are first to appear as a mutual contact or shared connections in a search. Thus, they are the potential non-competitive link between two parties that are trying to find each other. When looked at in this manner, you can say that third party logistics and other trade service providers will have a much greater stake in social media then they do in the existing online sourcing environment. Social media for sourcing is potentially the most powerful future sales tools for any trade service provider, allowing them to use their existing customers to gain new customers. Now that is something worth looking into.


Contents On the Road with Victor Mok /59 Having fun with CHA1N/60 Top Supply Chain Books /61 The State of SaaS/62 Seen on CHA1N/LinkedIn/64 Unilever prepares to Grow/70 在路上—— Victor Mok的商务之旅/59 大家来玩CHA1N/60 CHA1N/LinkedIn 观点采集/64 联合利华为未来铺路/70


供应链好书推介/61 SaaS现状解析 /62

On the Road With Victor Mok


ow here’s a man who knows how to travel! Victor Mok is the CEO of DHL Supply Chain North Asia. Based in Shanghai, but with a coverage region comprised of China, Hong Kong, Taiwan, Japan, and Korea, means Victor spends a lot of time on the road. When he’s not inspecting warehouse sites or hammering out deals in boardrooms, he tries to enjoy the local elements of the cities he visits. Here’s a taste of Mr. Mok’s travel schedule, and what he does with his precious few minutes of leisure time while en route to his next destination:

Victor Mok - CEO, DHL Supply Chain North Asia

1.How many days do you spend on the road per year?

Ha! I spend 4 to 5 days on the road per week! Most of my week days are spent traveling, and I come back to Shanghai for the weekend.


.What kind of entertainment do you bring on the plane? I hate to say it, but I bring my iPad with me! I also bring my books on with me.

2.What’s something you buy in ev-

ery city you go to? I like to buy some local snacks. Any kind of local snacks, produce… you know fruits and stuff. If it’s easy to carry, that’s good, because I don’t usually check any luggage when I travel.

3.What’s your favorite airline?

I have a quite a few to be honest. I like Lufthansa in Europe. I really enjoy traveling on the Asian-based airlines, they’re impressing me more and more. They include everything, and they’re becoming very international.

4.What’s a magazine you read quite regularly? I read The Economist, and a lot of Chinese magazines about the country.


.What’s your favorite hotel to stay at? Wow! I might get in trouble with friends for naming them…I usually go with the ones that DHL has a contract with. Maybe the Marriot is one of the nicer hotels I’ve stayed at.


.What’s one product you look for in every city? Good question. I look for a good bookstore usually.


.Favorite restaurant? In Shanghai? For Cantonese, I like the Chinese cuisine in Shangri-la, I think it’s called Fook Lam Moon. For Western, well there are a lot here, T8 is pretty good.



THE links

Having FUN with


Describe your job in 10 words or less! Help China’s Powertrain suppliers win new business.

David Reeck

Director – Powertrain Product Engineering General Motors China

Coolly manages operations, cuts costs and supports Sales ;)

James Chua

Operations Manager AMOS Paints Singapore

I turn Supply Chain Lead into Gold!

Scott Lowther

Business Owner Supply Chain Alchemy

Overall SCM management, Strategy development, fire-fighting, coach and trainer.

Youman Lu

VP of Supply Chain & IT Hisun pharmaceutical

Getting the delayed to be delivered on time!


Head of Operations, Production & Sourcing, India Sodirep Textiles

For airliners, survive and live to fight for another day.

Rick Yu XIONG Supervisor, Sales & Marketing US Great Wall Airlines

Global Sourcing Leaders Forum

May 19th, 2011 Downtown Puxi, Shanghai (Venue to be confirmed)



The Latest books in Supply Chain Lean Supply Chain Management Essentials

Supply Chain Resilience

by Bill Kerber and Brian J. Dreckshage

by Francis Mungofa Manzira

This book presents an alternate approach to supply chain issues. The authors argue that the traditional materials planning environment, typically embodied by an Enterprise Resource Planning (ERP) system, is an ineffective support system for a company that wants to adopt Lean practices. Presenting a materials planning and control chart approach using only Lean tools, the text focuses on the materials management aspects of Lean, such as leveling work within the value stream and the concept of Every Part Every Interval. It combines independent demand characteristics with manufacturing strategy.

Supply Chain Strategies for AgriBusiness

by A.V.Nageswara Rao, Dr. D. Sahu, Dr. V. KrishnaMohan Agriculture productivity is decreasing in many economies which remains a serious concern for growing population and consumption in global scale. To support increase in Agriculture production and food security effective Supply chain mechanism plays a vital role in solving the problem. Supply chain strategies planned in various forms can help Agribusiness to increase productivity and sustain in global competition.

Supply Chain Management in the Drug Industry By Hedley Rees This book bridges the gap between practitioners of supply-chain management and pharmaceutical industry experts. It aims to help both these groups understand the different worlds they live in and how to jointly contribute to meaningful improvements in supply-chains within the globally important pharmaceutical sector.

Supply chains can be disrupted in a number of ways.Among them are: natural disasters that include hurricanes and earthquakes;accidents human induced disasters such as terrorist attacks and sabotage. It is critical to Supply chain networks that they have resilience. This is a challenging and demanding area of research as it involves high level of complexity due to the nature of supply chain networks. As past research has been focusing on supply chain management, risk management, supply chain vulnerability, performance and several other aspects of the supply chain.

Flexing the Supply Chain by Ananth V.Iyer and Alex Zelikovsky Efficient planning and superior execution against clear objectives is the way companies operate best. For many companies, the planning process is carefully orchestrated, objectives are set, budgets are negotiated, resources are allocated, and then it’s up to the organization to execute. But what happens when the unexpected occurs? What if your business declines by 40% in 1 month, what do you do? The authors call these events ‘stretch opportunities’

Supply Chain Risk Management by Donald Waters There is constant pressure on managers to improve the efficiency of their supply chains, allowing materials to move quickly and at low cost. This pressure has encouraged a stream of new initiatives and methods, but these new methods also increase the supply chain’s vulnerability to disruptions. By removing the slack that used to protect supply chains from unforeseen events, they create inflexible chains where even a small, unexpected event can bring everything to a standstill.



THE links

The State of the SaaS Supply Chain Growth in Asia By Chris Beukenkamp Managing Director, Asia of SPS Commerce


here’s no doubt that Software-as-a-Service (SaaS) or on-demand software has become a driving force within the software industry. Over the past few years, there has been a surge of interest and investment in SaaS solutions from retailers and their trading partners looking to optimize their supply chains. Multi-tenant SaaS has become a robust contender for slices of the IT budget. On-demand solutions are now available across a wide range of supply chain functions in North America, such as sourcing, procurement, CRM, manufacturing, warehousing, logistics, forecasting and planning. Where does the Asia Pacific region fit into the SaaS picture? The appeal of SaaS is growing rapidly in Asia Pacific, due to a host of factors – primarily a significantly increased awareness of the SaaS concept and a proliferation of new SaaS applications. In fact, Springboard Research predicts that the SaaS market in Asia Pacific will grow to $2.25 billion by 2012. Many organizations are deploying SaaS to meet their key IT needs and overcome challenges posed by the rising cost of deploying 62 MARCH/APRIL 2011

and managing traditional software systems. In addition, SaaS is creating a new breed of first-time software users, mostly among small and medium enterprises. However, research shows Asia as a whole is still tracking behind North America in terms of SaaS adoption. There are several reasons for this. Many of the traditional software providers such as large ERP vendors have failed to promote their supply chain solutions to enterprises in the region. This has created a gap in the market, and many best-ofbreed vendors have taken advantage of this by selling an array of supply chain solutions. While many Asian companies are tempted by SaaS and have options to choose from, they’re still concerned about the maturity of these solutions, losing control of their data and applications, the financial stability of the vendors providing them and an uncertainty as to how to integrate SaaS into their legacy systems. The market for B2B EDI solutions is particularly confusing. Countries such as Australia are underserved by providers, where a key few own the majority market share. Other countries, such as Japan, have technical

and relationship hurdles that slow EDI adoption. And still others, like China, are served by every vendor you can think of, while still lacking a dominant player. Retailer advice and systems are useful, but a third party solution would be more effective long term. Many small, agile vendors provide high quality solutions, but users worry that they won’t be able to grow with their business and be with them long term. The biggest hindrance to SaaS supply chain adoption in Asia, in my opinion, is the unnecessary complexity that is embedded in educating the market. Talk to any software provider and you will hear the following verbiage: VAN, fees, annual contracts, maintenance renewal, software updates, map maintenance, resends, transmission monitoring, kilo-character charges, etc. You don’t know what a kilo-character is? Join the group. This is like asking your mother how large her email file is, or if she knows the location of the EML file on Yahoo’s servers. The problem is that factories popping up every day in Asia do not drive their business this way and do not speak like this. They simply want to receive a purchase order and send an

THE links invoice – the less software, install time and setup the better. When they are ready to purchase a solution and explore the market, they are unnecessarily inundated with this “education” into the vernacular of EDI. Why do you have to be an EDI expert to use EDI to automate your supply chain? There is a better way. The SaaS delivery model, in which applications are delivered to users by a browser and software that doesn’t reside on premise, is ideally suited to

emerging markets such as those that characterise the Asia-Pacific region. Primarily, this is because the SaaS model appeals to a segment of user organizations that has previously been under catered for by software providers. The SaaS provider is responsible for hosting, deploying, customizing, configuring and delivering the software. Many of the Asia-Pacific countries have a huge base of small and medium sized enterprises (SMEs), and traditional enterprise applications have been way out of their reach. Those companies are mostly using point solutions at the moment. They would like to use advanced software, but they don’t want – or aren’t able to – invest money upfront to buy it. So the subscription model that is inherent in SaaS is ideal for them. SaaS takes the setup and maintenance away from the customer

by putting it online. The trading partner can then focus on receiving and processing orders, not running the IT of EDI. But it doesn’t stop there. There are still maps that must be created, document flow that is monitored and alerting – all of which should be happening behind the scenes. When there’s an issue, rather than get a confusing email telling you to click on the third tab and fifth link down to see an indecipherable error message, you should receive a phone call from an individual at your SaaS provider. A real human being who takes ownership of your account and speaks to you in your language in your terms about your business. While Asia remains a complex and challenging marketplace, SaaS providers will continue to stream in, refine and localize their business models.

SaaS Solutions are web-based...not just web-enabled: - Requires only a web browser and secure access through Intranet, Internet or Extranet - Zero-footprint client access (no client component required to access the system) - Maintenance and Administration using just a web browser - Real-time collaboration and visibility with vendors and customers EDI, Product & Price Mgt, Visibility, Invoicing WMS, Inventory Mgt EDI, Selling & Fulfillment, Multi-Channel Selling, Invoicing Inventory Mgt, Compliance, Letter of Credit EDI, Inventory Mgt, Transportation Mgt, Planning, Compliance WMS, Transportation Mgt, EDI, Execution Transportation Mgt, Order & Invoice Mgt, Visibility WMS, Order, Transportation, Forecasting, Assembly & Kitting Fullfillment Solutions, Returns Mgt, Glocal Postponement Yard Management


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Can you give a brief overview of the project? TK: The project was basically a regional roll-out of SAP’s WMS Solution for Unilever. It’s part of an end-toend implementation to link Unilever’s warehouses from Japan, to Australia and New Zealand, across the whole of Africa and Central and Eastern Europe. Two years ago, we actually started the greater China implementation and I was the project director. What were the challenges of carrying out this project? TK: We have 55 warehouses in Hong Kong, China and Taiwan.The supply chain is complex because it covers home and personal care, but we have also food and ice-cream, so we have to incorporate cold-chain into the equation. When it came to the cut-over, we decided that we could only afford to go live at the same time, so that we wouldn’t need any intermediary systems. Shelton: We needed to ensure that there was no disruption in the supply chain. Any delays that resulted in an imbalance in inventory, is going to cause problems with their customer service, and cause damage to their reputation as a leader in the marketplace. Which countries are these 55 warehouses supplying? George: There are a few that are supplying some of Unilever’s exports because they have both capabilities, but for the most part it’s only for China and the Chinese market. What are some of the benefits Unilever is enjoying from establishing this system? TK: At the regional level, it’s definitely the tax benefits and being able to closely manage the supply chain. Unilever is also finally leveraging its scale by doing a lot more cross-border sourcing. The WMS solution definitely has more capabilities to support the growth. What were the challenges for Resources Global Professionals with this particular project? TK: We are talking about organizing and training the people, along with the preparation for going live. In

China, the people that work in warehouses are very new. The day before they joined Unilever, maybe they were farmers. It’s necessary to have local talent who can effectively communicate and understand the local labor. George: Some of the sites would be covering coldchain, some were for ambient logistics. My area covered roughly 40 different sites, some of which were very small with few people, and some had over 100 people working on-site. Then of course, we had to know who the 3PL partner was at each site. Alex: For Western China, probably the most challenging aspect for me was getting the right people to the sites. To re-assign a manager to a location in West-China is not a simple as moving someone to the East. Shelton: You have to remember that the internal Unilever team which were assigned to this task, they themselves have no prior experience handling a project of this magnitude. That was the biggest challenge. Even TK, who was the director! How does the project position Unilever for the future? TK: The Chinese management of Unilever sees the system as an enabler to grow. We would like to double the size of the company in a short few years. The project was also a method to grow our people internally. The people are more confident and they feel like they can handle projects of this magnitude. Shelton: This project has given Unilever a serious competitive advantage to be faster while growing. If


THE links

you look at Unilever main competitor, Proctor and Gamble, you’ll notice that they have six or seven warehouses, while Unilever has chosen to develop a network of 55. The more spread out you are, the faster you will be able to respond to your clients needs, so I see that speed as a the value for Unilever. George: I see the IT infrastructure as a very important basis for expanding and evolving the business. It cost a lot of money, but Unilever can reap the benefits over

time. Shelton: Unilever can now better anticipate risk. The consultants worked on lots of different scenarios that could cause problems in Unilever’s operation. TK: If we screw up on that day, it usually takes a few days, or maybe a few weeks to fix. Just imagine the losses in sales while the system is down. If you screw up, it completely wipes out the benefit of doing a project like this. George











Alex: 在中国西部,挑战又有所不同。每个片区之间差距颇




TK: 我们的供应链不仅覆盖家居和个人护理,也包括食

部重任经理并非像在东部执行那么容易了。 联合利华以后会如何发展这个项目?


TK: 联合利华中国管理层已经认为这个系统比较稳固,可以



Shelton: 保证供应链环环相扣非常重要。货存方面一旦出





Shelton: 现在联合利华长势颇好,这个项目推波助澜,



TK: 从区域角度出发,税务方面自然有利,供应链管理也能









George: IT设施对于业务的扩展和延伸是不可或缺的基




George: 以前TK和他的团队面试我的时候就提到,就算身

TK: 是,联合利华是少有的把IT放在战略层面的公司。 Shelton: 说到策略,这个系统能帮助公司更好地进行风





TK: 同Resources合作的原因也在此。我们是想组织团队培



TK: 要谨慎。一朝搞砸,得搭上几天来弥补。系统垮了,







George: 有些地方主要是冷链,有些区域主要是物流环 65



LOGISTICS SERVICES 4SCM A10, 5/F, 61 Old Warehouse Building, 61 Yangshupu Road, Shanghai 200082 上海市杨树浦路61号老栈商务楼5楼A10室 邮编:200082 +86 (21) 6148 9800 ARJ Commercial Leasing Limited 1500 Lianhua South Road Max-Mall Office Tower Block 8-9 Unit 810, Shanghai 201100 中国上海市闵行区莲花南路1500弄 梅陇镇新都会,商务中心8-9号楼810室 邮编:201100 +86 (21) 3358 2270 Arvato Services B-1/F XingHong Science & Technology Industrial Park, Feng Huang Gang Village, Xi Xiang, Bao’an District, Shenzhen 200231 深圳宝安区,宝安西乡前进二路凤凰岗村 星宏科技园,邮编:518102 +86 (755) 3386 1666 BDP International Unit 2101-2110, Shanghai Bund Int’l Tower, 99 Huangpu Road, Shanghai 200080 上海市虹口区黄浦路99号上海滩国际大厦 2101-2110室,邮编:200080 +86 (21) 6364 9336 Best Logistics Technology Bidg 11 West, 1F West Lake Soyea Software Park 176 Tianmushan Road, Hangzhou, Zhejiang, 310013 浙江省杭州市天目山路176号西湖数源 软件园 11号楼1层西2201-03室 +86 (571) 8899 5656 +86 (571) 8827 0027

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

上海鲁班路600号江南造 船大厦19楼 +86 (21) 5302 9988 Dajin Logistics 3000 South Lianhua Road, Prologis Logistics Park, Minhang, Shanghai 201109 莲花南路3000号,普洛斯闵行物流园区 内,邮编201109 +86 (21) 3430 7666 Damco 5/F, Tian An Centre, 338 West Nanjing Road, Shanghai 200003 上海黄浦区南京西路338号天安中心24楼, 邮编:200003 +86 (21) 2306 2000



Deret Logistics Asie Suite 1703 Shanghai Bund International Tower, 99 Huangpu Road, Shanghai 200080 上海市黄浦路99号上海滩国际大厦 1703室,邮编:200080 +86 (21) 6306 2592

Hercules Logistics Unit 5A, Bldg. A, Shenfubao Hightech Park, No. 3, Huanghuai Road., Futian Free Trade Zone, Shenzhen, Guangdong 518038 广东省深圳市福田保税区, 黄槐道3号深福保科技工业园A栋5A, 邮编518038 +86 (755) 8358 0000

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

ID Logistics Room 19D, Dong Tai Plaza, 309 Tanggu Road, Shanghai 上海市塘沽路309号19D +86 (21) 6306 7083

DSV Air & Sea Logistics DSV Logistics 38/F, 1 Grand Gateway, 1 Hongqiao Road, Shanghai 200030 +86 (21) 5406 9800 DTW Logistics Group 16 Tianzhu Middle Road, Zone A, Tianzhu Airport Industrial Area, Shunyi District, Beijing 101312 北京市顺义区天竺空港开发区A区天柱中路 16号,邮编101312 +86 (10) 5923 7777 Duisport Packing Logistics A, 8/F Shanghai Industrial Bldg, 18 North Caoxi Road, Shanghai 200030 上海漕溪北路18号上实大厦8楼A座, 邮编200030 +86 (21) 6427 2906 Elee Logistics 375, Kefu Road, Nanxiang Town, Jiading District, Shanghai 上海嘉定区南翔镇科福路375号 +86 (21) 3912 4360 FM Logistic 3 West Guangzhou Road, Taicang EDZ Jiangsu Province. 江苏省太仓市经济开发区广州西路3号 邮编:201103 +86 (512) 8889 8666 Geodis 3/F. OOCL Plaza, 841 Middle Yan’an Road, Shanghai 200040 上海市静安区延安中路841号 东方海外大厦3楼,邮编200040 +86 (21) 6193 2323 H&T International Transportation 5/F, China Merchandise Building 152-155 Connaught Road Central, Hong Kong +852 2543 0708 HAVI Logistics 6 Xingsheng Jie, Beijing Economic & Technological Development Area, Beijing 100176 北京经济技术开发区兴盛街6号, 邮编:100176 +86 (10) 6788 3335

LOGISTICS SERVICES 邮编:200001 +86 (21) 2326 2000

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

上海浦东新区民 生路1518号 金鹰大厦A座13楼 邮编:200135 +86 (21) 6160 1198

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

上海市闵行区宜山路2000 号利丰广场 主楼8楼,邮编:201103 +86 (21) 2416 4700 Kuehne & Nagel Block 1, 11-16F, 1868 Gong He Xin Road, Shanghai 200072 上海共和新路1868号大宁国际商业广场 第一幢11-16楼,邮编:200072 +86 (21) 2602 8000 Linfox Road Transport 26-F, Cross Region Plaza, 899 Ling Ling Road, Xuhui District, Shanghai 200030 上海市徐汇区零陵路899号飞洲国际广场26 楼F座,邮编:200030 +86 (21) 5150 6699 Linghua Logistics 333 Ke Yuan Road Zhangjiang HiTech Park Pudong New Area, Shanghai 201203 上海市浦东新区张江高科技园区科苑路333 号,邮编201203 +86 (21) 5080 0107 Linkstar Logistics 49A, 199 North Riying Road, Waigaoqiao Free Trade Zone, Shanghai 200131 上海市外高桥保税区日樱北路199号49A, 邮编:200131 +86 (21) 5046 1865 Logisfashion Transportation Tower, Room 1101 218, Hengfeng Road, Shanghai 上海市现代交通大厦恒丰路218号1101室 +86 (21) 5180 1781 Logwin Air+Ocean China 5/F & 6/F, Ocean Towers, 550 East Yan’an Road, Shanghai 200001 上海市延安东路550号海洋大厦5楼和6楼,

Nowaday Rational Logistics 685 Huadan Road Qingpu District Shanghai 201708 上海市青浦区华丹路685号, 邮编201708 +86 (21) 5155 6226 Penske Logistics Room 1801, Honi International Building, 233 Weihai Road, Shanghai 200030 上海威海路233号恒利国际大厦1801室, 邮编:200041 +86 (21) 6227 8566 P.G. Logistics Group 4/F, Baogong Building, 361 East Longkou Road, Tianhe district, Guangzhou 广州市天河区龙口东路361号宝供大厦四楼 +86 (20) 3848 2090 Schneider Logistics UC Tower,Suite 1605, 500 Fu Shan Road, Shanghai 上海浦东福山路500号城建国际中心1605室 +86 (21) 5058 7970 SDV International Freight Forwarding 20/F, East Building, New Hualian Mansion, 755 Middle Huai Hai Road Shanghai 200020 上海市淮海中路755号新华联大厦东楼20 楼,邮编:200020 +86 (21) 3395 0600 SunJet Logitics 299 Huaxiang Road, Shanghai 上海华翔路299号 +86 (21) 6127 2637 Sinotrans Guangdong 16/F, 97 Haiyuan Road, Huangpu, Guangzhou, China 510700 广州市黄埔区海员路97号外运大楼16楼, 邮编:510700 +86 (20) 8710 2800




PROFESSIONAL SERVICES +86 (21) 6317 2030

18/F, Times Plaza, 1 Taizi Road, Shekou, Shenzhen 518067

深圳蛇口太予路1号新时 代广场1801室, 邮编:518067 +86 (755) 2681 9188

Control Risks Suite 1001 East Tower China Merchants Plaza, 333 North Chengdu Road, Shanghai 200041 上海市成都北路333号招商局广场东楼 1001室, 邮编200041 +86 (21) 5298 1800 +86 (21) 5298 0991

Dragon Sourcing Suite 1502, Jin Tian Di International Mansions 998, Renmin Road Shanghai 200021 上海市人民路998号今天地国际大厦 1502室,邮编:20002 +86 21 61413955

YatFai Logistics 39-H, Fortune Building, 88 Fuhua San Road Futian District, Shenzhen, Guangdong Province 广东省深圳市福田区福华三路88号, 财富大厦39楼H座 +86 (755) 3336 6898

ET2C International 23 Wangjiao Plaza, 175 East Yan’an Road, Shanghai 200001 上海黄浦区延安东路175号旺角大厦23楼, 邮编:200002 +86 21 5308 1220

YRC Logistics 8F, Building 2#, Xinda Commercial Building, 1158 Xiehe Road, Shanghai 200335 上海协和路1158号鑫达商务楼2号楼8楼, 邮编:200335 +86 (21) 6137 7668

IIAPS 27/F, Room 02 418-428 Jiang Ning Road 200041 Shanghai, China 上海市江宁路418-428号 27楼02室,邮编:200041 +86 (21) 6217 0253

Accenture 30/F, Central Plaza, 381 Huaihai Road, Shanghai 200020 上海市淮海中路381号中环广场30楼, 邮编:200020 +86 (21) 2305 3333 AsiaInspection 2201-03, Guidu Building, 3007 Chun Feng Road, Luo Hu DistricUnit 810, Shenzhen 深圳市罗湖区春风路3007号, 桂都大厦 2201-03室 +86 (755) 8231 6796 Baker & McKenzie Suite 3401 China World Tower 2 China World Trade Center, 1 Jianguomenwai Dajie, Beijing 100004 +86 (10) 6535 3800 BBK Consulting 17/F Lippo Plaza, 222 Middle Huaihai Road, Shanghai 上海市淮海中路222号力宝广场17楼 +86 (21) 5396 5600 BPS Global Group Unit 3104, Tower 1, Kerry Everbright City, 218 West Tianmu Road, Zhabei District, Shanghai, China 200070 中国上海市闸北区天目西路218号嘉里不夜 城第一座3104室, 邮编:200070 +86 (21) 6317 8830

PricewaterhouseCoopers 11/F, PricewaterhouseCoopers Center, 202 Hubin Road Shanghai 200021 上海湖滨路202号普华永道中心11楼, 邮编200021 +86 (21) 2323 8888 +86 (21) 2323 8800

Demand Solutions PO Box 6180, Norwest Business Park, Baulkham Hills BC NSW 2153 +612 9659 4555

TNT Hoau 2239,Huaxiang Road,Shanghai 上海市华翔路2239号, 邮编201107 +86 (21) 6091 6666 +86 (21) 5080 0109


PROFESSIONAL SERVICES 上海南京西路1515号,嘉里中心601- 603 邮编:200040 +86 (21) 3222 4758

InnoCSR Room 11- A2, Yujia BD, 1336 Huashan Road Shanghai 200052 上海市长宁区华山路1336号 玉嘉大厦11 楼A2座, 邮编:200052 +86 (21) 5237 7387 +86 (21) 6091 9265 Ivie Asia Room 1507, You You International Plaza, 76 Pu Jian Road, Pu Dong New District, Shanghai 200127 上海市浦东新区浦建路76号由由国际 广场1507单元,邮编:200127 +86 (21) 6165 9100 Lloyd’s Register Asia 20/F Ocean Towers, 550 East Yan’an Road, Shanghai 200001 上海市延安东路550号海洋大厦20楼, 邮编:2000012 +86 (21) 5158 5700 Logistics Executive Suite 13G, Shanghai Ind’l Investment Bldg. 18 North Caoxi Road, Shanghai 200030 上海市徐汇区漕溪北路18号, 上海实业大厦13楼G座,邮编:200030 +86 (21) 6427 6697 Michael Page International 601-603 Shanghai Kerry Centre 1515 West Nanjing Road, Shanghai 200040

11F, PwC Center 202 Hubin Road, Shanghai

湖滨路202号普华永道中 心11楼 邮编:518067 +86 (21) 2323 8888

Resources Global Professionals Room 2705-06, Lippo Plaza, 222 Middle Huaihai Road, Shanghai 200020 上海市卢湾区淮海中路222号 力宝广场2705-06室, 邮编:200020 +86 (21) 6386 8710 Russell Reynolds Associates 4504, Jin Mao Tower, 88 Centure Avenue, Pudong, Shanghai 200121 上海浦东世纪大道88号金茂大厦4504, 邮编200121 +86 (21) 6163 0888 Smart Sourcing 1210-1213 Guo-Li Plaza, 1465 West Beijing Road, Shanghai 200040 上海市北京西路1465号 国立大厦1210-1213室, 邮编:200040 +86 (21) 5212 1200 ThreeSixty Sourcing International 3/F, Hua Sheng Mansion, 398 HanKou Road, Shanghai 200001 上海市汉口路398号华盛大厦3楼 邮编: 200001 +86 (21) 6322 5000 +86 (21) 6352 8899 Tractus Asia Suite B, 22/F, Zhaofeng Universe Building, 1800 West Zhongshan Road, Shanghai 200235 上海中山西路1800号 兆丰环球大厦22楼B座, 邮编:200235 +86 (21) 6440 0990 World-Check Unit 4C, Times Plaza, 1, Taizi Road, Shekou, Shenzhen, 518067 深圳蛇口市太子路1号新时代广场4C座,

PROFESSIONAL SERVICES 邮编518067 +86 (755) 2688 9786 REAL ESTATE SERVICES AMB China Suite 2908, Plaza 66 II, 1366 West Nanjing Road, Shanghai 200040 上海南京西路1366号 恒隆广场二座 2908单元, 邮编:200040 +86 (21) 6135 1688 BlueScope Steel 12F HSBC Tower, 1000 Lujiazui Ring Road, Shanghai 200120 上海陆家嘴环路1000号汇丰大厦12楼, 邮编:200120 +86 (21) 6841 1898 +86 (21) 6841 2340 Blogis International Logistics +86 (755) 2669 4211 CB Richard Ellis Suite 3201 K Wah Center, 1010 Middle Huaihai Road, Shanghai 200031 上海淮海中路1010号嘉华中心3201室, 邮编:200031 +86 (21) 2401 1200 Colliers International 16/F Hong Kong New World Tower, 300 Middle Huaihai Road, Shanghai 200021 上海淮海中路300号, 香港新世界大厦16楼, 邮编:200021 +86 (21) 6141 3688

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

上海市陆家嘴环路1233号 汇亚大厦2708室, 邮编:200120 +86 (21) 6105 3999 Goodman Group 2107 - 2109, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 200021 上海淮海中路333号瑞安广场2107-2109室 邮编200021 +86 (21) 6133 2000 +86 (21) 6386 2386 Lingang Free Trade Port Economic Development 6/F, 188 Yesheng Road, Pudong, Shanghai 201308 上海市浦东新区业盛路188号6楼, 邮编:201308 +86 (21) 2095 0600



REAL ESTATE SERVICES Shanghai 201308 上海市浦东新区业盛路188号6楼, 邮编:201308 +86 (21) 2095 0600 +86 (21) 2095 0604 GSE 27C Industry Building, 18 North Caoxi Road, Shanghai 200030 上海市徐家汇漕溪北路18号实业大厦27C, 邮编200030 +86 (21) 6090 1388 Mapletree Suite A-D,14/F, Times Square Office Building, 500 Zhangyang Road, Pudong, Shanghai 200122 上海市浦东新区张扬路500号, 华润时代广场办公楼14楼ABCD单元, 邮编:200122 +86 (21) 5836 7177 Nanjing ZAL Management Office 18 B Deji Mansion, 188 Changjiang Rd. Nanjing 210018 南京市长江路188号德基大厦18楼B座, 邮编:210018 +86 (25) 8572 6079

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

中国上海市南京西路1366 号恒隆广场2座25楼,邮 编200040 +86 (21) 6393 3333 +86 (21) 6393 3080 www.joneslanglasalle. Vailog Room 702, City Gateway, 398 North Caoxi Road, Shanghai 200030 +86 (21) 6090 5292 VIP 36 Fengshou Road, Pingsha Town, Gaolan Container Port Zone, Zhuhai, Guangdong 广东省珠海市平沙镇丰收路36号 +86 (756) 772 7118

IT & SOFTWARE SOLUTIONS Apprise Software 6009 Changjiang Science Building, 40 Nanchang Road, Nanjing 210037 江苏省南京市南昌路40号长江科技园大 厦6009室,邮编210037 +86 (25) 8345 5308 Barloword Optimus 15/F NCI Tower, 12A Jianguomenwai Avenue, Chaoyang District Beijing 100022 北京市朝阳区建国门外大街甲12号新华保险 大厦15楼邮编,邮编:100022 +86 (10) 8523 3103 BravoSolution 19F-08, Chinese Overseas Building, 129 West Yan’an Road, Shanghai 200040 上海市静安区延安西路129号华侨大厦 19楼08室,邮编:200040 +86 (21) 6145 8500 Emptoris Unit 01, Floor 7, 1 Grand Gateway 1 Hong Qiao Road, Shanghai 200030 虹桥路1号港汇中心1座701单元, 邮编200030 +86 (21) 6447 6600 +86 (21) 6407 2737 Epicor Software 2008 Cross Tower, 318 Fuzhou Road Huangpu District, Shanghai 200001 上海市黄浦区福州路318号 高腾大厦2008单元,邮编:200001 +86 (21) 63912808 GXS International Room 1602, 16/F, Grand Gateway Tower 1, 1 Hongqiao Road, Shanghai 200030 上海市虹桥路1号港汇广场1座1602室, 邮编:200030 +86 (21) 6120 1088



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

CHEP (China) 40/F, Suites 8-10, 2 Grand Gateway, 3 Hongqiao Road, Shanghai 200030 上海市虹桥路3号港汇二座40楼08-10室 邮编200030 +86 (21) 6127 2488 +86 (21) 6127 2466

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

Dexion (Shanghai) Logistics Equipment 155, Zha Yin Road, Shanghai 200438 上海市闸殷路155号, 邮编 200438 +86 (21) 6505 0011

SUPPLYON Suite 1515, Silver Centre, 1388 North Shanxi Road, Putuo District, Shanghai 200060 上海陕西北路1388号 银座中心1515室, 邮编:200060 +86 (21) 6149 8042 Tradecard Room B, 23/F, Jinrun Mansion, 6109 Shennan Road, Futian District, Shenzhen 518040 深圳市福田区深南路6109号 金润大厦23楼B座,邮编:518040 +86 (755) 8830 9265

Loscam Packing Equipment Room 508, 707 ZhangYang Road, Pudong, Shanghai 200120 上海市浦东新区张扬路707号508室, 邮编:200120 +86 (21) 6104 8156 Schoeller Arca Systems Unit 1111-1112, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 上海淮海中路333号, 瑞安广场办公楼1111-1112室 +86 (21) 3133 2081 www.schoellerarcasystems.comApprise

Vocollect Asia Pacific Unit 3, 29/F, Sino Plaza, 255-257 Gloucester Road, Causeway Bay, Hong Kong 香港铜锣湾告士打道255-257号 信和广场3单元29楼 +852 2893 3321 +852 3051 8209

JDA Software Unit 06, 29/F, Raffles City, 268 Xizang Middle Road, Shanghai, 200001 上海市西藏中路268号,来福士广场2906室, 邮编:200001 +86 (21) 2327 9400 +86 (21) 2327 9401 Manhattan Associates Software Unit 2110, 21/F, Shui On Plaza, 333 Middle Huaihai Road, Shanghai 200021 上海淮海中路333号瑞安广场21楼2110室, 邮编:200021 +86 (21) 6386 8800

Yupei Group Yupei Building, 2500 Jinchang Road, Shanghai 200331 上海市普陀区金昌路2500号宇培大厦, 邮编:200331 +86 (21) 6627 7577


COMPANYINDEX 7Eleven............................................15 A.P. Moller - Maersk Group..............21 ACC........................................35,54,56 Accellos............................................63 Acer........................................16,49,53 Agilent Technologies....................19,68 Airbus..........................................19,28 Airport City Development Co............20 Alibaba.............................................29 AMB.......................................20, 37,38 American Enterprise Institute...........32 AMOS Paints....................................60 APL Logistics....................................19 Apple................................3,6,15,46,47 AsiaWorld-Expo...........................14,27 B&Q..................................................10 Baowan Logistics.............................38 Beijing Airport. Cargo.......................20 Beijing Benz Automotive...................19 Beijing Morale Furniture Co.Ltd........21 Beijing Gongmei...............................19 Bejing Huajiang Culture Development Company..........................................14 Best Buy...........................................10 Bharat Heavy Electricals..................14 Bliss Gvs Pharma Ltd.......................33 Boeing.........................................14,28 BYD..................................................31 Cargotec Corporation.......................20 Carrefour..........................................15 CEIBS...............................................35 CEVA.............................................9,66 Chang’an automobile.......................17 China Railway Container Transport Corp. Ltd...........................................15 Coach Inc.........................................14 Coca Cola.........................................17 Colliers International...............38,39,67 Compressors Electrolux..........................................21 Consona...........................................14 Continental Commercial Products....70 Dajin Logistics.............................21,66 Dawson Consultants........................70 DHBW...............................................40 DHL..........................................8,59,66 Directions Consulting.......................35 DPRK............................................... 11 EIPM................................................5,9 Electronic Art....................................44 Encana Corp....................................20 Esprit................................................14 Extron...............................................63 ExxonMobil.......................................21 Facebook.....................................45,58 Five Star...........................................10 Forward Management......................37 Foxconn.............................10,30,31,35 Foxlink..............................................15 French Chamber..............................26 Gazeley............................................38 General Motor.............................14,60 Gerson Lehrman Group...................46 Gome................................................10

Goodman...........................17,20,38,67 Goodyear.............................3,23,24,25 Google.........................................47,69 Great Wall Airlines............................60 GTNEXUS........................................63 Guizhou Yibai Pharmaceutical,........17 GXS.............................................63,68 Hercules......................................21,66 HINPET............................................70 Hisun pharmaceutical.......................60 HQPC.................................................9 HTC.............................3,6,35,36,43,46 Huabao Shoe...................................31 Huawei.............................................46 IDS Group...................................21,66 IIAPS.............................................9,67 IMVU.................................................44 Infineum............................................19 Intermec Inc......................................20 iPad.....................................3,35,36,59 Jones Lang Lasalle..........................17 Kangli Warehouse Facility..............................................20 Kinaxis..............................................70 Ktech Foods..................................6,23 LAOGANMA..................................6,43 Lenovo.........................................14,46 LG...........................................34,46,47 Li & Fung..........................................56 LinkedIn....................................6,58,59 Logivex.............................................70 Lopal Petrochemical Co. Ltd......................16 Lufthansa.....................................28,59 Luzhou Shoe....................................31 Lynas................................................55 M on the Bund.................................................26 Madison............................................26 McKinsey & Company......................48 MediaMarkt.......................................10 Mekophar Chemical Pharmaceutical.................................33 Menlo Worldwide.........................19,59 Metro................................................15 MGC.Com.........................................19 Microsoft......................................46,47 Molycorp Minerals.......................55,57 Motorola......................................35,36 NAFDAC...........................................33 NDRC...............................................15 Nestle...............................................17 NETD................................................16 Nippon Airways.................................28 Nokia......................................35,46,47 North Korean Investment and Development Group......................... 11 OPEC...............................................55 Orient Aviation Magazine..................28 P&G.............................................64,65 Peninsula..........................................26 Pepsi................................................17 PetroChina.......................................20 PGL.............................................41,66

Philips Lighting.................................19 Piaggio & C.s.p.a..............................14 PINCSlolutions.................................63 Progressive Media Group...................9 Prologis.............................20,37,66,67 PWC....................................... 11,39,67 Quest Rare Minerals Ltd.............55,57 Reed Exhibitions...........................9,16 Reserve Bank of India......................14 RIM.........................................35,36,47 Riot Games......................................20 Ritz Carlton.......................................26 Rolls-Royce......................................28 Samsung...........................34,35,46,47 SEEBURGER..............................19,68 SFDA................................................32 Shagang Group................................15 Shangri-la.........................................59 Sharp Corp.......................................34 Shenyang Nonstaple Foods Group...... Shiseido............................................15 Shuanghui Logistics.........................15 Singapore Airlines............................28 Smart Turn........................................63 Sodirep Textiles................................60 Softeon.............................................63 Spaceframe Construction & Engineering. .........................................................21 SPS Commerce...........................62,63 Steenkampskraal.........................55,57 Sterling Commerce...........................63 Sumitomo.........................................55 Suning Appliance.........................10,16 Supply Chain Alchemy.....................60 Supply Chain Center........................70 SYE..................................................15 Syngenta..........................................70 Synthes............................................21 Taobao......................................6,10,29 Technomics......................................22 Tencent.............................................20 Tommy Hilfiger..................................19 Tompkins International.....................19 Toshiba........................................34,55 Tradebeam.......................................63 TransGrid..........................................35 Unilever............................3,6,49,59,64 Vocollect Inc................................20,68 Wahaha............................................17 Wallenius Wilhelmsen Logistics.......70 Walmart.......................................15,70 Wintek.........................................15,35 World Health Organization...............33 Yahoo...............................................62 Zebra Technologies..........................20 ZTE...................................................46






Which trends and challenges will we see for the global supply chain in



Trevor Miles Thought Leader - Kinaxis Social media concepts will become part of SCM solutions Transportation costs and inventory liability force a rethink of off-shoring Demand from emerging economies will force a rethink of supply chains and emergence of new brand owners

Ganapathy Balasubramaniam Operations Manager - HINPET Managing the increasingly shorter life cycles of products - managing the changes in customer expectations, changing trends and design supply chain monitoring metrics effectively. This will help focus on strengths and work on improving weaker links in the chain.

Timothy G. Reis Sourcing/Supply Manager - Continental The biggest challenge will be to manage commodity prices. All indications are that the global recovery will continue. Capacity that was taken offline during the recession will not come back fast enough causing commodity price volatility. The key will be to manage price risk and not price certainty.

Peter Dawson

Bryan McCausland Reg. Head of SCM - Wallenius Wilhelmsen Cross competition collaboration by 3PLs to benefit from each others’ networks Consolidation of 3PLs used by OEMs Total landed cost to be the key metric used by OEMs and an expectation that 3PLs are able to support Richard Lean Consultant - Logivex Now that markets are opening up and communication is getting better the wholesaler is a waste in the purchasing process. Companies are looking for direct relationships with the producer. Forwarders will create services that focus on delivering door to door and on combined loads. Producers will also focus more on communication of their offerings and marketing, not solely on production capacity.

Consultant - Dawson Consultants Future proofing to ensure that the SC is setup as per the “Authorized supply chain” mandate of the WTO that is coming in 2014! Rick Feltenberger Principal - Supply Chain Center Executives are becoming painfully aware that the “supply chain” isn’t just purchasing & logistics anymore…if it ever was. It is widely reported that 65% to 85% of all company cost within any organization that makes, moves, or manages products & services is within the supply chain. This means that a small improvement, as little as 2% to 5%, will deliver savings at orders of magnitude greater than any other area. CEOs, CFOs, and COOs will realize the “hidden value” of Supply Chain Management and make significant investments in improving their business through the power of Supply Chain Management. Alex Rotenberg GSCM Strategy Manager - Syngenta Green supply chain will become a reality thanks to experiments pioneered by Walmart and other large-scale companies


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