Chaina Mar Apr 2007

MARCH/APRIL 2007 www.chaina-online.
com
AUS$7.50
EUR€5
HK$40
RMB40
SG$9
UK£3.50
US$6
THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS
Mind
the talent
gap:
solving China’s
skills shortage
CONTENTS
MARCH/APRIL 2007
THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS www.chaina-online.com
18 COVER STORY
Mind the talent gap

Some fresh perspectives on how to solve
the massive skills shortage that is slowing
down your China supply chain
24 Q&A
Danger: Proceed with caution 18

Improvements are needed in the transportation, handling
and storage of dangerous goods in China
REGULARFEATURES
7 COMMENTARY
■ A look at China’s industrial land auction process
■ After-sales blues
■ The impact of rising energy prices
■ Developing a China operations strategy
11 NEWS ROUNDUP
29 REGIONAL FOCUS
■ Tianjin: China’s third engine
24
37 CAREERS
40 CLASSIFIEDS
27 Q&A
41 EVENTS CALENDAR
Setting the standard
Susanne Lehmann, logistics planning manager, 41 COMPANY INDEX
Shanghai Volkswagen
42 CHINA SUPPLY CHAIN IN NUMBERS
34 SUPPLY CHAIN FEATURE
Navigating the logistics

real estate maze
China’s complex real estate environment
remains a major obstacle to improving
overall supply chain efficiency 34
www.chaina-online.com MARCH/APRIL 2007 5

M
any in China have recently returned to
work after the week-long Chinese New Year
holiday, a Golden Week holiday that turned
out to be especially golden for China’s retailers, with
the government reporting a 15 percent year-on-year
growth in retail sales over the period (see Growth in
China’s retail market, page 42).
But not all workers in China will be returning to
work, or at least not to the same company. The results
of a recent survey with 700 white-collar workers (most CHaINA MAGAZINE
of them in Shanghai) working across 15 different Publisher Contributing Writers
industries in China showed that a whopping 40 percent Michael Pennington Chris Horton, Russel Beron,
of them were planning to change jobs in the month michael@chaina-online.com Yang Ning, Shirley Liu
immediately after the holiday. Editorial Consultant Art Director
Max Henry Colin Dizengoff
With the large-scale job-searching peak in 2007
expected to come in mid-March this is a particularly Graphic Designer
fitting time for Chaina magazine to take a look at one of How Xu
the biggest problems currently afflicting most company’s
China supply chain operations: the talent shortage (see
Mind the talent gap, page 18). CHaINA MAGAZINE EDITORIAL ADVISORY COMMITTEE
This is not a problem restricted to the supply chain Jamie Bolton Amit Kumar
area and most sectors in China are reporting similar skills Executive Partner Logistics Manager Asia
deficiencies at all levels, with the problem most acutely Supply Chain Management Intercontinental Freight and
felt at a mid- to senior-management level. The bad news North Asia Logistics Services
is that the problem is not likely to go away in the extreme Accenture Electrolux Group
short term: it will take at least five years, though probably Mark Millar Jean-Luc Laboucheix
closer to ten years, before the current crop of junior-level Director of Strategic Business Supply Chain Director
executives (who are already benefiting from the millions Development Asia Pacific, Goodyear
of dollars that many companies are now spending on UPS Supply Chain Solutions
Sean Shao
training programmes in China) come of age. Eugene Lim Logistics Manager
The confusing industrial real estate environment in Registered Foreign Lawyer NuSkin China
China (and subsequent lack of quality warehousing Baker & McKenzie, Hong Kong
Jeffrey Tew
space) is another oft-cited obstacle to the continued Henrik Anker Olesen General Manager and
smooth development of China supply chains. Towards Transport & Logistics Lab Group Manager
the end of 2006 the government announced new Leader, Asia General Motors R&D Centre
regulations intended to increase efficiency in the buying IBM Global Business Services
Ash Lim
and selling of industrial land. But the move has left Bee-Choo Lim Market Development Director
many analysts wondering whether the new regulations Materials Director Supply Chain Management
have just made matters worse (see A look at China’s Asia and Latin America APAC
industrial land auction process, page 7; and, Navigating Intel Oracle
the logistics real estate maze, page 34).
It’s not all doom and gloom however: 2007 is the
year of the golden pig, which only comes around every
600 years, and is supposed to be notably auspicious. ADVERTISING SALES
Let’s hope this year is a golden year for your company’s Michael Pennington
China-based operations too. michael@chaina-online.com
+86 138 1897 6097
DISTRIBUTION
Michael Pennington By direct mail to subscribers in China, Hong Kong and Singapore who are involved
Editor and Publisher in supply chain management, manufacturing and logistics including: supply chain
directors and managers; logistics, warehousing and transportation directors and
michael@chaina-online.com managers; sourcing, materials management, procurement and purchasing directors
and managers; operations, manufacturing, import/export and trade managers; and
chief executive officers, chairpersons, presidents, vice presidents, general managers,
managing directors and country managers.
For subscription enquiries please contact our subscription
department at: subs@chaina-online.com or subscribe online at:
Chaina magazine’s sponsors: www.chaina-online.com
All subscriptions will commence from the next available issue.
We welcome your comments and feedback, please contact the
Publisher at: michael@chaina-online.com
© Copyright 2007, Red Circle Group (Hong Kong) Limited. All rights reserved. CHaINA™ (or Chaina magazine) is published by the Red Circle Group (Hong Kong) Limited, Room 813, Hollywood Plaza, 610 Nathan Road, Kowloon, Hong Kong. Telephone: +852 8192 5719. Fax:
+852 3015 8719. No charge for subscriptions to qualified individuals. Annual rates for subscriptions to non-qualified individuals differ depending upon the subscribers country or territory and can be found at: www.chaina-online.com
Send address changes to: subs@chaina-online.com The contents of the publication may not be reproduced in whole or part without the written consent of the publisher. The publisher is not responsible for product claims and representations.
6 MARCH/APRIL 2007 www.chaina-online.com

COMMENTARY
A look at China’s industrial

land auction process
I
n what appears to be a confusing time for The benchmark for such ‘6th level industrial Trent Illife is the Regional
industrial companies looking to buy real estate land’ has been set at RMB 336 per square metre Director, Head of Industrial for
in China, it’s worth taking a look at the impact meaning very simply then that throughout Jones Lang LaSalle, based in
Shanghai.
of the new regulations governing the purchase 2007 any industrial land in the Jiading district
of industrial land usage rights in China, and to of Shanghai for example must be sold through
analyse some of the implications and constraints a bidding, auction and listing process at a
placed upon industrial companies growth and base price of RMB 336 per square metre.
expansion plans as a result.
Before the end of 2006, the transfer of
land usage rights for industrial land, had been
predominately handled through a private treaty
process. Due to the perceived absence of an
open and fair competition for the purchase
of industrial land, the central government
felt that this process had led to an apparent
undervaluation of industrial land prices. In
order to enhance efficiency and increase
transparency, the government therefore
announced a new policy to tighten the control
of land administration in August last year.
New benchmarks
According to the new policy, the government
has set the new benchmark of industrial land
use rights as of December 28, 2006 and all An increase in land value...
industrial land can only be granted by bidding, As a result of this new policy, second hand
auction and/or listing. And from now going industrial land transactions will become more
forward, prices for land usage rights, should attractive to buyers and thus force a considerable
not be lower than the benchmark set by the knock on increase in land values. Anticipating
central government. Local governments have the price increase, some local developers have
also studied and finalised the respective base land banked large amounts of land prior to this
prices in their areas of control. implementation, hoping for the excepted, and all
Juncho Logistics Park located in the but certain, increase in land values.
municipal-level Shanghai Northwest Logistics And despite the the increase in the asking
Park was the first to announce their base price prices, most investors and developers are now
at RMB 700,000 per mu or approximately preferring to deal with private land owners. A
RMB1,050 per square metre. (Editor’s note: a recent transaction involving an industrial land
mu is a traditional Chinese unit for measuring parcel adjacent to Pudong Airport was completed
area and is approximately 667 square metres) between two private developers with a transaction
According to the central government’s edict, price of RMB 1,200,000 per mu. Whilst this may
China’s industrial land has been divided into seem like a high price, the purchaser is expecting
different levels. Many areas of tier 1 cities for are to see a further increase ahead of any additional
in the 6th level (see chart, below). transactions there.
...and in rents
The obvious consequence of increasing land
6th level industrial land prices is that the rental rates for logistics and
City Districts warehouse facilities will most certainly continue
to grow. Even though new benchmarks have
Beijing Daxing, Changping, Shunyi been set and there’s no way to avoid the industrial
Tianjin Jinnan, Xiqing land auction process in 2007, there is still no land
Shanghai Jiading, Baoshan, Minhang quota release, as this widely expected policy has
Guangzhou Panyu, Nansha not been customised for local governments as yet.
And the longer this policy takes to implement, the
Source: Jones Lang LaSalle
further it will drive land values and rents.

COMMENTARY
After-sales
blues
D
Eugene Lim is a Registered ecember 2004 marked the “big bang” for Defective returns
Foreign Lawyer with Baker & foreign investment in the distribution
McKenzie, based in Hong Kong.
The disposal of defective goods that are returned
sector. Foreign investors applied to (or defective returns) can be problematic.
establish their foreign-invested commercial If the defective returns were initially imported
enterprises (FICEs) in droves. One area often into China pursuant to a customs duty exemption
neglected in this process is after-sales services. and are subject to Customs supervision, consent
Having worked with numerous companies and from Customs is required before they can be
industries, some of my thoughts on planning returned by the customer.
an efficient after-sales program in China are If the defective returns are exported overseas,
as follows. special programmes (such as temporary export for
repair and replacement without cost) may be used
Appropriate spare inventory levels to reduce the customs duty and import VAT costs
Speed and service satisfaction are often on imported replacements or repaired parts. These
synonymous in after-sales programmes. To programmes may however increase complexity to
minimise the time taken to repair and replace after-sales operations (for example, tracking serial
goods, companies often maintain spare numbers of exported defective goods, having the
inventories in China. But there is a trade off. defective goods undergo commodity inspection,
Increasing inventory levels reduce delivery times and so on).
but tie up cashflow in inventory, customs duty
and import VAT costs. Duty deferral schemes,
such as the use of bonded warehouses, may
ameliorate these costs. However, optimising
inventory levels is often an essential criterion.
Pricing issues
Traditionally, foreign investors faced immense
difficulties providing after-sales services in China.
They had to use third party service providers
or provide such services through consulting
arrangements. These arrangements were often
unsatisfactory and cumbersome.
FICEs are allowed to perform after-sales
services relating to goods set out in their
business license. Repair and replacement
services, unlike other types of services, are
subject to VAT and not business tax. This has
two consequences:
•Investors which previously provided

such services through consulting
arrangements are now required to levy VAT.
This increases turnover tax cost for such
services (from 5 percent business tax to 17
percent VAT); and
•Transitioning to a VAT model also means Need for updated regulations

that input VAT costs of importing or procuring The ability to provide efficient after-sales
spare parts or replacement products may be services is crucial to protecting Chinese consumer
offset against the output VAT levied on the rights. The problems foreign investors and FICEs
repair and replacement costs. Hence, the currently face are often due to rules that were
entire turnover tax burden may be transferred not designed to account for modern demands
to the consumer. of the Chinese consumer. As China becomes
more developed, consumers will demand more
These consequences need to be taken into sophisticated after-sales programs. Many existing
consideration when pricing after-sales programs rules and regulations will need to be updated to
in China. cope with these developments.

COMMENTARY
The impact of rising

energy prices
T
he impact of oil prices on your China supply There is another less significant but present Dustin Mattison is a
chain is a strategic issue both for companies impact of energy on logistics costs: the component management consultant with
selling in China as well as those sourcing for of warehousing that is energy related. In the US Established, based in Shanghai.
export. Oil price increases may affect the cost-to- utilities bills, including water, electricity and gas,
serve customers, thus negatively influencing the make up approximately 5 percent of the cost of
performance of your supply chain. The rise in oil warehouse operating costs.
prices may also ignite higher energy input costs for Energy costs in China however make up a
manufacturing and fuel costs for transportation. larger component of total logistics costs due in
Indeed, according to recent reports domestic part to the lower wage rates and the relatively
logistics expenses in China in 2006 increased by high total fuel costs as a percentage of sales.
13.7 percent when compared to 2005. Therefore, any fluctuation of energy costs in
It is critical for companies with supply chains China would drive a much larger change in
in China to remain aware of changes taking place overall costs and a correspondingly larger impact
in their markets in response to oil price hikes. on logistics strategy.
In order to avoid, or at least delay a rise in your
cost-to-serve, companies are advised to closely
watch for changes in the buying behaviour of
their customers and the selling behaviour of
their supplier segments, adjusting their supply
chains accordingly.
And as a result of the rise in energy prices, some
questions worth asking include: Will consolidation
of orders and shipments become more of a
necessity? Will warehouse receiving practices of
customers need to be adapted towards larger, less
frequent deliveries? Will companies operating Just-
In-Time manufacturing and distribution models
be required to add more distribution centres to
their network, improve inventory management,
and carry more inventory? And, will higher Avoiding irrational strategy changes
transportation costs offset the gains achieved by A case study which shows that increases in
sourcing in China? fuel prices in China may have an irrational impact
on the decisions made by executives involves a
US versus China multinational manufacturer of consumer goods
In the United States, changes and sold in the local market. The company was
fluctuations in oil and energy prices, and their rationally pursuing a sound strategy involving
impact on total logistics costs, are muted by reducing domestic logistics costs in China by
the relatively small percentage that energy cutting the number of warehouses, encouraging
costs represent of total logistics costs, where direct flows from factories to customers, reducing
a 20 percent rise in fuel costs results in only a handling, consolidating product in fewer locations
4.8 percent rise in transportation costs. Even and reducing the number of 3PLs they dealt with.
a doubling of fuel costs – an extreme example However, due to the recent increases in global
even by today’s rapidly changing oil price energy prices many international 3PLs in China
scenarios – represents only a 24 percent rise were forced to raise their prices. In response,
in transportation costs. this multinational cut the relationship with their
strategic 3PLs and instead began to work on a more
ad-hoc basis with a much larger number of local
Chinese warehousing and trucking companies
China vs US trucking cost factors that offered cheaper rates. Clearly this decision
(percentage of sales) was not consistent with their original long term
China US strategy which had been to become more lean
and agile. More rational strategy changes might
Fuel 14-40 20-25
have included keeping temporary warehouses
Toll Charges 20-40 20-25 which could be easily shut-down, creation of
Driver Wages 3-5 25-35 cross-docking platforms and having distributors
Source: Establish handle logistics on their behalf.

COMMENTARY
Developing a China
operations strategy
C
Jamie Bolton is Executive hina is not always an easy country in which to Managing third party relationships
Partner, Supply Chain do business. Despite its entry into the WTO
Management, North Asia for
For most companies, a China operations strategy
in 2001, complex distribution, licensing, will involve collaboration with numerous entities
Accenture, based in Shanghai.
health, technical and packaging restrictions that — not just distributors. Relying on qualified third
don’t necessarily infringe WTO tenets but put parties is therefore critical. In addition to minimizing
foreign competitors at a disadvantage still exist. risk, the right third-party relationships make it easier
These restrictions can inhibit newcomers from to quickly identify and enter new markets, and to
using existing distribution channels and rapidly rapidly achieve scale. The ability to fully quantify
gaining economic access to markets, thus giving risk and plan for its mitigation can separate success
domestic companies advantages in preparing for from failure. Companies that understand their
direct competition. Regulatory fragmentation is baseline cost structure, know the drivers of supply
another challenge for new entrants. chain excellence, and have the ability to calculate
Logistics in China has been micro-regulated for total net landed costs will dramatically increase their
years, with different service components treated chances of success in China.
as distinct subsectors by various government A final “must have” is clear expertise in supply
departments. Although efforts are being made chain technology. Maximising information
to improve coordination, shared jurisdiction visibility and correctly managing supply chain
for the logistics sector remains a challenge. movements, leveraging the contributions of
Companies still must acquire separate licenses supply chain partners, and flexing the supply
through multiple governing bodies, and often chain to meet changing objectives are just some
must obtain separate licenses for each province of the reasons. Yet expertise in supply chain
in which they operate. technology cannot be separated from expertise
as it applies to people. On balance, the concept
One step at a time of functional or service excellence needs to be
Although there are hundreds of steps improved in China. Some believe that up to
companies can take to address the above 90 percent of China distribution initiatives fail
challenges from a supply chain perspective, a because of workforce capability. To surmount
few are critical to a company’s ability to thrive this obstacle, make training a priority, develop
in China. The most important of these is to think leadership capabilities at all levels, and set clear
“end-to-end” and develop a ‘China operations criteria for advancement within the organization.
strategy’. China is one of the world’s most
dynamic markets. This makes planning for an
integrated supply chain much more critical and Some baseline questions
underscores the importance of fully coordinating The best way to understand and prioritize the
demand, production, supply, distribution, supply chain capabilities needed to thrive in China
information technology and human capital. End- and develop a China Operations Strategy is to create
to-end integration is particularly important when a detailed understanding for your company’s entry
developing a China operations strategy because it and operations. Start by addressing the following
helps align supply with demand: Companies with baseline questions: How can we best leverage
superior supply/demand-matching capabilities China as a supplier and consumer market? What
will have a significant advantage in this market does our company have to offer? What do we
because they are more responsive to changing want to bring to China? Does our company have
market conditions. sufficient knowledge of the China market? Have
Investing wisely in capabilities is critical. we considered all the supply chain complexities
For many companies, high costs and lengthy associated with sourcing, manufacturing, selling
timetables make the development of proprietary and distributing products in China? Do our
sales and distribution channels or networks service model, technology know-how, existing
unfeasible. As a result, investing in the capabilities international network and/or management skills
of domestic distributors has particularly high provide us with a competitive advantage? Do we
payback potential. Such investments could take know how to continually reduce operating costs
the form of incentives and performance audits to support attractive pricing?
to improve distribution efficiency. Well-focused Asking the right questions, and subsequently
investments also will align with regional/local developing the right supply chain capabilities,
particularities and relationships, since every city could provide the China operations strategy that
or investment zone has different policies designed many China-focused companies desire, but far
to attract certain types of investment. fewer achieve.

NEWSROUNDUP
news@chaina-online.com
LEGAL
Calls for China to restrict foreign

access to local logistics market
There have been recent calls in
China for the central government to
restrict foreign access to the domestic
logistics market.
The calls come after a report compiled
by 20 domestic logistics industry and
related associations urged moves be
taken to prevent foreign firms from
monopolising the domestic logistics
industry at the expense of local small-
and medium-sized enterprises. R&D
According to the findings of the report,
leading overseas firms are dominating the MSN setting up Shanghai R&D centre
international express and shipping industries,
Microsoft is setting up a US$20 million R&D centre in Shanghai for its online
as well as logistics services catering to foreign
MSN service, its first such centre outside of the United States.
manufacturers based in China.
The move comes after the software giant saw setbacks in its online services in
DHL, FedEx, UPS and TNT together
China, including the resignation of a top executive responsible for the company’s
control an 80 percent share of China’s
Windows Live unit in China late last year.
international express market.
The R&D centre will be based in Shanghai’s Zizhu Science Park close to
The report said that 98 percent
where Intel already has a research facility.
of clients of international logistics
The centre will also host a technical support team for Microsoft’s online
companies based in China are foreign
communication tool MSN Messenger, which has over 20 million users in China.
invested companies whereas the clients
Luo Chuan, former head of Microsoft’s Windows Live unit in China and
of local logistics businesses tend to
also responsible for the China site of the company’s MSN portal, resigned from
be domestic firms, indicating that the
Microsoft at the end of 2006.
customer service networks of both sides
Luo is tipped to become the first chief executive for MySpace China, an
are separate and not yet overlapping.
online networking website.
FedEx Express recently completed
a buyout of Tianjin Datian’s 50 percent
stake in their JV and Tianjin Datian’s
domestic delivery network as part of a Shanghai Automotive also plans to take
US$400 miion deal, giving FedEx Express R&D
a 50 percent in SAIC Iveco Commercial
89 locations across China. Vehicle Investment for around US$25
China is world’s top spot for R&D million with the acquisition coming
China, US reach pact on China is the most popular country
as part of the company’s program to
advance pricing in the world for setting up new R&D
develop commercial vehicles.
facilities, according to the UN.
Tax authorities in China announced The company will also establish a
61 percent of foreign companies
in January that they had reached the first US$9.82 million subsidiary in the UK, SAIC
establishing new R&D centres globally
ever bilateral advance pricing agreement Motor UK Holding, which will become its
are choosing to set up in China, compared
(APA) by signing an agreement with the main platform for European operations.
to 41 percent in the United States and 29
United States. The APA, which involves percent in India. By 2005, multinational
Wal-Mart Stores, makes it possible for tax corporations had established 700 R&D
departments and the retail giant to resolve centres in China, the UN report states.
transfer pricing issues before they arise
during an audit. It also gives the company Shanghai Automotive
greater confidence that its transfer-pricing
methods will be upheld during an audit. ups R&D spend
The APA program also enables Shanghai Automotive is planning to
taxpayers and the Chinese tax authorities invest more than RMB3 billion in R&D
to work together to resolve potential and business expansion.
double taxation disputes. The auto manufacturer is set to
“We’re working more closely with the inject RMB868 million into its joint
US Internal Revenue Service with the venture with General Motors, Shanghai
development of economic cooperation General Motors, and also plans to invest
between the two countries,” said a RMB142.25 million into Shanghai GM
commissioner from the Chinese State Dongyue Power, a producer of third-
Administration of Taxation. generation engines.

NEWSROUNDUP
SOURCING
Tommy Hilfiger to sell

global sourcing division
Fashion brand Tommy Hilfiger Group
is reportedly planning to sell its global
sourcing group to Li & Fung, a provider
of outsourced procurement and import/
export services.
Under the agreement, Tommy Hilfiger
will sell its global sourcing operations,
with offices in Hong Kong, Taiwan, India,
Bangladesh and Sri Lanka, to Li & Fung for
close to US$250 million. Hilfiger will then
use Li & Fung’s global sourcing operations
on an outsourced basis.
Tommy Hilfiger procured a little over
US$700 million in goods in 2006.
Fred Gehring, the chief executive officer
of Tommy Hilfiger Group, said, “Our own
Imagine China
operated buying offices have contributed
tremendously to the development of our Xu (Ian) Yang
business to date, but we believe that general manager, Intel China
to take things forward we can benefit

tremendously from the integration of MANUFACTURING Sources declined to give further
these offices within the greater network details of the project, such as the location
of Li & Fung, with over 70 offices in over and timing. Intel also said last month
40 countries and territories, including as Intel plans new China plant it would make China an independent
many as 19 offices in China alone.” Chipmaker Intel plans to invest in a sales and marketing region from the
major new plant in China to manufacture beginning of 2007.
Visteon to lift China sourcing leading-edge chips. One source said
Global automotive supplier Visteon the investment in the new plant would Mizuno plans US$4.2
expects to buy substantially more Chinese total a “couple billion of [US] dollars”, million warehouse
parts and components as its strives to lower making it Intel’s biggest investment in Mizuno will invest US$4.2 million on
its cost base. the country to date. the construction of a 30,000 square metre
About 20 percent of Visteon’s global The plant will manufacture 65- warehouse in Shanghai.
purchasing is in China today and about nanometre multi-core processors and The sportswear manufacturer also plans
half of the company’s Asian supplier base will be Intel’s first such manufacturing to decrease production costs and open more
is located in there. facility in Asia. franchise retail stores in China. There are
“China is critical to our success. This is Intel, which has invested about currently around 700 Mizuno retail outlets
why we have located our global electronics US$1 billion in China to date, already in China and the company aims to raise that
and our regional purchasing at our China has major test and assembly plants in number to 1,200 by 2008. Mizuno has set a
technical centre in Shanghai,” said Sylvain Shanghai and Chengdu. sales target of US$135 million for this year.
Gaillet, global purchasing director of
Visteon’s Asia-Pacific electronics divisions,
noting that the company is looking to lift
its Chinese auto electronics buying by about
30 percent at the same time as it develops its
network of Chinese suppliers.
“Our long-term goal is to improve
the capability of key suppliers in China
to play an increasingly important role in
Visteon’s development both locally and
globally,” said Gaillet.
Visteon recently announced plans to
close a parts plant in the United States,
the start of a turnaround program that will
see no fewer than 30 facilities in North
Imagine China
America either restructured, sold or closed.

The company has complained that high
production costs in North America are
making it uncompetitive.

NEWSROUNDUP
Hershey and Lotte announce JV

United States-based confectionary
manufacturer Hershey and South
Korea-based Lotte Confectionery
have announced plans to set up
a manufacturing JV in the Jinshan
district of Shanghai.
“The manufacturing facility in
Jinshan gives us the flexibility to make
products closer to our consumers,
Imagine China
bringing locally relevant and
innovative new products to markets
faster and fresher,” said Hershey
senior vice president J.P. Bilbrey.
The Jinshan manufacturing facility orthodontics and microbiology Sim Joo Hua, business unit head of
is expected to begin operations in categories according to Brad Sauer, Nestle Purina Petcare China, said “when
June 2007, with products available in executive vice president of 3M considering the site for a factory, and
retail locations in China by August. Health Care. weighing up all the different factors such
Lotte added that it will use the strategic 3M has already invested US$35 as the proximity of resources, the quality
partnership to sell its Xylitol chewing million in the first phase of the of infrastructure and the nearby port
gum in North America via the distribution factory, slated to start operation in facilities, in case in future we wish to
network owned by Hershey. January 2008. export from this plant to other countries,
Tianjin clearly came out on top.”
Semiconductor giants plan Suzhou JV Nestle open new petcare Annual sales of pet food and supplies
NXP Semiconductors, formerly factory in Tianjin in China are projected to reach some
Philips Semiconductors, and Swiss food giant Nestle has opened a US$750 million by 2008. And, in five
Advanced Semiconductor Engineering petcare factory in the Tianjin Economic years time the total value of the country’s
(ASE) have signed an agreement Development Area (TEDA). It is Nestle’s pet-related economy could be around
to form a JV in Suzhou focused on first pet food factory in mainland China. US$2 billion.
semiconductor testing and packaging.
The entity will focus on the testing
and packaging of a wide range of
semiconductors in areas such as
mobile communications, consumer
electronics and automotive products.
“We’re pleased to be able to
strengthen our relationship with
ASE through the formation of this
JV and appreciate the willingness of
governments to help in this regard,”
said Ajit Manocha, chief manufacturing
officer with NXP. “The JV combines the
expertise of both companies to provide
Imagine China
high-quality, competitive products

to address the needs of electronics
manufacturers around the world.”
3M to establish health MANUFACTURING

care products factory
Diversified technology manufacturer Nokia to merge China JVs
3M is establishing a new health care Nokia has received government approval to merge its four manufacturing JVs
products factory in Shanghai and in China. The restructuring involves a JV between Nokia and handset manufacturer
expects the facility will help the Capitel, a JV between Nokia and a telecoms gear manufacturing company in
company maintain 20 percent sales Beijing, a Nokia JV plant in Dongguan, and a Nokia JV in Suzhou.
growth in greater China, including Nokia filed the necessary applications for the merger in January 2006, and
Hong Kong and Taiwan, over the next obtained approval from all relevant local governments in June that year. The
few years. central government issued its preliminary approval in August 2006.
3M currently has six factories The new entity, which will produce mobile phones and network equipment,
in China, but this new facility will will be based in Beijing, and Nokia will hold approximately a 60 percent share
be its first devoted to health care with the four Chinese partners holding the remaining stake.
products in the medical, dental,

NEWSROUNDUP
Dell may add new factory in China

The general manager of Dell China’s
client service centre, Li Yuanjun, has
said that Dell’s sales in China will
increase by 30 percent in 2007 and
with this fast growth, the company
may need to build a new computer
factory in the next three to four years.
Dell opened its second computer
factory in China in May 2006. The
factory covers 55,000 square metres
and is designed to produce 7 million
computers each year, doubling the
annual production capacity of Dell’s
old factory in Xiamen, which mainly
targets the Chinese domestic market.
At present, China is Dell’s third
largest market after the United
Imagine China
States and the UK. Dell hopes to
take up to ten percent of China’s
computer market.
LOGISTICS SITC Logistics plans for

major expansion
Cathay, Air China form Shanghai JV SITC Logistics plans to invest
Air China and Cathay Pacific are more than RMB100 million over
organising a 50-50 Shanghai JV that aims the next two years to acquire the
to be mainland China’s biggest airfreight latest technology and expand its
enterprise after it starts operations in the distribution network to cover 75
second quarter of 2007. percent of China, including all major
“The establishment of the JV with and secondary cities.
Cathay will lay a solid foundation for S ITC L ogi st i c s was fo r med
our cargo business,” said Air China i n Dec em ber 2006 fo llowin g
vice president Fan Cheng. “We are t he merger of t he l o g istics u n it
now busy preparing for the joint of S ITC M a ri t i me with Beijin g -
China Foto Press
venture programme and hope to realise based New Times Inter national
practical progress in the cargo business Tr a nspor t S er vi c e, C hin a’s larg est
Li Yuanjun partnership with Cathay in the first half privately-owned for warder of
general manager, Dell China’s client service centre
of 2007.” out bound a i r f rei ght .
LOGISTICS
DHL invests extra US$110 million in China

Express delivery and logistics services provider DHL plans to invest more than
US$110 million into China in the next few years.
The investment will be used to expand infrastructure, including more transport
vehicles and service centre equipment, and for training its employees.
DHL also said in the report that it is considering setting up a North Asia hub
either in Shanghai Pudong International Airport or Incheon International Airport
in South Korea.
China is one of DHL’s fastest-growing markets and accounts for 25 percent of
its revenue in Asia-Pacific and ten percent of its global sales. The company has
maintained an annual growth rate of 35 to 45 percent in China in recent years and
has set up 73 branches, making it the largest network among international express
delivery firms in the country.
In January this year, DHL launched domestic airfreight operations in 17 cities
across China.

NEWSROUNDUP
SITC Logistics wants to become China’s The SCIC is a supply chain enabling clients in this fast developing market,”
leading supply chain management and technology centre that is designed to said Vincent Wong, joint managing
integrated logistics service provider. showcase Electronic Product Code/ director, Kerry Logistics.
The company last year purchased Radio Frequency Identification (EPC/ Talke Logistic Services, based near
Oracle’s Transportation Management RFID) integrated solutions from Cologne, is a chemical logistics service
System (TMS), a web-based application around the world. provider and has been working with
that allows authorised internal and “Maersk Logistics, as a founding major global chemical manufacturers for
external users to execute booking/ member of the supply chain innovation the last 60 years.
tendering and en route planning, plus centre in Hong Kong, has been an “Joining forces with Kerry Logistics in
receive status updates. active user of RFID technology through China gives us an ideal platform to further
“We are now working with Oracle’s the RFID Core Competence Centre implement our strategy of international
consultant and system developer in established in 2004, and this initiative development with strong local partners,” said
Australia and India to carry out the will further support RFID development in Richard Heath, chief business development
second phase integration of the TMS the market, especially here in Asia,” said officer of Talke Logistic Services.
suited for the Chinese market,” said Yang Steffen Schiottz-Christensen, managing
Shaopeng, chairman and chief executive director of Maersk Logistics China.
officer of SITC Logistics. “Our customers rightfully expect
Yang said in a company statement that we deploy the most up-to-
that when the first stage of the system is date technology, such as RFID, to
completed in April, SITC Logistics would improve their supply-chains. It has
become the first logistics company been a positive experience for Maersk
to utilise this technology in its daily Logistics to cooperate with the SCIC
enterprise resource planning (ERP) and we believe this co-operation
management in Asia. will enhance our ability to deliver
SITC Logistics anticipates net profit improved supply chain visibility and
to increase by more than 30 percent in optimisation to our customers through
2007. The main source of the growth is continuous innovation.”
expected to be from the development of The SCIC is intended to provide a
its supply chain management business. focal platform for professionals in supply
chain management deploying EPC-
standards-based RFID development and
Maersk Logistics helps establishes application activities.
supply chain innovation centre
Maersk Logistics is teaming up with a Nippon Express announces
number of industry leaders to establish China tie-up REAL ESTATE
a supply chain innovation centre (SCIC) Japanese transportation provider
in Hong Kong. The project is being Nippon Express announced that it has First China investment for
undertaken by Maersk Logistics together linked up with a logistics subsidiary of New City Corporation
with Cisco, the Metro Group and PCCW Chinese automaker Dongfeng Motor, New City Corporation has
Solutions plus five other companies. targeting growth in China. announced its acquisition of a
Nippon Express also said it had logistics facility in Shanghai Pudong’s
started transporting auto parts for engine Waigaoqiao Bonded Logistics Park,
manufacturer, Dongfeng Cummins Engine. which marks the company’s first
The Japanese firm said it was its first investment in China. New City is
full-scale tie-up an affiliate of a Chinese a real estate merchant banking
automaker. Nippon Express will initially and investment management firm
offer shipping services for 13 autoparts headquartered in Tokyo.
suppliers in eastern Hubei province and The site it will acquire is the
expand the operation to other auto-related ‘Waigaoqiao Logistics Centre Phase
sectors in China. II’, a two-storey warehouse completed
in June 2006, which occupies more
Kerry and Talke sign chemical than 250,000 square metres and is
logistics services deal composed of 28 independent units.
Kerry Logistics and Germany’s New City will hold 27 of these with
Talke Logistic Services have signed a the remaining unit already owned by
JV agreement to provide a full range the State Grid.
of specialist chemical logistics services “Along with the country’s growing
throughout China. foreign trade, China’s logistics industry
“We are convinced Kerry-Talke will has attracted considerable attention,
provide a powerful combination of including from New City itself,” said
local experience and specialist chemical the firm’s chairman and chief executive
logistics know-how for the benefit of our officer, Frank Orrell.

NEWSROUNDUP
The acquisition is in line with the The UK-based company, formed last
RETAIL
company’s strategy to capitalize on year through the merger of Alliance
logistics opportunities in the China UniChem and the high street chemist
market and the Asia region. Best Buy to open up to 26 stores Boots, said it would buy a 50 percent
in China in the next 12 months stake in GP for US$74,635,660.
The deal is part of a 50:50 JV with
Ningbo to build cold Best Buy plans to open up to 26
Guangzhou Pharmaceutical, which
storage logistics hub stores in China during the company’s
currently owns 90 percent of GP, as
Authorities in Ningbo are planning fiscal year beginning March 4 2007.
Alliance Boots moves to cash in on the
to build a cold storage logistics The top US consumer electronics retail
rapid growth of the Chinese market. “It
centre in the city’s Jinzhou district chain, which recently opened its first store underlies our commitment to be a major
to ease the shortage of specialised in Shanghai, said that it expects to open up international player in pharmacy-led
warehouse space. to 23 Five Star Stores, as well as to establish health and beauty,” said Alliance Boots
The facility will cover an area two or three Best Buy locations in the next chief executive Richard Baker.
measuring 2,200 square metres, making 12 to 18 months. The company also said Baker expects China to go from
it the largest cold storage logistics facility that it expects to generate about US$100 being the world’s ninth-biggest
in eastern Zhejiang. billion in annual sales in China by 2010. market to the sixth-biggest by 2010.
REAL ESTATE
Decathlon sets up Shanghai distribution centre

Sports retailer Decathlon has rented more than half the AMB Jiuting
Distribution Centre in eastern Shanghai.
Guy Jaquier, AMB’s president, Europe and Asia, said, “China is Decathlon’s
retail entry into Asia, and we are proud that they rely on the efficiency of AMB
facilities as part of their Asia logistics operations. The delivery of the right
product, to the right place, at the right time is a key component of Decathlon’s
commitment to retail customers.”
Imagine China
Wal-Mart confirms Trust Mart deal

Retail giant Wal-Mart confirmed
in late February that it had acquired
Imagine China
a 35 percent stake in Taiwan’s

Bounteous, an operator of 101
hypermarkets in 34 Chinese cities
under the Trust-Mart brand. Wal-Mart
expects to acquire complete control
Mapletree moves into Wuxi Best Buy estimates that its China retail
of the company by 2010, subject to
Mapletree announced that it will square footage will exceed 5 million
square feet by the end of the upcoming unspecified conditions.
develop a logistics centre in Wuxi
New District with a gross florr area of fiscal year. Michael Duke, a Wal-Mart vice
about 42,000 square metres on a 6.8 chairman, called the investment
hectare site. Alliance Boots moves into China “an important step in bringing our
The development consists of three- Beauty and drugs retail giant Alliance additional scale to our China retail
storey warehouses with mezzanine Boots has gained a new foothold in business.” Wal-Mart already operates
offices. The project is Mapletree’s third China after signing a JV agreement 73 stores in China.
in China after Lingang in Shanghai’s with the country’s third-biggest Trust-Mart stores employ more
Pudong district and Tianjin. pharmaceuticals wholesaler. than 31,000 people, and will

NEWSROUNDUP
continue to operate under the Trust-

Mart name.
New eCard solution for B&Q China
Beijing-based integrated software and
professional services provider e-Future
has been selected by IBM to provide a
customer management eCard solution for
B&Q China.
B&Q has reportedly chosen IBM as its
total solution provider of front business
processes optimisation in China and
integration with SAP’s end solutions.
B&Q’s parent company, Kingfisher, is
Europe’s leading home improvement retail
group and the third largest in the world. semiconductor demand in 2006, according to in Shanghai in response to growing
Kingfisher operates over 700 stores in 11 a report issued by PricewaterhouseCoopers. market demand.
countries in Europe and Asia under various Despite China’s demand for chips, The WhereNet active RFID, real-time
retail brands including B&Q, Castorama, the report stated that China “continues locating system (RTLS) technology was
Brico Depot and Screwfix Direct. to rely on multinational suppliers for certified by the China State Radio Regulation
Since 1999, B&Q has developed and semiconductors. No Chinese-branded Committee in 2004 and is already deployed at
operated in excess of 50 stores in companies ranked in the top 70 chip several automotive manufacturers in China.
IT approximately 20 cities in China. suppliers to China in 2005.” With the opening of the Shanghai office,
WhereNet continues to expand its presence
WhereNet establishes as a global solutions provider of active
APAC HQ in Shanghai RFID, RTLS technology. The company
China accounts for 90% Wireless solutions provider for is currently focusing on two markets in
of chip growth tracking and managing enterprise China, automotive and transportation, and
Chinese manufacturing products assets WhereNet has announced the distribution and logistics.
accounted for 90 percent of the growth of opening of its Asia-Pacific headquarters WhereNet also recently hired Jinbo Yang
www.joneslanglasalle.com.cn
We Open Industrial Frontiers with You.

At Jones Lang LaSalle, our team of industrial experts can unlock the mysteries of the new industrial frontiers in China. With the varied labor
and the expansive geography in the emerging cities, multinationals can choose from over 2,000 industrial zones. You can now closely align
with your business objectives and achieve more economical and specialized industrial locations.
For expert advice, contact Jones Lang LaSalle today:
Investment Development Logistics

Trent Iliffe Richard Shan Wonder Wang
+86 21 6132 3706 +86 21 6132 3635 +86 21 6132 6906
trent.iliffe@ap.jll.com richard.shan@ap.jll.com wonder.wang@ap.jll.com
Business Parks Manufacturing Consulting Service

Jileen Loo Richard Huang Louise Zhao
+86 21 6132 6941 +86 21 6132 6924 +86 21 6393 3333
jileen.loo@ap.jll.com richard.huang@ap.jll.com louise.zhao@ap.jll.com
COPYRIGHT © JONES LANG LASALLE 2007

18
COVERSTORY
Mind the
talent gap
Some fresh perspectives on how to solve
the massive skills shortage that is slowing
down your China supply chain
F
acing exponential growth across their China operations,
companies are being forced to find innovative
alternative solutions to address the increasing talent
shortage in the booming supply chain sector.
One of the biggest factors impacting recruitment and
retention strategies in the logistics sector in China is the
speed at which the supply chain area is evolving globally.
The rules for such planning and strategy in more mature
industries (and in less dynamic markets) have to be adapted
on the run here.
“We are moving towards full network connectivity,”
says Diana Chan, a principal with Heidrick & Struggles, an
executive recruitment specialist based in Shanghai. “We now
have real time access to information, transparent inventory
and more predictive sales forecasting on a very advanced
technology platform.”
The effect of such changes, which have only happened
in the last five to ten years, has left a void of knowledge
workers to operate and manage a sophisticated global
supply chain.
According to a much-cited McKinsey study, the supply
chain area is facing a demand for 75,000 new employees
a year in an industry in which there are only 5,000 new
graduates per year. The number of universities in China
offering logistics courses has grown from one in 2001 to
165 by 2005, but the training the students receive tend
to be more academic rather than practical, resulting in
most students graduating with diplomas but without any
real experience.
With such a severe shortage across a wide range
of positions, talent, or rather the lack of it, is one of
the top items on the agenda for companies in China
and the first-ever supply chain focused HR conference
recently took place in Shanghai. The summit provided a
forum to present current and relevant insight into best
practices in the areas of recruitment, retention, training
and leadership development.
The long search

One very simple issue many companies face is that
finding the right employee in China takes along time. “The
lead time to find the right candidate is very long,” says
Alex Yang, HR Director of Borgwarner China. “You need
to find the right combination of technical background,
soft skills and aptitude.”
Russel Beron is a freelance journalist specialising in

supply chain and logistics based in Shanghai. He is a
regular contributor to Chaina magazine.
19
COVERSTORY
With the gap

between supply
and demand of
skills so huge,
it’s impossible to
find everything
in one person
Diana Yang, Hewitt Associates
Supporting Yang’s view, “We need highly were two of the most sought after leadership
specialised people,” says Jiva Guragai of Hamilton. criteria, and were typically found to be lacking
“Because we need such technically specialised among the generation of workers who are now in
people, we use all kinds of avenues to find their 40s or 50s, the so-called “lost generation”.
people. Some of the attributes we look for are This next generation of children brings their
workplace experience, English skills, a supply own set of dynamics to the employment market.
chain background and foreign experience.” Typically from single child families they in turn
Faced with such stringent requirements it have been called the “coddled generation.” It will
seems unlikely the skills shortage will ease any be interesting to see how these coddled youngsters
time soon. will fit into the workforce.
“With the gap between supply and demand of
skills so huge, it’s impossible to find everything in Expat talent versus local talent
one person,” says Diana Yang, co-leader of Hewitt One of the biggest challenges facing
Associates’ Talent and Organization Analytics companies operating in China is finding the right
business in China. combination of skills and experience in one
One of the problems Yang observes is that individual. While hiring an expat might give you
“contract logistics is such a relatively new idea in the skills and knowledge of the latest western
China, having developed only in the last five years. business operational practices, such individuals
Furthermore, leaders need soft skills in addition to run the risk of finding it difficult to operate in an
technical skills. That is, they need the ability to unfamiliar environment.
gain support across the organisation.” And though more and more foreigners are
With strategic sourcing on the increase, becoming conversant in Mandarin, being able to
employees who understand western style speak the language doesn’t always fully bridge the
business practices and needs coupled with a solid cultural divide. Furthermore, according to Diana
knowledge and experience of the local markets Chan, “the problem with hiring an expat is often
are in high demand. the lack of China market knowledge in terms of
According to Olivier Levy, managing director legal, tax and people management issues.”
of Dragon Sourcing, “there is a drastic shortage One of the top reasons why foreign executives
of highly experienced buyers. The key skill in China fail according to Ivo Hahn, chief
required is the ability to negotiate, which can be executive officer of recruitment firm Xecutive
hard to find.” Group is because of cultural differences (72
Some companies have also complained about percent) much more so than a failure in leadership
the disconnect and lack of understanding between abilities (only 37 percent).
HR departments and line managers. “The prevalence of regionalisation in China is
Other specific skill areas in supply chain also a problem,” says Chan. As many expats in
management where shortages exist include: a China find out to their dismay, not every city in
shortage of logistics engineers, quality process China is as international as, say, Shanghai.
engineers, commodity managers and, more Can the talent problem then be addressed
generally, people that combine strong technical through hiring local talent? The answer is only
skills with business acumen. partly. According to the experts, some of the
A void in solid local leadership is at the heart problems in hiring local candidates include an
of the talent gap. According to a recent survey of inability to engage global counterparts and a lack
60,000 respondents, initiative and communication of home-grown talent.

COVERSTORY
Legislative changes
Changes to China’s employment contract Employers have
law are also making it more difficult for foreign
companies to manage employees in terms of to balance a
contracts and layoffs. mix of local and
Until recently, says Dr. Andreas Lauffs, head
of the China Employment Practice Group for foreign talent by
Baker and McKenzie, most companies have
used short term or fixed term contracts to hire
implementing
employees. However, Lauffs remarks, “under strategic planning
the new law, in most cases severance will be
necessary and there will be restrictions on the throughout the
number of fixed term contracts an employer organisation.
can use to hire an individual.”
Added to this fact is that labour unions are
becoming increasingly important, which does
not bode well for foreign companies who
have always profited from lower salaries in
China. Lauffs noted one case where a logistics
Imagine China
company with branches in China was being

pressured to equalize pay and benefits across
the board.
Another big problem with local talent is the Some solutions

fast-tracker mentality which makes retention a To meet the hiring challenge employers have
big issue. to balance a mix of local and foreign talent by
implementing strategic planning throughout
Finding the bad apples the organisation.
The issue of pre-employment due diligence Bee-Choo Lim, Intel’s materials director for
is a much more crucial factor in China than it Asia and Latin America, noted the importance
is in other countries, argues Peter Humphries of her company places on organisational
Chinawhys consulting. As much as 16 percent of development. With Intel operating in 13
China’s GDP is reportedly not realised as a result countries and utilising English as the common
of corruption and white-collar crime, compared language platform, Lim stressed how crucial
to an estimated four percent in the US, which it is for companies such as hers to “create a
makes it increasingly important for companies to dialogue, identify common goals and values
do due diligence on potential hires. and create opportunities for learning.”
“Our goal is to help promote good According to Sim Cheng Hwee, a Singapore
business ethics and due diligence,” says Peter based consultant focused on strategic planning
Humphries. One area that Chinawhys focuses and demand forecasting, “one of the key
on is pre-employment checks and facilitating solutions to the HR challenge in China is to plan
employment integrity programs which ahead.” As anybody who has worked in China
categorise staff into different screening levels. can testify however, business tends to move
They will run background checks for instances much faster than in other markets which often
of previous litigation. leaves HR planning lagging behind.
Imagine China

COVERSTORY
Some of the strategies that Intel uses to Interestingly, salary is not always the number
combat the HR challenge is extensive on the job one reason for people changing positions.
Maybe we need to training, classroom training, web-based e-learning Xecutive Group recently reported that Chinese
find people from and innovative approaches to facilitating intra- top managers switch jobs every 15 months. One
company dialogue, such as learning circles. of the top reasons cited for this job-hopping is
other sectors that Ainsley Mann of Coca-Cola has other ideas international training, 66 percent, followed by
can be retrained about how to find the solve the problem. “With salary increases, 53 percent, and coaching and
recruitment, I think it’s possible that we are mentoring, 51 percent.
for positions looking at too narrow a field. Maybe we need
in logistics. to find people from other sectors that can be How to hold on to your star performers
retrained for positions in logistics.” Retaining good employees in such a dynamic
Ainsley Mann, And similarly some companies have tried to market is not easy. Forward thinking employers
Coca-Cola mitigate the skills shortage by putting employees are using a variety of strategies to hold on to the
into cross-functional teams. That way people with their star performers. These strategies include
specialized skills can offset the deficit in other offering training and development, a clear career
people’s skills. path and of course offering competitive salaries.
One solution to the retention problem put
The difficulty of retention forward by Chan at Heidrick and Struggles is for
With an explosion of opportunity and companies “to make retention part of their corporate
an increasing demand for their skills, top DNA.” Rather than waiting for the “exit interview”
workers can and do have their pick of jobs. to discover employee concerns, companies should
According to one disgruntled manager of a conduct “stay interviews,” retention workshops and
foreign strategic sourcing company, many of focus on career development.
the potential hires he sees have spectacular Companies also have to make themselves highly
resumes with multiple big name companies attractive to employees. “Being an employer of
listed, but each position lasting typically less choice is also a competitive advantage,” says Chan.
than one year. Companies with solid brand names, offering the
Investing in training also brings risk as local right mix of training and development and career
companies take advantage of the more developed progression, have a substantial advantage.
training programs foreign companies offer by According to Ivo Hahn companies need to treat
poaching employees. “12 out of 15 people trained employee candidates more like customers. “They
in CPRM at Philips left within one to two years,” need to give the employee an emotional association
commented one Philips Lighting manager. “Yet, to through offering a fun place to work, a passionate
uphold standards, Philips is still willing to invest intelligent culture and a strong team feeling.”
in training,” she says. Philip Kwa at Accenture thinks training is the
According to some experts, in China there is key stating that, “companies that invest in training
a 50 percent chance of a new employee leaving have reported and on average a 53 percent
within the first two years. increase in profit.”
China Foto Press

Danger: Proceed with caution
China Foto Press

Improvements are needed in the transportation, handling and storage of dangerous goods in China
T
Russel Beron is a freelance he recent introduction of China’s Restrictions Robert Jiang with logistics service provider Dajin
journalist specialising in supply on Hazardous Substances (RoHS) on March Logistics recently remarked that, “the government
chain and logistics based 1 has made the dangerous goods, or hazmat, is very strict about licences. Companies like us are
in Shanghai. He is a regular supply chain a prevalent topic for many logistics struggling with licensing issues.”
contributor to Chaina magazine.
service providers and manufacturers. There’s a To complicate matters, different licenses
lot of confusion surrounding this directive and apply to different goods. “There is not one
also surrounding the transportation, handling and licence, there are many, depending on what
storage of dangerous goods in China in general. A kind of chemical you’re transporting,” says
second document to be published later this year Ursula Schumacher, technical manager at
will cover substance restrictions and compulsory Intertek Testing Services.
pre-market testing and certification. Talk of licences mostly applies to trucking
One area in particular where companies with road still the optimal transportation
will need to become more proficient is in their method for dangerous goods in China. And
preparation of documentation for shipments according to Helen Liu, director at S&W
involving dangerous goods both into and out International Chemical Logistics, “due to the
of China. “90 percent of rejections of dangerous shortage in dangerous goods transportation
goods are due to documentation errors,” says Jim vehicles, we think China’s inland transportation
Powell, president of Transportation Development market has potential.”
Group, which provides training in transportation
of dangerous goods best practices. “It’s easier to Improvements are needed
reject a shipment.” And post 9/11, security has As infrastructure improvements take place
become a global concern, driving an increased and more companies expand their operations
inspection of international shipments. into western China, significant improvements
in the quality and service of dangerous goods
A potentially expensive problem transportation are needed.
There are plenty of reasons why companies One insight that surfaced repeatedly at the
should be concerned and cost is just one – non- Hazmat conference is that manufacturers and
compliance of regulations such as RoHS directives service providers need to work together more
can be very expensive. One such case in the United closely to improve safety. “The fundamental gap
States saw a company fined US$97,500 for shipping between manufacturing and forwarding is lack of
an aerosol can, which was not reported. knowledge. Manufacturers are not supplying the
Companies face potential liability from 3PLs for right information,” said a China-based 3PL.
non-compliance or accidents, meaning the shipper is “Shippers need to get together and demand
responsible for ensuring compliance of regulations. competency on the part of them as a group. This will
Sometimes criminal liability can be involved. increase their buying power as consumers,” says Liu.
One of the biggest issues raised at the
recent China Supply Chain Council-organised Enforcement of regulations
Hazmat conference held in Shanghai was the Another big concern raised at the conference
complications of licensing for the transportation is the gap between the actual regulation and the
of dangerous goods. enforcement of those regulations.

HAZMATFEATURE
As one representative from a multinational “Manufacturers should know their products,

chemical manufacturer remarked: “The question they can save money through the use of policy
is how strong is the enforcement of those directives to reduce components in products
Manufacturers
regulations. Now the standard doesn’t really and keep in mind market requirements,” says and service
exist. As chemical manufacturers we need to help Czarnowski. “For example mobile phones don’t
establish those regulations.” need to [be manufactured to] last ten years in providers need
Foreign companies have further difficulties China when people replace their phones every to work together
operating in this market, as they tend to have one to two years.”
stricter internal standards and can’t navigate the Although fast moving consumer trends more closely to
market as smoothly as local companies. might clash with environmental concerns improve safety.
Terence Li, national logistics manager for due to the disposal of mobile phones every
Arkema, one of the larger chemical manufacturers few years, manufacturers have to balance
in China expressed this concern which drew these concerns.
considerable agreement from other foreign
company representatives: “We as foreign companies A need for greater dialogue
are competing with Chinese companies that are One of the problems, as Arnie Bornstein,
not complying.” director of marketing and corporate
Part of the problem as chief business development communications at BDP International stated,
manager with Talke Logistics Services Andreas is the lack of a formal forum for discussing
Kirschner highlighted is that “Chinese government such issues. “What we need to do is to find a
authorities cannot really cope with the rapid growth in way to get the smaller players to the table to
the industry.” Obviously this is a problem felt in every
China Foto Press
get their perspective.”

individual aspect of the supply chain across China. Both manufacturers and logistics service providers
acknowledged the need to work more closely
Move towards more together as an industry to ensure the safe and proper
sustainable manufacturing handling of dangerous goods. “It is important that
There is a greater move toward a consideration of we enhance our dialogue,” stressed Kirshner.
the potential environmental problems caused by the With dangerous goods logistics still in its
manufacturing of products that include potentially early stages of development, the next few
harmful components or by-products and companies years will bring some much needed changes.
are becoming more aware of their corporate social Including the introduction into the market of
responsibility in this area and looking at more more specialised service providers focusing
sustainable manufacturing. on dangerous goods transportation. As one
One point raised by Dirk von Czarnowski, a manager speaker at the Hazmat conference noted: “All
at TUV SUD, a testing laboratory, is that “manufacturers of the logistics companies in China will have
should design products to facilitate dismantling and to specialise one day. None of the logistics
recovery of components – eco-design.” companies can hope to do everything.”
Preparing for China RoHS

As China has emerged as one of the world’s leading trade nations and a key link in countless global supply chains,
manufacturers must ensure that measures are in place to demonstrate and maintain compliance with the new China RoHS, also
known as Administration on the Control of Pollution Caused by Electronic Information Products. Non-compliance with this
directive can result in stalled supply chains, lost revenue, fines and damage to corporate reputation.
What steps should manufacturers take now?

Establish an internal team or engage trade specialists to manage your compliance with China RoHS.
Familiarise yourself with the law and stay aware of any evolving changes. An English translation of the directive is
posted at the web site of the American Electronics Association: www.aeaneet.org.
Familiarize yourself with the list of more than 1,800 specific parts, components and materials that China considers
to be electronic information products (EIPs). A list has been posted by the American Electronics Association here:
www.aeanet.org/governmentaffairs/gabl_HK_Art3_EIPTranslation.asp.
Comply with environmental labelling requirements and provide supporting self-declaration information in Chinese
relating to the presence of any of the six hazardous substances in your EIPs.
Perform supplier due diligence. Validate that your supply chain partners are shipping RoHS-compliant products.
Maintain an audit trail to track and capture data pertaining to compliance measures you have taken.
Do not assume that your compliance with, or exclusion from, the European Union’s RoHS will result in compliance
with or exclusion from China RoHS.
Jiwei Ye
is vice president of JPMorgan Chase Vastera International
Trade Consulting (Shanghai), based in Shanghai.

Having problems promoting your
supply chain services in China?
2007 China Supply Chain and Logistics Directory

To list your company now, go to: www.supplychain-directory.com/china
Enhance your exposure by promoting your company both online and in the fourth print edition of
the most widely distributed supply chain services directory in China:
• a popular resource for buyers of supply chain services and solutions in China
• companies are listed by service offering, making specific services easy to find
• all listings will appear online and in the print edition to be published in April 2007(circulation: 10,000)
To list your company now, go to: www.supplychain-directory.com/china
Or for further information, please contact Michael Pennington +86 138 1897 6097

Setting the standard QA
Susanne Lehmann is the logistics planning manager for German car manufacturer Volkswagen’s joint venture
with Shanghai Automotive Industry Corporation, Shanghai Volkswagen, based in Shanghai. Since July 2004 she
has been responsible for implementing a lean inbound logistics operation for Shanghai Volkswagen.
&
Q&A
Susanne Lehmann: More than 400. is pretty high. It is of course possible to

50 percent of these are based in the reach these levels of efficiency in China.
greater Shanghai area though little One of the reasons it is possible is that
by little we are starting to shift the in China the safety standards aren’t as
focus of our sourcing to the north, strict as they are in Germany where
including the greater Beijing area and legislation requiring that all trucks are
Changchun, and the south of China. fully insured for example is one of the
Such a change is driven by the sourcing reasons that logistics costs there are so
strategies that we are implementing high. To give you an example, we have
where we are looking for the best started to localise airbags which have a
parts at best price and quality. We have potentially explosive material inside and
to of course also consider the logistics are therefore classified as dangerous
costs of this change, and even though goods. In Germany the airbags must be
at the moment the logistics costs only stored and transported in a closed metal
make up around three percent of total box. In China our suppliers wanted to
: What kind of logistics material costs, we have seen a relatively just transport the airbags on wooden
operations existed when you first big rise in logistics costs as a result of pallets. Volkswagen of course puts a
came to China? this change to the sourcing strategy. great deal of emphasis on ensuring the
Susanne Lehmann: Well, Shanghai safety of our employees and the quality
Volkswagen had been handling its of our products, so I will not allow these
: What kind of standards does basic safety requirements to be broken.
own productive materials’ logistics Shanghai Volkswagen have when
operations for nearly 20 years and But in theory logistics costs here can be
it’s looking at new suppliers to even cheaper than in Europe.
it worked – somehow. We had work with?
great factories and were building
great cars without any logistics Susanne Lehmann: We have teams
with members from all relevant : So what areas have you identified
planning department, which was as those where costs can be cut?
founded when I arrived in July departments who are responsible for
2004. The worst thing was it had looking at potential suppliers. And Susanne Lehmann: Well, of course
been functioning without structured we also have audit teams that look with regards to the containers and
processes and planning activities, at suppliers not only from a quality trucks. The container dimensions are not
and without a clear focus on the perspective but also from a logistics synchronised with the truck dimensions.
local supply chain side. A lot of the perspective. We’re looking to see There are no standard truck sizes. No
focus was on imported parts from whether a particular supplier can read modularised containers. These are three
Europe and South America. our material call-offs, what systems things that could be easily improved.
they have in place, do they have good We refuse to use cardboard packages
control over their stock, do they have without pallets which helps to improve
: What’s the primary focus of the good control over the technical validity efficiency and quality. Implementing
team that you manage? of single parts, the whole process warehousing management systems, very
really. The audit takes two days. We basic things really.
Susanne Lehmann: Well, we have
already have more than 200 suppliers
30 people in my team, which has
audited in such a way and the rest will
grown from zero people when : Can the problem of a lack of
follow this year.
I came here. We focus solely on standardisation of truck sizes be
logistics planning of productive rectified easily, and how can Shanghai
materials for the manufacturing : In what areas is Shanghai Volkswagen help?
side of the business. The reason Volkswagen trying to cut costs in Susanne Lehmann: It can be rectified
this side of our logistics operations logistics expenditure? and we try to push the changes by
is separate from the automobile Susanne Lehmann: Well, the three talking with the local 3PLS and with
and spare part logistics is that percent I have mentioned refers to our local logistics service provider
historically a sales company handled materials logistics process costs. When which is Anji TNT. We work together
those operations. you compare this however to Germany with Anji TNT to help standardise
or Europe where typically those their truck fleet and we also use a
: How many different materials’ inbound logistics costs would be around standardised method of calculating
suppliers do you work with in China? 1.6 percent to 2.4 percent, three percent costs which really helps.

Q&A
: How are the 3PLs doing in

handling the requirements of automotive
logistics in general? Chinese design meets German engineering know-how
Susanne Lehmann: We have If you’ve ever caught a taxi in Shanghai, chances are that your taxi was
outsourced the entire purchase part a Shanghai Volkswagen manufactured Santana, one of China’s best selling
of the logistics process which includes sedans. Keen to replicate their success with the Santana, Shanghai Volkswagen
transportation from local suppliers last year revealed the Neeza concept car, a crossover between a sports
and bringing in containers from the coupé and an estate with an off-road appearance, and a car which has been
port to Anji TNT. They also handle our designed in China for China, unlike many of the company’s other models.
warehousing, storage, re-packaging and The car attempts to combine Chinese and German design philosophies.
line feeding. So they are responsible for Many analysts have suggested that the Neeza signifies the future of new
quite a big part of our global logistics models from Shanghai Volkswagen: produced with Chinese culture, tastes
chain. We are both working hard to and requirements firmly in mind, with a mix of traditional Chinese and
build a strong working relationship and modern European features. The front of the concept features a grille and
they are also developed some software bumper design that is typically Volkswagen, yet traditional Chinese window
specifically for Shanghai Volkswagen. engravings are incorporated into the grille design.
Anji TNT is also handling the spare The name Neeza originates from Nezha, the name of a famous and
parts side of our supply chain. With mystical figure from Chinese history who had magical weapons and
regard to other companies, all the big fought evil spirits.
3PLS are trying to get into this area.
But we find they tend not to focus
more on automotive logistics but more
on import/export related activities. So if we three can’t come together how : Volkswagen has a number of
can we tell the Chinese companies distinct and separate JVs in China. To
to accept one set of standards? The what extent is the materials’ logistics
: Do you share ideas with your automotive industry globally needs to
competitors? operations centralised in China for
agree on one set of standards. Volkswagen as a whole?
Susanne Lehmann: Yes, we meet
regularly at conferences to share, to : Is there a formal forum Susanne Lehmann: Responsibility
learn and to see how we can work wise, it’s completely separate.
whereby the larger automotive
together to help automotive logistics But of course we are working
manufacturers can work together
in China develop. I think it’s important together and are starting to look
in China to try to develop such
that we don’t just copy the way things at our supply chain as a whole,
standardised systems?
are done in other parts of the world. comparing and benchmarking,
Furthermore, the larger automotive Susanne Lehmann: At the moment finding synergies and thinking
manufacturers, including the larger unfortunately it’s done on an informal about how to improve things
Chinese companies, need to work basis. We’d like to have that formalised. through economies of scales. We
together on developing standards in I of course have some ideas about do have suppliers in common
China. But there aren’t standardised how that might happen but the final so why not work together more
systems currently between Germany, decisions have to come from the closely in working with suppliers;
the rest of Europe and the United States. Chinese authorities. this is starting to happen.

REGIONALFOCUS
Imagine China
China’s third engine
Tianjin is poised to become the northern counterpart
to southern powerhouses Shanghai and Shenzhen
S
ince opening up as a treaty port in 1860, kilometres of coastline and includes Tianjin Port, Chris Horton is managing
Tianjin has been one of China’s busiest ports Tianjin Economic and Technological Development director of the Meridian Group
and one of its more robust domestic markets. Area (TEDA), Tianjin Port Free Trade Zone and the of Hong Kong, a logistics-
focused consultancy with offices
Now, almost 150 years later, this major port city Tanggu, Hangu and Dagang administrative regions.
in Hong Kong and Kunming. He
is being groomed to become northern China’s Under a familiar combination of preferential is a regular contributor to Chaina
answer to boomtowns Shanghai and Shenzhen government policies, tax breaks and investment magazine.
in the South. incentives, Binhai New Area will be converted
Geographically located between Beijing and the into China’s third major economic engine,
Yellow Sea, Tianjin is the largest city in the Greater complementing Shenzhen and Shanghai’s Pudong.
Bohai Bay area, an economically dynamic area The area covers a total of 2,270 square kilometres.
that includes Tianjin and Beijing municipalities, The pace of Binhai New Area’s development
and Hebei, Liaoning and Shandong provinces. noticeably quickened in 2006. For an idea of the impact
Tianjin is a city of more than ten million, the area is having upon Tianjin’s economy, consider
boasting the Greater Bohai Bay area’s largest that last year it was reported to have accounted for
port and most developed logistics infrastructure. 51.4 percent of the city’s economic growth. Last
Located only 120 kilometres from Beijing – and year the area also imported more automobiles than
being the capital’s closest port – Tianjin is poised anywhere else in China and produced ten percent of
to benefit from central government mandates to the world’s mobile phones.
develop the city into an economic and logistics Aside from upcoming physical infrastructure
hub for north China and Northeast Asia. improvements, the central government is
working to develop the necessary financial
Binhai New Area infrastructure to facilitate the Binhai New Area’s
The government has made the comprehensive development. In February 2006, a decade-old
development of Tianjin’s Binhai New Area a top national moratorium on new commercial banks
priority for the next several years, including it in came to an end with the establishment of Bohai
the 11th Five-year Plan (2006-2010) as a major Bank, which is headquartered in Tianjin and
objective. Well-positioned to facilitate northern includes UK-based bank Standard Chartered
China’s overseas trade, Binhai New Area has 153 among its shareholders.

REGIONALFOCUS
Room to grow
Tianjin still lags As a major supply chain link in northern China,
Tianjin is an increasingly important logistics hub
behind in terms of for more than just itself and Beijing. Tianjin also
modern logistics serves as a logistical gateway to areas further
inland such as Shanxi, Shaanxi, Gansu, Inner
facilities, but Mongolia, Ningxia and Xinjiang.
But Tianjin is still relatively underdeveloped,
we expect the especially when compared to the facilities on
environment to show in Shanghai and Shenzhen. What does this
mean for logistics providers considering investing
improve quickly. in the city sooner rather than later? In the short-
term it will likely mean waiting for infrastructure
Jack Yang,
Gazeley
improvements to come online. In the mid- to
long-term it could mean early footing in what the
central government is pushing to become one of
China’s main logistics hubs.
Leading European warehousing and logistics
space developer Gazeley has set up a joint venture
with Hexing Logistics to develop its first “G. Park”
in China in the Tianjin Beichen Hi-Tech Industrial
Park, ten kilometres from Tianjin’s international
airport. And the 266,700-square metre facility’s
first major tenant will be Wal-Mart, whose
Tianjin Distribution Centre will be completed in
September this year.
Jack Yang, Gazeley China country director, said
that Tianjin’s status as a north China economic
centre with a strong industrial base and quality
port facility make it an appealing investment
destination. Most importantly for logistics
providers, the central government has also
endorsed the city’s ambitious plan to develop and
establish itself as the logistics hub for northern
part of China, he said.
“Gazeley fully recognizes the importance
of Tianjin, not only for its economic strength
today, but the enormous potential for logistics
development in the future,” Yang said.
Tianjin’s opportunity lies in its slower
development when compared to other Chinese
cities of similar size, he said.
“Compared with Shanghai, Shenzhen, Beijing
and Guangzhou, Tianjin still lags behind in terms of
modern logistics facilities, number of international
logistics operators present and the city’s overall
Imagine China
business service capacity, but with the central

government’s preferable policies toward Tianjin,
we expect the above to improve quite rapidly.”
Tianjin’s free trade port

There’s serious money being invested in Tianjin Dongjiang Free Trade Port, the new part
of Tianjin Port which is now nearing the end of its first phase of construction. Hao Yunhui,
deputy director of the Department of Investment with Tianjin Port said, ‘Investors from home
and abroad are showing great interest in the Dongjiang Free Trade Port thanks to its high
potential for economic growth.’
The Tianjin Dongjiang Free Trade Port, with an expected area of ten square kilometres will
be the largest free port in China. The government approved the free port in the Dongjiang
Free Trade Port in August last year and it is the second free port to be established after the
eight square kilometre Shanghai Yangshan Free Trade Port. But it is widely expected that
the Dongjiang Free Trade Port will enjoy more preferential policies on financing and tax
than Yangshan.

REGIONALFOCUS
Naturally, domestic logistics providers Furthermore, the expansion of Tianjin’s air

are also keen to tap into the opportunities cargo links beyond northeast Asia are already Tianjin’s primary
offered by an ascendant Tianjin. Qiao Wei, underway – in June 2006 Singapore Airlines
a manager at Tianjin Port Sinochem DG Cargo launched the first cargo flights between appeal is
Logistics, a state-owned dangerous goods- Tianjin and the United States. The twice-weekly
focused 3PL provider that will launch flights link Singapore and Los Angeles with stops the promise
operations in Tianjin Port later this year, said in Nanjing and Tianjin. of its future
Tianjin’s primary appeal was the promise of Tianjin Airport International Logistics Park,
its future development. located on the northwestern edge of Tianjin development.
“As a 3PL provider we feel Tianjin possesses Binhai International Airport, is being built up to
excellent development potential,” Qiao said. serve the growing cargo demands of the airport.
“And the logistics sector in general has significant The bonded airport logistics park is currently
room for growth across the board, not just in using 0.55 of a planned 0.95 square kilometres
terms of 3PLs.” for sorting, storing, allocating distributing and
One of the appealing elements of moving processing air cargo. The park is adjacent to
into the Tianjin logistics market during its the Beijing-Harbin railway artery, the Beijing-
current developmental stage, Qiao said, was the Tianjin-Tanggu expressway, the Tianjin-Binhai
ability for early movers to affect the course and expressway and Tianjin’s outer ring road. Located
speed of Tianjin’s metamorphosis into a regional some 30 kilometres from Tianjin Port and TEDA,
logistics hub. the park has leveraged the promise of Tianjin’s
“The market is still relatively undeveloped, future air cargo to attract foreign investment from
you could say we’re first movers,” he said. “We companies including Singapore-based Mapletree,
want to help nurture the Tianjin market as it which has begun construction on a 57,000-square
becomes more standardised and raise the level of metre warehouse project in the park.
professionalism among logistics providers.” In anticipation of growing trade in the coming
years, Tianjin Port is also focused on expanding
Upgrading capacity, expanding links capacity to meet the coming demand. During
A crucial element of elevating Tianjin’s the current Five-year Plan, more than RMB 27.3
regional and international significance is billion will be invested in 30 major construction
increasing the city’s international transport links projects at Tianjin Port, raising its commodity
and its capacity to handle more cargo. handling capacity by 300 million tons over the
In August of last year, Tianjin Binhai same period. Among these projects are the
International Airport began a RMB3 billion completion last year of a 200,000-dwt vessel lane
renovation and expansion project which will as well as the speeding up of construction of
see the airport triple in size by May 2008. the southern port area’s deep water, large-scale
The airport’s passenger volume is expected to crude oil, ore,and coal berths. Construction of a
grow from 2.15 million in 2005 to 6.5 million large scale coal wharf was completed in late 2006
by 2010 and cargo shipments are expected to and by the end of 2007 a 250,000-dwt large-scale
jump from 96,000 tons to 500,000 tons during crude oil berth and large-scale dry bulk handling
that same period. berth will also go into operation.
China Foto Press

REGIONALFOCUS
Bonded Harbour Area. The area, mainland

China’s largest bonded harbour area, covers 10
Tianjin Port is Schneider moves into Tianjin square kilometres and is being promoted as
placing a lot of Its been widely reported in the news
an international free trade zone. It is expected
to begin operating by the end of this year and
emphasis on recently that transportation company will offer preferential taxation and forex policies
Schneider was recently given authority to
taking expert operate as a domestic carrier and logistics
with a focus on international distribution, global
procurement and export processing. Other
analysis and service provider in China, making them companies that have signed letters of intent to
the first US trucker to establish a domestic
opinion to create business there.
operate in Dongjiang Free Trade Port include
HSBC, China Merchants Bank and Mapletree.
a road map for And Schneider has chosen Tianjin as Tianjin Port Group President Yu Rumin said that
the base for their China operations having in addition to improving Tianjin Port’s facilities,
development. established an office in TEDA. “We see this it is also of paramount importance to expand
as a great opportunity for customers in relationships with international shipping lines.
Yu Rumin, China, whether they are foreign-invested
Tianjin Port Group
companies or Chinese-based businesses,”
said Martin Winchell, managing director A road map for development
of Schneider Logistics China, a part of the “In terms of increasing Tianjin Port’s
Schneider National enterprise. “We will international interaction and influence, we have
now be able to help customers build out made a lot of progress recently,” Yu Rumin said.
their intra-China network and grow their “We have attracted investment from the world’s
business in the various provinces.” top 20 shipping companies, including Maersk,
China Far East and Mediterranean. They’ve been
coming here one after another, and through their
investments they are creating a strategic alliance
Tianjin Port is also bringing in outside with us for the future. In terms of attracting world-
expertise. Tianjin Port Group has signed a 50-year class management experience, we’ve also made
agreement with the investment arm of Singapore’s great advances and are already operating the port
PSA to build and operate six berths in the western in accordance with global standards.”
part of Tianjin Port’s Dongjiang Free Trade Port Yu said that Tianjin Port has benefited greatly
at a cost of approximately RMB6 billion. The via its increasing interaction with international
agreement will give the mainland port operator a enterprises from global shipping lines to port
controlling 51 percent interest in the berths, three operators such as PSA.
of which are planned to be operational in time for “We’ve made major gains in terms of increasing
the Beijing Olympics in 2008. our employees’ knowledge base, modernising
Tianjin Port in February announced that it our facilities and upgrading our information
had signed agreements with shipping companies management,” Yu said. “From this perspective,
Mediterranean Shipping, Compagnie Maritime Tianjin Port is placing a lot of emphasis on strategy
d’Affretement and Hanjin Shipping to transport – taking expert analysis and opinion to create an
containers through Tianjin Port’s Dongjiang informed road map for development.”

S
ome of the most prevalent hot topics that are discussed when looking
Navigating at the logistics sector in China include: government investment

in infrastructure for the development of new ports, roads and rail,
inefficiencies in supply chain management, the impact of China’s ascension
the logistics to WTO, trade sanctions on exports, tariffs and outsourcing trends. While the
gradual liberalisation and growth of the logistics market encourages increased
participation by foreign companies, few have given due significance to the
knock-on requirement for modern warehousing facilities and the evolving
real estate trends and the policies needed to support the development of the logistics
real estate sector.
This sounds like a simple demand-supply issue: if the government is
maze
trying to encourage the growth of the logistics sector then naturally we
should see an increase in demand for logistics space. And it would also
follow that with the introduction of such policies to allow the logistics
sector to flourish, regulations must also be imposed to allow for the
China’s complex real estate environment complementary growth of the logistics real estate sector. The reality is
remains a major obstacle to improving not quite as simple.
There exists a gap between the wants and wishes of the central government
overall supply chain efficiency responsible for making the policies, and the local governments who execute
them. The single greatest factor hindering the development of the logistics
real estate market in China is the tax revenue generated from industrial land.
Why? Because local governments are reluctant to devote increased plots of
industrial land to logistics service providers, but rather prefer to reserve the
Jeremy Chapman is Director,
land for higher income generating industries such as manufacturing and
China Industrial and and Ying
Shin Lee is Senior Manager,
R&D, where the government in turn will generate a higher return.
China Industrial for Colliers That, along with the recent introduction of new policies, whereby all
based in Shanghai. primary industrial land is subject to an auction system with new minimum
benchmark prices, has inflated land prices anywhere from 20 percent to

REALESTATEFEATURE
providers and manufacturers were experiencing

phenomenal growth and rental increments were
insignificant, thus leading to difficulties in rational
The market can
and effective planning. Fast-forward to 2007 and a be visualised
snap snot of the current lease trends in the market
will show that change is underway. As a result of as a constant
more predictable growth and increasing rentals, we three way tug-
now see manufacturers and logistics companies
consolidating their operations to allow for increased of-war between
efficiency through economies of scale. investors,
A three-way tug-of-war end uders
Real estate remains a major obstacle to and the local
improving overall efficiency for the logistics
sector though it is often forgotten or not given governments.
priority by companies seeking to optimize their
supply chain. The market can be visualised as a
constant three-way tug-of-war between investors,
end users and the local governments. The normal
market mechanisms needed to bring equilibrium
are absent in this market. The biggest by-
product of this tug-of-war is developers inability
to match supply with the pent up demand.
Investors operate in an environment plagued by
risk, uncertainty, tax inefficiencies and volatile
government regulations.
In most transaction there exists a kind
of compromise. It is rare that all parties get
exactly what they want, when they want it.
In addition to the natural discord in rental
expectations between landlord and tenant,
lease term expectations is also an area for
heated discussions. Developers seeking profit
China Foto Press
and minimal risk will prefer a longer lease

term, while logistics service providers and
manufacturers with higher growth are unable
to commit to such lease terms.
International developers have responded to
60 percent and brought about a unique market this discrepancy by providing more highly evolved
situation. Stake holders will need to develop products, by being more creative with lease terms
creative and innovative means to weather the and gaining a better understanding of their tenants’
storm brought on by the added complexities. businesses. Armed with stronger knowledge of
market dynamics developers are becoming more
A question of supply versus demand open minded when negotiating lease terms. Due
There is currently a shortage in the supply to recent trends, developers have recognised that
of quality, modern warehousing in the market. shorter lease terms provide an opportunity to
In an environment where end users have little adjust rental incomes more frequently. In this fast
choice but to accept what is currently available, paced market, characterised by strong demand and
many developers have taken a speculative increasing rentals, negotiating shorter lease terms to
approach to seeking a foothold in this bullish some extent allows developers to more accurately
economy. The gains that industrial facilities yield match rentals with current market rates.
are so substantial that investors who traditionally As the reliability, efficiency and coverage
acquire only income producing properties are of infrastructure continues to progress, and
also considering taking on development risks. in lieu of the healthy growth of the logistics
The key drivers fuelling the increase in industry, we are witnessing more and more
demand arise from manufacturers outgrowing international developers who are willing to bare
existing warehouses, increased outsourcing to increased exposure by entering the market with
3PLs, consolidation of storage by both end-users a speculative approach.
and 3PLs and the growth in export as well as With the time critical nature of the logistics and
domestic demand. And there are few choices due supply chain business, the development of hgh
to the tight supply. standard speculative development projects is an
Traditionally, logistics service providers and effective way to absorb the excess demand. However,
manufacturers have been unwilling to accept long- development zones that hold the largest stock of
term leases, as they were typically unable to plan industrial land have been unwilling to bridge the
for more than a year in advance. This especially gap between supply and demand, leaving it to
held true in the days when logistics service the private sector to do so.

REALESTATEFEATURE
Local governments as a driver of land prices supply of quality warehouses does not arise
Local governments and development zones just because there are not enough warehouses;
Traditional very often, local developers lack the experience
have to do deal with the pressure that tax revenue
warehouses generation is the most prevalent performance and know-how to construct facilities to meet
indicator of any local official. international standards.
of low quality Development zones therefore require that With the emergence of international developers
are becoming tenants register locally, thus ensuring that the providing a new tier of products, a new market
tax revenue generated will flow directly in to is created where a premium is required for high
obsolete as the its coffers. In addition to tax revenue, minimum quality warehousing in the greater Shanghai area.
market transitions investment costs and big corporate brand names For several years now, low-grade warehouses
also give buoyancy to a zone’s bottom line and have remained at US$22 to US$36 per square metre
to high volume, overall prominence. Zones will also take into per year (which is approximately RMB0.50 to
RMB0.80 per square metre per day), while modern
timely and consideration the projected revenue it will collect
non-bonded warehouses average around US$35
from a particular company, and depending on the
efficient space forecast, either artificially inflate or discount the to US$42 per square metre per year (RMB0.75 to
price accordingly. RMB0.90 per square metre per day) and bonded
utilisation. warehouses such as Shanghai Bonded Logistics
Manufacturers generally can achieve higher
operating profits and thus more tax revenue for Park hover around US$65 to US$75 per square
its respective development zone. Because logistics metre per year.
service providers do not generate huge tax Throughout this period, land prices have
revenues when compared to manufacturing and remained steady with little change. With the
R&D focused entities, land for them is generally expected spike in land prices due to the newly
more expensive than that for manufacturers (with introduced land auction system and a raised
local governments also unwilling to subsidise minimum benchmark pricing for primary land
the cost of infrastructure and land clearing for and the surfacing of a new tier of high quality
logistics service providers). And despite the products, tenants have to accept that rentals will
higher price that logistics service providers pay experience upward adjustments.
for land, the return generated by such tenants for
the local government are still much lower when The need for specialisation
compared to a manufacturer because of many Piggybacking the growth seen in the Chinese
other aspects including local taxes, stimulation economy as a whole, the logistics industry is
to local economy and so on. Not in the habit of characterised as a sector poised for tremendous
pushing away business however many zones will growth in the coming years. And additionally
still respond to proposed logistics projects, albeit with China’s export levels and domestic appetite
with some ambivalence. for imports growing, developers of logistics real
estate face a challenging yet lucrative situation.
A look at Shanghai Despite the introduction of the land auction
Current industrial rentals in Shanghai are system, minimum benchmark pricing structure,
determined by a number of related factors. land appreciation tax levy and other hindering
Traditional warehouses of low quality and design factors, the logistics real estate sector, driven by
are becoming obsolete as the market transitions to strong consumer demand will continue to thrive.
high volume, timely and efficient space utilisation. As the market evolves, developers will begin to
Warehouse space is increasingly focused on offer more specialised products catered to niche
a cost per cubic metre and pallet rate rather markets, including temperature controlled/cold
than cost per square metre rate. This is because storage facilities, consolidated regional distribution
logistics providers are faced with higher costs hubs, export oriented/city distribution facilities,
per square metre of floor space as unit costs dangerous goods storage facilities, cross dock
increase for newly developed international- facilities and many other variations to support the
grade high volume warehouses. Inadequate economic progression of the sector.

CAREERS
Changed jobs in the past month? Hired someone new recently? careers@chaina-online.com
Home Depot appoints new China Changes at Dell Horak will have oversight of Warner
Home Video’s worldwide marketing,
retail operations president Dell has named former Motorola
sales, supply chain and operations,
Home Depot has appointed executive Ron Garriques president
of a new division that will sell as well as broad responsibility for
Yves Chen as president of retail
technology products to consumers the teams handling pre-production,
operations in China. Chen most
in developing markets such as China category management and business
recently served as the executive
and India. Most recently Garriques and legal affairs.
president of Chinese retail company
Beijing Hualian Group and has also was an executive vice president
held executive positions in China at Motorola and president of their Wuxi PharmaTech fills key position
and France with French retailers mobile-devices division. Before Wuxi PharmaTech, China’s leading
Carrefour and Promodes. joining Motorola, Garriques held provider of pharmaceutical R&D
“As a local Chinese business management jobs at AT&T, Lucent outsourcing services, has promoted
leader, Yves will bring invaluable Technologies and Philips. The new Dr. Suhan Tang to chief manufacturing
insight to our operations and division led by Garriques will sell officer. Tang joined the company in
growth strategy,” said Annette all consumer products, including 2003 as vice president of process R&D,
Verschuren, president, Home Depot desktop and notebook computers, from Schering-Plough. Over the last
Asia and Canada. software and peripherals. three years, he has been instrumental
Chen will have full responsibility As Dell continus to grow worldwide, in shaping and developing the process
for the operating and financial it as recgnised the importance of chemistry and scale-up manufacturing
performance of retail operations manufacturing close to its customer and service offerings.
in China and will report directly to fully integrating its supply chain into
Verschuren. He will also be responsible one global organisation. The company
for integrating newly acquired Home will innovate and adapt its supply FedEx Express appoints new
Way into Home Depot, and working chain model to help drive differentiated China sales vice president
on growth in China. product design, manufacturing and FedEx Express has appointed Marco
distribution models. Lee vice president, sales, for China.
Sony China names new
China president
Haruyasu Nagata has been
named president of Sony China, and
chairman and vice president of Sony
Marketing China. Former Sony China
president Seiichi Kawasaki has been
named vice president of Sony Supply
Chain Solutions in Japan. Nagata
formerly headed the Sony consumer
electronics business for Asia Pacific,
Middle East and Europe.
Wako Logistics adds CEO

for China, Hong Kong
Anthony Leung has been appointed
the chief executive officer of Wako
Logistics Group’s operations in Hong
Kong and China. Leung has over 30
years freight forwarding and logistics
industry experience. Dell has also appointed Solectron Lee will lead a team of sales
Chris Wood, chief executive officer chief executive Mike Cannon to oversee professionals and provide dedicated
of non-asset based 3PL and freight global manufacturing, procurement and strategic focus on China to capture
transportation provider Wako Logistics, supply chain. Cannon and Garriques will long-term revenue growth in the
commented: “[Anthony Leung] comes to both report directly to chief executive market, and ensure continued growth
us at a time when our offices in China officer Michael Dell. and development of the FedEx
are showing double digit growth, and sales organisation. Reporting to
he has the experience and management Warner Home Video names him will be two managing directors
skills to make our business in China executive vice president from the China sales division and
into a world-class provider of a full Mark Horak has been named five managers from sales strategic
range of logistics services to fully executive vice president, general solutions. Lee joined FedEx in 1995
satisfy the diverse needs of our global manager, worldwide operations and new as managing director, sales, Hong
customers.” packaged media, Warner Home Video. Kong and China.

CAREERS
Changed jobs in the past month? Hired someone new recently? careers@chaina-online.com
Red Hat names new Asia TNT announces new Hong

Pacific president Kong operations director
Open source vendor Red Hat has TNT Express has named Thomas Tse
appointed Gery Messer as the new as its new director of operations for Hong
president Asia Pacific. He will report to Kong, responsible for supervising the
Alex Pinchev, executive vice president, Hong Kong operations team, improving
global sales, and Charlie Peters, chief operational efficiency, enhancing service
financial officer. quality and reliability as well as staff
Messer previously successfully development.
founded and launched SAP in Korea. He Tse was previously the general
was most recently a vice president for manager of Maersk Logistics Hong
EMC Asia Pacific. His key responsibilities Kong and operations director for DHL
included execution of EMC’s go-to- International Hong Kong.
market strategy and integration of TNT Express delivers 3.5 million parcels,
the professional services and system documents and pieces of freight each week
engineering practice into a single- to over 200 countries using its network of
customer facing organization. nearly 900 depots, hubs and sorting centres.
What’s it like to work for... Jean-Luc Laboucheix, Supply Chain Director,

Goodyear? Asia Pacific, Goodyear
Who’s the boss? How do you get a job at Goodyear?

The vice president Operations is Harold Smith. He covers not only All job opportunities with Goodyear are listed at www.goodyear.
supply chain, but also manufacturing. He is located in Shanghai. com. We also occasionally work with executive search firms in
the region.
How many staff? The three people in the regional supply chain team here were
Goodyear employs 89,000 people globally, with 10,000 in Asia all promoted internally. My job is to train these people and for
Pacific and around 700 here in China. Most of those people are them to eventually handle our supply chains at a ‘cluster’ level.
based at our manufacturing facility in Dalian, in north China’s
Liaoning province. The China head office is based in Shanghai. Any training offered?
We believe in extensive training. I personally am involved
Supply chain responsibilities? in about three days of training sessions every three
Asia Pacific is divided into five ‘clusters’: China, India, South East months. And, we sometimes use external consultants to
Asia, Australia/New Zealand, and Japan/Korea/Taiwan. Goodyear is help with training.
starting to focus more or more on country flows in our supply chain,
and changing from a focus on ‘supply chain by country’ to ‘supply Pay or perks?
chain by region’, with one factory serving several countries. Our The pay is on a par with other large international companies in
supply chain in Asia Pacific will become more and more complex as the region. Senior foreign staff can expect expatriate packages. We
a result. And that is why we need to have a team at the regional level provide locally employed staff with benefits consistent with what
to handle the change and the operational aspects going forward. In is required in a particular country.
the regional supply chain team in Shanghai there are three people
that report directly to me. My role is to coordinate the supply chain Long hours?
flows between clusters and between countries. And to support each I do work long hours! 10-12 hours as a minimum. As we
cluster in establishing a world class supply chain. move from country to regional supply chain everything
there is a lot of work to be done and as we do not yet have
Who are your customers? an integrated IT system we face extra manual work. I am
We have three types of ‘customers’. There are internal customers: sometimes obliged to stay late in the office for conference
we manufacture in Asia for Goodyear in North America, in Latin calls with North America.
America and in Europe. And we also manufacture for domestic
clients in Asia Pacific, with two distinct channels in this area. The first Business travel?
is OEM, which includes all the big car manufacturers, such as Ford, Not as much as I expected when I took this job, which has been
Volkswagen, GM, and so on. The second channel is the replacement a nice surprise. I usually spend one week per month away from
market, which includes all the service centres where customers can Shanghai. We do try to find effective ways to communicate without
replace their tyres. We do operate some of own service centres. the need for travelling, such as regular conference calls.

NOW SPECIALISING
IN PROCUREMENT &
SUPPLY CHAIN RECRUITMENT
We can offer you exceptional opportunities with some of the world’s leading
employers. There is a strong demand for professionals with your qualifications and
experience to take on a number of roles we currently have within supply chain and
procurement. As specialists in this area, we have the experience and business
relationships to help you find your ideal role.
CURRENT EMPLOYMENT OPPORTUNITIES

General Manager – China Director – Supply Chain Country Manager – Procurement
Multinational automotive organisation looking A leading brand of high quality fashion wear Working with Line Managers, you will be
for a General Manager reporting directly to and accessories. A well established brand responsible for reviewing and improving
the UK based Managing Director. globally, they are now looking to appoint the buying processes for one of the largest
You will be responsible for the achievement an experienced Supply Chain professional. consumer products companies in the world.
of annual budgets for sales, profit margins Experience in the fashion industry would be
and cash flow. an advantage but is not essential. Regional Quality Assurance Manager
An export trading firm managing supply
Asian Sourcing Buyer Quality Control Manager chains for major brands and retailers
A world leader in the food industry, this A leading apparel manufacturer employing worldwide. This position will work
company is now looking for an experienced over 25,000 employees across Asia. closely with customers, factories, mills
professional to evaluate regional Reporting to the Head of Operations you will and merchandising teams to resolve
opportunities, in order to meet the demand take overall charge of all quality issues in the quality issues.
for new products worldwide. knit garment factory.
Fluency in English and Mandarin would be highly regarded.
CONTACT US
For further information on any opportunities or to submit your cv, please contact:
Olly Riches
Manager
+86 21 3222 4758
ollyriches@michaelpage.com.cn
#3929
Shanghai Tian Cai Network Co. Ltd., under license from Michael Page International Group PLC.
CLASSIFIEDS
Go
TRADE UP TO GREATER INNOVATION ࡏ Kunming
Global Trade Management can … Whether you're going to Kunming on business or for leisure you'll
• Drive Cost Savings need to know how to get around, where to stay and the top places for
• Mitigate Risk food, drinks and fun.
• Improve Supply Chain Efficiencies
• Deliver import/export compliance GoKunming is the only English-language website serving the needs
of visitors to and residents of Kunming, China's 'Spring City'. Filled
…simplify and streamline international trade operations. with useful listings, an insightful blog that is updated daily plus
Utilizing the company’s global trade management forums and classifieds, GoKunming makes it easy to get the most
solutions, clients realize trade cost savings and supply out of one of China's top second-tier cities.
chain efficiencies while improving compliance with
ever-changing government regulations. With operations www.GoKunming.com
in every major trading region in the world, JPMorgan Chase
Vastera global trade solutions incorporate:
• shipment documentation
mghk = china logistics

• import/export compliance
• duty management
• classification & valuation
• strategic sourcing The Meridian Group of Hong Kong (MGHK) is an integrated
• trade agreement programs business consultancy and research house based in Hong Kong
• restricted party screening & resolution with operations in mainland China. Our knowledge of China's
• logistics & transportation management logistics infrastructure and connections with key players inside
and outside of China make us the premier source for
high-value China logistics information.
Ⴡ
JPMorgan Chase Vastera International Trade
Need answers? Contact us today:
Consulting (Shanghai) Co., Ltd.
Tel: (86 21) 6101 0241 Mainland Director: Christopher Horton
jpmorganchase.com/vastera E: chris.horton@meridiangrouphk.com
Logistics Consultant: Lee Perkins
E: lee.perkins@meridiangrouphk.com
T: +86 871 551 9116
www.meridiangrouphk.com
ః

EVENTSCALENDAR COMPANYINDEX
MARCH
3M............................................................................................. 13
S 25 4 11 18 25 Accenture ................................................................. 2, 10, 22, 40
Air China .................................................................................. 14
Alliance Boots .......................................................................... 16
26 5 12 19 26 AMB.......................................................................................... 16
M American Electronics Association ........................................... 25
Anji TNT ................................................................................... 27
ASE ........................................................................................... 13
AT&T ........................................................................................ 37
27 6 13-15
13 20 27 B&Q ......................................................................................... 17
Baker & McKenzie ............................................................... 8, 21
T 3rd China Logistics Summit
BDP International .................................................................... 25
March 13 - March 15
Shanghai, China Best Buy ................................................................................... 16
www.eyefortransport. Borgwarner .............................................................................. 19
com/china Bounteous ................................................................................ 16
28 7 14 21 28
Capitel ...................................................................................... 13
W Carrefour .................................................................................. 37
Cathay ...................................................................................... 14
China Far East .......................................................................... 32
China Merchants Bank ............................................................ 32
1 8 15 22 29 China Supply Chain Council ....................................... 23, 24, 43
T Chinawhys ............................................................................... 21
Coca-Cola ................................................................................. 22
Colliers ..................................................................................... 32
Compagnie Maritime d’Affretement........................................ 32
2 9 16 23 30 Dajin Logistics .......................................................................... 24
Decathlon................................................................................. 16
F Dell ........................................................................................... 13
DHL .............................................................................. 11, 14, 37
Dongfeng Motor ...................................................................... 15
Dragon Sourcing...................................................................... 20
S 3 10 17 24 31 e-Future .................................................................................... 17
EMC Asia Pacific ...................................................................... 38
Establish ..................................................................................... 9
APRIL FedEx ................................................................................. 11, 37
Gazeley ................................................................................ 3, 30
GM............................................................................................ 11
S 1 8 15 22 29 Go Kunming ............................................................................ 40
Goodyear ................................................................................. 38
Hamilton .................................................................................. 20
2 9 16 23
23-25 30
Hanjin Shipping ....................................................................... 32
Post Harvest 2007
M April 23- April 25
Heidrick & Struggles ......................................................... 19, 22
New Delhi, India
Hershey .................................................................................... 13
www.postharvestindia.net Hewitt Associates..................................................................... 20
Hexing Logistics....................................................................... 30
3 10 17-18
17 24
Automotive Logistics
China 2007
1 Hitachi ...................................................................................... 38
China Rail Financing Home Depot ............................................................................ 37
T Summit 2007
April 23- April 25
Home Way ............................................................................... 37
April 17 - April 18 Shanghai, China
Shanghai, China www.automotivelogisticsasia. HSBC ........................................................................................ 32
com Hualian Group ......................................................................... 37
www.globaleaders.
com/en/2007/rail.asp
44 11 18 Logistics Mergers and
25
Acquistions in China Forum 2 IBM ........................................................................................... 17
Services Procurement in China Intel .................................................................................... 12, 21
April 25
W April 4 Shanghai, China
Shanghai, China
Iveco......................................................................................... 11
www.supplychain.cn Jones Lang LaSalle ............................................................... 7, 17
www.supplychain.cn
JPMorgan Chase Vastera..........................................25, 40, Back
Kerry EAS ............................................................................. 4, 40
5 12 19 26 3 Kerry Logistics ......................................................................... 15
T Kingfisher ................................................................................. 17
Li & Fung ................................................................................. 12
Lotte ......................................................................................... 13
Lucent Technologies................................................................ 37
6 13 20 27 4 Maersk Logistics........................................................... 15, 32, 37
Mapletree ..................................................................... 16, 31, 32
F McKinsey.................................................................................. 19
Mediterranean Shipping .......................................................... 32
Meridien Group of Hong Kong .............................................. 40
Michael Page ............................................................................ 39
S 7 14 21 28 5 Microsoft .................................................................................. 11
Mizuno ..................................................................................... 12
Motorola ................................................................................... 37
MAY Nestle ....................................................................................... 13
New City Corporation ............................................................. 15
Nippon Express ....................................................................... 15
S 29 6 13 20 27 Nokia ........................................................................................ 13
NXP Semiconductors ............................................................... 13
30 7 14 21 28 Oracle....................................................................................... 14
Philips ................................................................................ 22, 37
M Promodes ................................................................................. 37
PSA ........................................................................................... 32
Red Hat .................................................................................... 38
S&W International Chemical Logistics.................................... 24
1 8 15 22 29 SAP ..................................................................................... 17, 38
T Schneider ................................................................................. 32
Shanghai Automotive ........................................................ 11, 26
Shanghai Volkswagen.............................................................. 26
Singapore Airlines Cargo......................................................... 31
2 9 16 23
23-25 30 SITC .......................................................................................... 14
Logistics World 2007 Sony ......................................................................................... 37
W May 23 - May 25 Talke Logistics Services ........................................................... 15
Suzhou, China TEDA ...................................................................... 13, 29, 31, 32
www.logisticsworld-expo.com Tianjin Port Group............................................................. 31, 32
Tianjin Port Sinochem DG Logistics ....................................... 30
3 10 17
17 24 31 TNT .................................................................................... 11, 37
Supply Chain Risk Summit
T May 17 Shanghai, China Tommy Hilfiger ........................................................................ 12
www.supplychain.cn Transportation Development Group ...................................... 24
Trust Mart ................................................................................. 16
TUV SUD.................................................................................. 25
4 11 18 25 1 UPS ........................................................................................... 11
Visteon ..................................................................................... 12
F Wako Logistics ......................................................................... 37
Wal-Mart ....................................................................... 11, 16, 30
Warner Home Video.......................................................... 37, 38
WhereNet ................................................................................. 17
S 5 12 19 26 2
Xecutive Group ....................................................................... 20

CHINA SUPPLY CHAIN IN NUMBERS
China manufacturing PMI watch

The CFLP China Manufacturing Purchasing
Managers’ Index (PMI) provides a monthly
indication of economic activity in the
manufacturing sector, compiled each month from
data about their purchasing activities and supply
situations from more than 700 manufacturing
companies.
%
60
58
56
55.1
54
52
50
FEB 06 JAN 07
Source: China Federation of Logistics and Purchasing Growth in China’s retail market
China’s retail market is expected to grow by about 51 percent between
Shanghai foreign trade up in 2006 2007 and 2011, to reach a total value of over RMB7.17 trillion according
Shanghai’s foreign trade increased to recent study by Research and Markets. The study also showed there
to US$428.75 billion in 2006, up 22.3 is aggressive consolidation in China’s retail market, as larger operators
percent on 2005, according to recent swallow up smaller players.
report in Logistics Week. In a golden ‘Golden Week’, retail sales of consumer goods in China
The value of exports rose to rose 15 percent year-on-year to RMB220 billion during the recent week-
US$266.56 million, an increase of 25.5 long Spring Festival holiday.
percent over 2005, while the value
of imports climbed 17.3 percent to Chery sold 37,207 vehicles in ranking the airport seventh in the world
US$162.19 billion. January, compared to the 40,570 units and third in Asia.
Shanghai’s largest trading partner is sold by Shanghai General Motors, Shanghai’s two airports, Pudong and
the European Union with trade valued while Shanghai Volkswagen and FAW Hongqiao, together handled 409,000
at US$87.07 billion, closely followed by Volkswagen recorded sales of 35,128 planes in 2006, representing an increase
the United States with total trade volume vehicles and 32,084 units respectively. of 9.21 percent.
of US$81.76 billion. Currently there are 64 domestic and
Japan is still the biggest exporter to Pudong Airport ranks 7th globally international airlines operating regular
Shanghai with imports worth US$31.19 Cargo and mail throughput at services from Shanghai, with the flight
billion in 2006. Shanghai Pudong International Airport network covering 169 cities at home
Exports from Shanghai included reached 2.16 million tons in 2006, and abroad.
mechanical and electrical equipment which
carried the highest value at US$152.72
billion, up 28.3 percent. Textiles grew by
15.9 per cent to US$21.17 billion. Top China ports in 2006
In comparison, the Suzhou Export TEUs handled in 2006 (million) Increase on 2005
Port (million) (%)
Processing Zone handled trade worth
US$10.4 billion in 2006, a year-on-year Shanghai 21.7 20.1
rise of 85 percent. Shenzhen 18.46 14
Qingdao 7.7 22.1
January car market Ningbo-Zhoushan 7.06 36
Chinese auto manufacturer Chery Guangzhou 6.6 41
overtook Shanghai Volkswagen to Tianjin 5.95 23.9
secure the second highest car sales Dalian 3.21 21.2
in China in January 2007, with Lianyungang 1.3 30
Shanghai General Motors securing Zhongshan 1.17 9.1
the top spot.

Global trade has no boundaries,
why should you?
“Best Trade Services Provider”
Trade up to greater innovation Trade & Forfaiting Review, 2004, 2005, 2006
Only one provider offers a holistic solution to help you effectively manage “The largest international
your entire supply chain while mitigating risk. At JPMorgan Chase Vastera, trade logistics vendor”
Aberdeen Group, 2005
we help global organizations with complex supply chains optimize working
capital, drive cost savings and improve supply chain efficiencies while Global Trade Management market leader
AMR Research and ARC Advisory Group,
helping maintain compliance with ever-changing government regulations. 2004, 2005
Get the whole solution from the only provider that delivers it – everywhere.
Market Leadership Award in
European Trade Compliance Management
Frost & Sullivan, 2005
To find out more, go to jpmorganchase.com/vastera, or contact:

V
V
Europe, Middle East, Africa Jenette Stiles at 44-207-777-2456

Asia-Pacific Jiwei Ye at 86-21-6101-0241
Latin America Alvaro Quintana Elorduy at 52-55-91-77-15-88
North America Michael Golden at 1-212-552-2952
The products and services featured above are offered by JPMorgan Chase Vastera International Trade Consulting (Shanghai) Co., Ltd., a wholly-owned
indirect subsidiary of JPMorgan Chase & Co. JPMorgan Chase is a marketing name for the treasury services businesses of JPMorgan Chase & Co. and
its subsidiaries worldwide. ©2006 JPMorgan Chase & Co. All rights reserved.

Chaina Mar Apr 2007

Încărcat de

Informații document

Descriere originală:

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Chaina Mar Apr 2007

Încărcat de

Drepturi de autor:

Formate disponibile

MARCH/APRIL 2007 www.chaina-online.

THE MAGAZINE FOR GLOBAL SUPPLY CHAIN LEADERS

Mind the talent gap

Danger: Proceed with caution 18

34 SUPPLY CHAIN FEATURE

Navigating the logistics

www.chaina-online.com MARCH/APRIL 2007 5

6 MARCH/APRIL 2007 www.chaina-online.com

A look at China’s industrial

www.chaina-online.com MARCH/APRIL 2007 7

•Investors which previously provided

•Transitioning to a VAT model also means Need for updated regulations

8 MARCH/APRIL 2007 www.chaina-online.com

The impact of rising

www.chaina-online.com MARCH/APRIL 2007 9

10 MARCH/APRIL 2007 www.chaina-online.com

Calls for China to restrict foreign

www.chaina-online.com MARCH/APRIL 2007 11

Tommy Hilfiger to sell

to take things forward we can benefit

America either restructured, sold or closed.

12 MARCH/APRIL 2007 www.chaina-online.com

Hershey and Lotte announce JV

high-quality, competitive products

3M to establish health MANUFACTURING

www.chaina-online.com MARCH/APRIL 2007 13

Dell may add new factory in China

LOGISTICS SITC Logistics plans for

DHL invests extra US$110 million in China

14 MARCH/APRIL 2007 www.chaina-online.com

www.chaina-online.com MARCH/APRIL 2007 15

Decathlon sets up Shanghai distribution centre

Wal-Mart confirms Trust Mart deal

a 35 percent stake in Taiwan’s

16 MARCH/APRIL 2007 www.chaina-online.com

continue to operate under the Trust-

We Open Industrial Frontiers with You.

For expert advice, contact Jones Lang LaSalle today:

Investment Development Logistics

Business Parks Manufacturing Consulting Service

www.chaina-online.com MARCH/APRIL 2007 17

The long search

Russel Beron is a freelance journalist specialising in

With the gap

20 MARCH/APRIL 2007 www.chaina-online.com

company with branches in China was being

Another big problem with local talent is the Some solutions

www.chaina-online.com MARCH/APRIL 2007 21

China Foto Press

22 MARCH/APRIL 2007 www.chaina-online.com

China Foto Press

24 MARCH/APRIL 2007 www.chaina-online.com

As one representative from a multinational “Manufacturers should know their products,

get their perspective.”

Preparing for China RoHS

What steps should manufacturers take now?

www.chaina-online.com MARCH/APRIL 2007 25

2007 China Supply Chain and Logistics Directory

26 MARCH/APRIL 2007 www.chaina-online.com

Susanne Lehmann: More than 400. is pretty high. It is of course possible to

www.chaina-online.com MARCH/APRIL 2007 27

: How are the 3PLs doing in

28 MARCH/APRIL 2007 www.chaina-online.com