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Huge business potential for European companies in China

Professor Dianjun Fang (left), a logistics and supply chain expert from China, provides an overview of the Chinese logistics and delivery market and reveals the opportunities it provides for European companies to expand their business in the country

E-commerce in China is growing rapidly, however, the development of efficient logistics and delivery processes are not evolving at the same pace. That is according to professor Dianjun Fang, who gave an account of some of the potential business opportunities in the country at the Nordic Delivery Conference 2016 in Copenhagen, Denmark. According to Fang, this means that there is huge potential in China for European companies specializing in manufacturing and supplying efficient and automated logistics processes.

“Logistics in China is at a very low level compared with Germany, which is one of the best countries in the world when it comes to logistics,” said Fang. “This is despite the fact that China has good infrastructure and many drivers and vehicles. The Chinese government also helps to fund many modern logistics parks. The problem is a lack of IT systems to coordinate logistics and freight, both at warehouses and carriers, as well as a lack of collaboration between the various logistics and freight companies. All this makes logistics in China costly and inefficient. For example, trucks in China often drive with half-empty loads, and if a Chinese warehouse has an IT system, it rarely supports the warehouse processes.”

These inefficiencies represent great potential in China for European companies specializing in streamlining warehouse processes, logistics and freight. According to Fang, the Chinese people’s openness toward new learning and technology helps to reinforce this potential, but there are challenges associated with entering the Chinese market. Although Chinese people are open to new methods and technologies, European companies need to understand Chinese culture and business procedures.

“Chinese people are not good at planning and thinking in processes, but are more concerned with owning the newest or best marketed technology,” said Fang. “It is therefore important that the European company convinces the Chinese company about the importance of analyzing their processes, before they choose which technology to support their existing warehouse, logistics and delivery processes.”

When it comes to establishing a foothold in the country, Fang believes that European companies are better off establishing a branch in China with local people. He states that Chinese people are generally hard working and eager to learn new things, therefore it is an advantage if European companies can offer education and training in the country.

“The culture and business procedures are completely different in China, and as such, it is virtually impossible to do business in China without personal Chinese connections within your industry. This is why I believe that European companies gain larger market shares by establishing local branches in China,” added Fang.

This view is shared by Fei Wang, country manager of delivery management software provider Consignor’s office in Shanghai. The company’s software platform helps businesses to digitize their manual shipping processes, enabling them to enter consignment information, print labels and transfer data using one system. Consignor established its Shanghai office in March 2015.

“China is a huge market where e-commerce and logistics is growing,” said Wang. “We believe in local people with software insight, who we support with experience and competence from the Consignor Group. Therefore, we have established an office and hired local people to carry out business in China, so we get an insider understanding of how the transport of goods, transport companies, and the entire transport network, interact with the senders. In this way, our knowledge and consulting in freight and delivery in China is truly unique and makes us a key partner for companies with shipments in the country.”

To view a video of professor Dianjun Fang’s presentation at the Nordic Delivery Conference 2016, click here.

Dianjun Fang is professor at Tongji University in Shanghai, China, and chief representative of China at the German Fraunhofer Institute in logistics. Fang has been researching, educating and consulting within logistics and supply chain management for more than 30 years.

October 19, 2016



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