“As China strives to improve the quality of its manufactured products and reliability of delivery through efficient supply chain management solutions, the share of high-value goods as part of Chinese trade flows will continue to rise – increasing demand for time sensitive logistics and supply chain management solutions, both domestically and internationally,” said Jane Zhou, CEO of Huier in her opening address earlier this week at the inauguration of Shanghai-based Huier Logistics' new Urban Ecological Logistics Park in Qingpu, China.
"At the moment however, no single operator has shown a
significant competitive advantage that puts it in the lead. Some local players,
with their greater experience in Chinese operations, will build their positions
to be dominant in the market. On the other hand, foreign international
integrators with their global reach and scale and a carefully crafted China strategy
may turn the race in their favour,” said Nicolas
Pechet, Vice President and Head of GIA Group's operation in China, as a guest speaker at the inauguration.
As most of China’s trade flows are focused on the United States, Europe, and the Asia Pacific region, global integrators are well-positioned to capture growing time sensitive SCM and logistics services demand in their worldwide networks. "Over the last decade, global integrators have captured 80% share of that market. Whether the same will happen in the domestic market will depend on the way in which companies operate within China, and if and how they set up their domestic delivery networks," said Pechet.
The Chinese logistics market continues to offer enormous growth opportunities for both local and foreign players – growth of time-definite deliveries is running at ~40% per annum. Immense growth in direct investments and foreign trade, state investments in massive infrastructure projects and strong domestic economic development cultivated a market environment that offers big opportunities for both domestic and international time sensitive SCM and logistics companies.
Despite the tremendous opportunities, the market remains
one of the most challenging in which to operate. In light of China’s explosive
growth and the full liberalization of the transport sector, the pressure is now
on the time-sensitive SCM and logistics providers to understand the new
strategic imperatives.
With the rapid growth of China’s SCM
and Logistics market in recent years, thousands of small to medium-sized operators entered the
domestic market. The vast majority are local providers operating at very low
prices and varying service levels in the fragmented landscape of the Chinese
logistics industry. However, none of the emerging local players have captured
more than 10% market share, leaving all players except China Post in highly
fragmented positions.
Both international and domestic contenders need to revisit their strategies to create and maintain sustainable positions that enable them to tap into future expected growth.
GIA believes that acquisition is one of the main growth strategies for significant integrators to capture the domestic market. A straightforward choice is to directly buy a smaller partner, which can ideally offer the “last mile” component to time sensitive SCM and logistics capabilities. While some of the acquisitions may not add significant operational assets or capabilities, they can help build the customer base and add volume into the network.
However, this strategy is not without challenges. “Given the high market fragmentation there are few large targets and a lack of data available to conduct detailed due diligence. Only small acquisitions by geography or service are feasible. This results in only marginal growth rather than a large leap forward. Rolling up and integrating regional time sensitive SCM and logistics players into an existing network and organization will be very difficult”, concluded Pechet, “however, the opportunity is certainly there.”
For further information, please visit www.globalintelligence.com or
send an email to info(at)globalintelligence.com.
You can also contact china(at)globalintelligence.com, tel. +86-21-6279 0197.
About Global Intelligence Alliance
Global Intelligence Alliance (GIA) is a strategic market intelligence
and advisory group. GIA was formed in 1995 when a team of market intelligence
specialists, management consultants, industry analysts and technology experts
came together to build a powerful suite of customized solutions ranging from
outsourced market monitoring services and software, to strategic analysis and advisory.
Today, we are the preferred partner for organizations seeking to understand, compete and grow in international markets. Our industry expertise and coverage of over 100 countries enables our customers to make better informed decisions worldwide.
About Huier Logistics
Shanghai Huier Logistics provides customized logistics solutions taking
advantage of RDC throughout China (except Xin Jiang and Xi Zang) to distribute
products to sales terminals or directly to customers within 24 hours. Business
lines include: transportation, warehousing, aparting, dividing, packing,
distribution and designing entire logistics solutions.
Huier Logistics
unveiled its new Huier Urban Ecological Logistics Park in Qingpu, as it expands
its domestic reach in and around Shanghai. The new 122,150sqm park is located
in the heart of Shanghai's Qingpu Industrial Park, a designated municipal
industrial development area. The park employs advanced logistics technology and
equipment, including radio-frequency identification (RFID), automated sorting
systems and an extensive information management system. Huier has over 600
employees in China. More information about Huier Logisitcs can be found on its
website http://huier56.com/english/home.asp.
Global media contact:
media@globalintelligence.com