Archive for the 'Guangzhou' Category

Booz Allen says very firmly that the implications for the supply chain clear — even more so than in Western markets, companies operating in China must have different supply chains to meet the needs of groups of individual product-markets.

Edward Tse in a recent issue of Booz Allen’s Strategy + Business magazine wrote:

‘In working with multinational companies that enter China, either to manufacture goods or to sell to Chinese markets, we can almost always tell which ones will succeed and which will probably fail.
‘Too often, Western companies think they can profit in China by simply focusing on the largest and most well-known metro areas such as Beijing, Shanghai, or Guangzhou. But today that is unlikely to be enough.’

Companies frequently must set up distribution ‘into second-, third-, or even fourth-tier cities. Doing this is not as easy as, say, expanding beyond New York and Chicago to Buffalo and Peoria. As you move into China’s second-, third-, and fourth-tier markets, you’ll find a steep drop-off in infrastructure, channels, management sophistication, and disposable income.’

Procter & Gamble is already doing that and setting up very different supply chain capable of physically delivering products effectively to these more remote markets – and at a cost to make and deliver at even lower levels than is required for the first tier cities.

Tse notes that until just a decade ago, most milk outside the largest cities was consumed in powdered form, as production and distribution systems could not get regular milk safely to consumers.

But as the supply chain solved that problem, Chinese milk demand exploded — allowing a few companies to profit handsomely and continue to enjoy high growth rates. (Our illustration may not be directly associated with logistics but it is the on the opening page of the Procter & Gamble site and is dashed attractive.)

Source: SupplyChain Digest

One definition of logistics is ‘The procurement and physical transmission of material through the supply chain, from suppliers to customers.’ There is no need to define precisely what the material should be.

In this case it is herb and specifically the dahurian angelica root (DAR), an herb that is widely used in China.

China Health Resources has signed a project investment contract with Guangzhou Qingping Market. Both parties will invest $3 million together to build Herb Network Logistics and Sales Platform with the intent of expanding the herb market of spot trade and futures trade by the means of e- commerce. The project will start in February 2008 and finished in 2009.

The technological and natural resources advantages of CHRI will be combined with the market advantage of the Qingping market.

China Health Resources is one of China’s leading industrialized agricultural corporations. It has focused on the production and further processing of dahurian angelica root (DAR), an herb that is widely used in China.
Source: Press Newswire

This is a step which will certainly lead to other things. India has given security clearance to cargo flights by China’s Great Wall Airlines to Mumbai and Chennai. This could pave the way for Beijing to allow Indian carriers to commence operations to various Chinese destinations.

New Delhi’s move, which came as Prime Minister Manmohan Singh began his official visit to China, is expected to encourage Beijing to grant long-pending clearance to Air India and Jet Airways to launch flights to Chinese cities of Guangzhou and Shanghai respectively. Air India already operates to Shanghai.

India had taken the stand in the wake of blacklisting of the carrier by the United States for its alleged involvement in transfer of missile technology to Iran.

As a result of the American decision, the Chinese cargo carrier had folded up operations for six months.

However, it revived in early last year with its controlling stakes going to Beijing Aerospace Satellite Applications Corporation (BASA). This is probably the first step in bringing China and India flight arrangements back to normal. Fascinating to see how it plays out.
Source: The Hindu

Trucks are the mules of China’s spectacularly expanding economy — ubiquitous and essential, yet highly noxious.

Trucks in China burn diesel fuel contaminated with more than 130 times the pollution-causing sulfur that the United States allows in most diesel.

The 10 million trucks on Chinese roads, more than a quarter of all vehicles in China are a major reason China accounts for half the world’s annual increase in oil consumption.

Cleaning up truck pollution presents complex problems for China’s leaders.

Forcing businesses and farmers to buy more expensive vehicles could put a drag on the economy. Oil giants like Sinopec, losing money on every gallon of diesel they refine because of the low sales cost, upgrade refineries slowly, if at all.

Evan Jia, a Sinopec spokesman said, ‘Sinopec is trying our best to purchase low-quality crudes - much heavier and more sulfur content. We buy those kinds of crudes to lower the purchasing cost.’

Low state-subsidized diesel prices frequently make trucks more cost-effective than trains, which pollute less. Demand for diesel at service stations is so great, and supplies are so tight, that rationing and shortages have become common.

Since 2000, sales of heavy-duty trucks have risen sixfold while car sales have risen eightfold.

Mainland Chinese atmospheric scientists concluded in an analysis this year in The Journal of Environmental Sciences that in Guangzhou, particles were the pollutant farthest out of line with air-quality norms 226 days a year.

A separate academic study of diesel exhaust in Guangzhou found that Chinese trucks put out particles in unusually large quantities and sizes. For the very long, thorough and balanced article click on Source.
Source: International Herald Tribune

The New Baiyun International Airport in Guangzhou expects to triple tonnage from last year’s figure within three years. This, after the completion of a new cargo terminal, a new runway and express operator FedEx’s Asia-Pacific cargo center.

New Baiyun handled 653,000 tonnes of cargo and post parcels last year, a rise of only 8.6% over 2005, a relatively low figure compared with other China airports.

But overseas-bound cargo traffic has been rising by an average 50% annually since the opening of the new airport in August 2004.

Liu Zijing,general manager of the Guangdong Airport Management Corporation (GAMC). Said, ‘The new airport has been developing well and fast over the past three years and should become a hub for international flights by 2010.’

Liu Zijing believes New Baiyun willl handle two million tonnes of cargo by 2010, three times last year’s figure, and four million tonnes by 2020.

The new cargo terminal, with an annual handling capacity of 500,000 tonnes, will be completed next year; construction of a third runway and a new passenger terminal will start in 2008; and FedEx’s cargo hub will be completed in the latter half of 2008.

The new airport is also setting up feeder cargo stations, a logistics park and a new administrative center, and opening more international routes, streamlining Customs services and holding talks on the building of a network of network of expressways for speedier cargo flow from other provinces in the Pearl River Delta.

The amazing illustration comes from the SOVINFORMSPUTNIK via the PLA.
Source: CargoNews Asia

China and Vietnam are seriously discussing improving the infrastructure in the two corridors involving two southwestern Chinese cities and four northern Vietnamese localities.

In May 2004, the governments of China and Vietnam agreed to develop the two economic corridors, and the Beibu Gulf economic belt involving China’s Guangxi, Guangdong, Hainan, Hong Kong and Macao, and 10 coastal localities of Vietnam, to speed up socioeconomic development of the involved cities and provinces, as well as their trade and economic ties with the Association of Southeast Asian Nations.

Now something appears to be happening.

At an international seminar attended by the Chinese and the Vietnamese representatives, the Chinese ambassador to Vietnam, Hu Qianwen, proposed the two sides should regard areas along the roads and railways in the two corridors, and ports and logistics services in the Beibu gulf economic belt as major points for bilateral cooperation on trade and investment.

China has improved and constructed necessary infrastructure networks in the two corridors, he said, adding that it is most important for the two sides, especially Vietnam, to improve transport systems.

At the seminar, representatives from Vietnamese ministries and research institutes stated that the two sides should work at seeking funds and human resources to construct the two corridors and the belt, especially their infrastructure.

Nguyen Ba An, vice director of the Development Strategy Institute under the Ministry of Planning and Investment said that the ‘most important measure is speeding up cooperation on building socioeconomic infrastructure, including expressways, rail routes, seaports, power plants, telecommunications networks, wastewater treatment plants, and infrastructure of border areas.’

He added the two sides should prioritize construction of expressways of Kunming-LaoCai-Hanoi-Hai Phong, and Nanning-Lang Son-Hanoi-Hai Phong.

This is a very tight geographical area around Hanoi as shown in our illustration which already has rail links although they are, at the moment, woeful.
Source: Window of China

Chen Mingde, vice-mayor of Guangzhou and seen here, is encouraging more foreign companies to help in developing the city’s air transportation industry. Guangzhou has mapped out a strategy to expand its postion as an international cargo aviation transportation and logistics hub.

Chen Mingde said the strategy offers a myriad of investment and business opportunities for foreign investors and business representatives. He said the room for foreign investment in the city’s airport-related economy is big enough and he promised foreign investors and businesspeople would earn profits if they participated. Which is a fairly large promise to make.

Guangzhou Baiyun International Airport, one of the country’s three busiest airports, has been determined to become the world’s 15th largest in terms of cargo volume before 2015.

To achieve this the airport has been urged to expand c-ooperation with neighbouring airports in the Hong Kong and Macau special administrative regions, as well as in Shenzhen and Zhuhai special economic zones, to increase the region’s cargo transportation business.

Construction of a new runway will start early next year to accommodate growing passenger and cargo transportation volumes.

The runway, the airport’s third, has been scheduled to be put into use in 2010 when the city holds the 16th Asian Games. The airport plans to operate 50 international flights that year.
Source: CargoNews Asia

FedEx, the US-based logistics giant, plans to start operation of its Asia-Pacific delivery centre it is currently building within Guangzhou’s Baiyun Airport, shown from the air in our illustration, by the end of 2008.

This delivery centre project has a total investment of US$337 million and is expected to become a super large delivery center catering toover 30 Asia-Pacific countries.

The project is expected to add about one million tonne per year of cargo turnover for the Baiyun airport within the first year of operation.
FedEx predicts that this delivery center will handle US$11 billion in revenue by 2010 and $65 billion by 2020.

Construction of the project started in early 2006.
Source: CargoNews Asia

108 cities in China were involved in a campaign with the theme of ‘Green Transport and Health’ to ease traffic congestion in the cities. The cities set one or more zones open only to pedestrians, cyclists, taxis and buses between 7 a.m. and 7 p.m. The illustration gives a rough idea of the change this can bring. Top picture shows the system working; bottom picture normal congestion.

In southwest China’s Chongqing Municipality, citizens have been called on to ‘walk quickly one kilometer a day’ by the sports bureau.

In Beijing, 176 kilometers of public transportation lanes have been put into use, which shall be lengthened to 250 kilometers by the end of this year, bringing the average speed of buses from 14 kilometers per hour to 20 kilometers during rush hour. And twenty-three new bus lines have gone into service.

So serious attempts are being made to stop congestion and pollution.

However, Guangzhou, city with a population of more than ten million people and one million cars, rejected Public Transportation Week.

An unnamed official with the municipal government said, ‘Limiting the use of cars is not practical in the city.’ Plainly the official knows nothing of London and Ken Livingstone. Perhaps it should be more widely publicised.
Source: China.org.cn

World Courier has great expertise in cold chain networks. These are used, obviously, for frozen foods. And, at a higher level for biological specimens and investigational drugs and, at a lower level, for dead bodies although the companies concerned do not emphasize this over much.

Now World Courier has extended its network within China to 36 major cities with cold chain transport services and supplies to every clinical trial location currently approved by the Chinese State Food and Drug Administration. Which is praiseworthy.

Henning Voss, director for World Courier, North Asia said, ‘China is poised to become the fourth largest pharmaceutical market by 2012. With our new operational network in place, we look forward to helping pharmaceutical companies, central labs and clinical research organizations improve their supply chain efficiencies in this vital, but complex country.’

It appears that in China cold chain distribution has been a huge stumbling block for large western fast food outlets.

McDonald’s and KFC have their own networks, and in April, the most splendidly named Yum! Restaurants China opened a 12,000 square meter distribution centre to provide cold chain distribution services to more than 400 stores in Guangzhou and surrounding cities.

Yum! China — the subsidiary of Yum! Brands Inc, the world’s biggest restaurant company — runs more than 2,000 KFC, Taco Bell and Pizza Hut chains and has 16 distribution centers in the country. It plans to open 300 stores in the mainland this year and its own cold chain network.
Source: CargoNews Asia