8 News & Analysis
Local Collaboration Will Unlock
China’s Automotive Markets
Logistics leaders meeting in Shanghai
learned recently that collaboration with
local supply chains should take priority
over the drive for an immediate profit in
China’s booming automotive market.
With cost savings from low labour and
parts being offset by high logistics costs,
foreign companies must lay the logistics
foundations now, to reap the long-term
profits predicted for the future. Zengrong
Ma, The vice general secretary for the
automobile association of the China
Federation of Logistics & Purchasing
(CFLP) warned OEMs that immediate gains
in the market would not be straightforward:
“For the first years you should not focus
or give priority to how much money you
make here. It’s more difficult to make a one
Renminbi profit here than one Euro.”
On OEMs investing in China’s automotive
industry, Ma commented: “I believe that the Freight Volumes Booming STL is the leading logistics gateway
market has huge potential. If you lose the services provider in Central Asia and the
current market, you lose the future of this Along the Silk Road CIS providing rail and road transportation
market.” Automotive companies seeking from all major industrial areas of China
to make a mark in the Chinese market are Freight transport volume between China as well as providing Customs clearance,
finding supply chain cost barriers in the form and Kazakhstan is forecast to grow to 25 intermodal services and airfreight
of operational challenges, lower efficiencies million tonnes in 2009 (from 12 million handling. “Some 35% of all China freight
and a complex regulatory system. Logistics tonnes in 2006) following a $1 billion transits through Kazakhstan en route
costs in China are 18% of its GDP, compared investment in a new railway line and to Russia and it is critical that freight is
with just 10% for Europe and North America. freight station at Khorgos funded by the managed and tracked from the border
Senior logistics managers and directors Kazakhstan government, according to to its destination. STL is the official
agreed that partnering with local companies Erlan Dikhanbayev, Managing Director freight-forwarding partner of Kazakhstan
and engaging with local supply chains of Soyuztranslink (STL) speaking at a Railways and Russian Railways, and we
offered the best route to success in the press conference in Hong Kong. “The can monitor the movement of all cargo
country’s complicated and competitive value of this trade turnover between China — providing our customers with real-time
automotive market. “Foreign companies and Kazakhstan is forecast to grow to information regarding the location of their
should look to gain as much local expertise $30 billion by 2010, and the demand for freight,“ said Elena Yusupova, Business
as possible,” explained Ouyang Pu, vice efficient freight forwarding services will Development Director for STL. The
president of shipping provider, Sinotrans. increase exponentially,” said Dikhanbayev. Kazakhstan government is also planning
“There is a great need for local knowledge “There is significant investment in to modernize the Russian border station
to make the supply chain more efficient.” infrastructure connecting China to Central Ozinki to meet the growing demand for rail
Delegates attended seminars, debated and Asia and the CIS countries. Kazakhstan services through to Western Russia and
discussed the rapid changes facing China’s provides the shortest and most efficient Ukraine (stl.china@gmail.com).
fledgling automotive markets at the 2007 gateway rail and road connections linking
Automotive Logistics China Conference. Asia to Europe. Central Asia and Russia
Among the speakers were Robert Strain, are rich in natural resources such as oil,
director of logistics for General Motors Asia gas and minerals and has modern heavy
Pacific Supply Chain, Peter Reinshagen, industries such as steel plants. As the
coordination and development manager economies grow in the region demand
for China for Gefco and Jean-Luc Guenard, for imported goods and materials are
business development director for Chep, increasing as well,” he added.
China (www.automotivelogisticschina.com).
Supply Chain Europe June 2007
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