Shanghai, China (PRWEB) December 23, 2009
Global Intelligence Alliance (GIA), a global strategic market intelligence and advisory group, highlights the opportunities in China's time-sensitive logistics market. Mr. Nicolas Pechet, Vice President and Head of GIA Group's operation in China, addressed 250 senior executives from MNCs earlier this week at the inauguration of Shanghai-based Huier Logistics' new Urban Ecological Logistics Park in Qingpu, China. "At the moment, 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.
As China strives to improve the quality of its manufactured products and reliability of delivery, the share of high-value goods as part of Chinese trade flows will continue to rise - increasing demand for time sensitive SCM and logistics service providers, both domestically and internationally.
"Because 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, and over the last decade 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 Nicolas Pechet.
As China rapidly establishes its position in integrated worldwide manufacturing processes, SCM and logistics services will grow in importance to cover demand for time-sensitive logistics in the global supply chain.
"When China joined the World Trade Organization (WTO), the country underwent rapid market liberalization and modernization as well as rising domestic consumption levels. The Chinese logistics market, as a result, 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," said Nicolas Pechet.
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. 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.
In recent years, with the rapid growth of China's SCM and Logistics market, 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.
"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," said Nicolas Pechet.
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 and/or service are feasible, which 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 Nicolas Pechet, "however, the opportunity is certainly there."
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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