Tuesday, February 11, 2014

Logistics Event Hears the Way to Move Freight Operations into the Chinese Supply Chain

Expert Speaker Stresses the Difference between East and West
Shipping News Feature

UK – CHINA – WORLDWIDE – To many readers the name Unipart will forever be associated with the everyday spares which they purchased for various British built cars and vans but, since a management buyout, partly possible due to employee funds, almost three decades ago, the group has spread throughout the freight and logistics sector to become a leading player in the global supply chain, whilst also diversifying into other areas.

At a recent company held conference in Oxford business leaders were addressed by Neil Selby, a Director of Executive Education at Cheung Kong Graduate School of Business (CKGSB). The school, whilst it was only started twelve years ago has since trained some of the leading lights in Chinese business administration amongst its 3,000 or so graduates, including the CEO’s of some of the country’s largest commercial operations. The CKGSB claims almost 15% of China’s annual GDP is generated by companies headed by its alumni.

Mr Selby was on home territory having been at university in Oxford for four years, to lecture on a subject he knows very well, and he pointed out that many businesses in the West have renewed their interest in establishing relationships in China because of the recent predictions from some quarters of massive growth, and stressing there are two key areas to focus on when entering that market, saying:

"If China grows by more than 7% each year and the US by 2.5%, by 2019 it will be the world's largest economy. It will provide massive opportunities for companies in almost every sector, and will develop a very large middle class, which will grow by 200 million. There is no country in the world where that kind of change will be happening. Some UK companies think it is too late to get into China as so many Western companies have already done very well there. Given the growth that is coming, China will still be a very important market for Western companies to enter for at least the next ten years.

"Firstly [however], Western businesses need to understand that the Chinese business operates in a different way. In Chinese organisations you have very hierarchical organisations, led by highly market responsive situational leadership. In the West, companies try to encourage a close personal relationship between the leader and the rest of the organisation and a more strategic approach.

"Secondly, the Chinese are by nature quite cautious and careful. They see the Western culture, which is much less risk averse, as 'ready, fire, aim'. They will look at things from a collective point of view rather than an individual point of view. You have to bear in mind that the Chinese culture concentrates on personal trust, rather than Western formal trust which comes from our system of law. A Chinese business person will need to have an idea of who you are before he or she can do business with you. You will find that developing those relationships takes time and patience."

Neil Selby’s views can be heard on this corporate video. Earlier in the day, Unipart Group Chairman and Chief Executive John Neill explained the importance of China to the Oxford-based company's plans for growth, commenting:

"We already have a number of sites in China, as well as in other emerging economies. At the beginning of the financial crisis, we set an agenda for growth that was both ambitious and challenging. To achieve our ambitions, we've further developed our international business in some of the fastest growing countries on the globe. We are already working with Western companies in China by helping them to manage their supply chains and ensuring they can get the right parts, to the right customers very quickly. Our consultants have also worked in Chinese operations enabling them to improve continuously through the implementation of the Unipart Way."

Photo: Five years ago Unipart opened the largest logistics hub in the country with its development of the GLP Park, in Suzhou, E China.