The mission of the logistics industry is not only to support and drive the entire national economy, but also to be the main source of fiscal revenue for a country or region.

With the reform and opening up, China’s national economy has achieved rapid growth and leaps. But overall, the quality of economic operations is not high. As the "main artery" that supports the operation of the national economy, a series of problems such as fragmented logistics methods, insufficient infrastructure, and backward application technology have begun to form bottlenecks and restrict the overall improvement of China's economic quality.

This magazine has noticed the fact that with the acceleration of foreign investment into China, multinational companies have included China in their global strategic territory. While sharing the huge business profits brought to them by the Chinese market, these Multinational groups have simultaneously accelerated their comprehensive penetration into the Chinese market.

Faced with the strong entry of foreign-funded logistics companies, China's logistics industry and China's logistics economic strategy have faced severe market tests.

Facing the challenges of multinational companies

Chinese logistics companies are facing unprecedented challenges. Since December 11, 2002, China has officially opened up its controlling stake in international freight forwarding companies to foreign investors. In many logistics fields such as road transportation, cargo agency, material warehousing, cargo express delivery, and auxiliary services, China has gradually adopted WTO regulations. The commitment opened up controlling interests to foreign investors.

As an advanced organizational method and management concept, modern logistics has long been considered by the world's industrial circles as the third source of profit for enterprises in addition to reducing material consumption and improving labor productivity. Because of this, countries around the world, especially developed countries, are stepping up the research and development of modern logistics forms.

The intervention advantages of transnational logistics

The rise of world logistics is accompanied by the rapid economic development. As early as the beginning of the 20th century, this concept triggered by the circulation of agricultural products expanded rapidly. Due to its developed economy, the United States naturally leads the way in logistics concepts and market operations. In the 1980s, with the introduction of advanced management systems such as MRP, MRPⅡ, kanban management, and just-in-time production, logistics gradually entered a stage where maturity and management modernization blend. Judging from the logistics industry in developed countries, the function of modern logistics is to design, implement and manage the logistics needs of customers in the supply chain. Its characteristic is to provide the logistics management and services that customers need at the lowest cost based on information and logistics expertise.

The penetration of developed countries into developing countries has become inevitable in the process of world economic integration. The huge demand in China's logistics market has naturally become the first choice for attracting many international capitals to enter this industry.

It is natural for transnational logistics to penetrate into the Chinese market through advanced management methods. Enterprises' foreign direct investment and transnational production and operation are the result of the combination of enterprise ownership advantages, internalization advantages and location advantages. In enterprises' foreign investment and transnational operations, the first two advantages are usually represented as prerequisites and motivation mechanisms respectively, while the third advantage determines the space for enterprises to carry out these activities.

To be able to successfully conduct foreign direct investment and cross-border operations, an enterprise must have at least one ownership advantage over its competitors—the enterprise owns or can acquire assets and assets that foreign enterprises do not possess or cannot obtain. its ownership. Ownership advantages are divided into two types: transferable and non-transferable. The former includes patent rights, trademark rights, production secrets, etc., while the latter includes the company's technological innovation capabilities, organizational management capabilities, marketing skills, corporate economies of scale, etc. In the logistics field of Western developed countries, its ownership advantages are extremely obvious. For example, in the United States, all components of the national logistics system are in a leading position in the world, among which distribution centers, express delivery, and industrial logistics are the most prominent. Distribution centers include the well-known California Food Distribution, Wal-Mart Distribution and Fleming Distribution; cross-regional express delivery - UPS represents the highest level of transportation and express delivery business in the world; Whirlpool Company is a typical representative of traditional industrial logistics; and e-commerce Enterprise logistics has well-known companies like Amazon. The strong ownership advantage has become a strong capital for these enterprises to enter the Chinese logistics market.

In terms of internalization advantages, foreign companies can obtain greater benefits by using their ownership advantages to make direct foreign investments than by transferring their ownership advantages for a fee (i.e., externalizing them). The ownership advantage of an enterprise is an organic whole. Patent rights, trademark rights, production secrets, etc. can be transferred to other enterprises, but the enterprise's technological innovation capabilities, organizational management capabilities, marketing skills, etc. are difficult to transfer. Therefore, cross-border operations will bring greater profits than transferring individual or partial advantages because the overall advantages are brought into play. Due to the service nature of logistics, this internalization advantage of the logistics industry is particularly obvious.

Three ways of transnational operations for foreign capital

The main means for international enterprises to conduct transnational operations are trade entry, contract entry and investment entry, combining domestic and international logistics industries Based on the specific characteristics of the logistics industry, international companies will flexibly adopt specific strategies to enter the Chinese logistics market.

1. Trade entry. Trade-based entry is entry into the market by exporting products or services to the target country and is a non-capital entry. International companies entered the Chinese logistics market earlier through trade, mainly providing logistics equipment and equipment, including the supply of software and hardware such as communications, networks, and computers. This type of entry method is characterized by a simple form and clear competitors, but lacks lasting competitiveness due to the small value increment of the product.

2． Contractual entry. Contractual entry is when an international enterprise enters a target country by entering into a long-term, non-investment intangible asset transfer contract with a legal person in the target country. It is a "Non-Equity Arrangement". The main methods of contractual entry include authorized operations, technical agreements, service contracts, management contracts, subcontracts, etc. Contractual entry is very common in service industries such as hotels and catering, but in the logistics industry, at least yet, it has not yet formed a climate. The reasons include: ① Although logistics management has become mature in developed countries, it is still a New things, the profit margins here are huge. Therefore, international companies tend to operate independently in order to make money quickly. ② The development of my country's logistics market is lagging behind, and vicious competition among domestic logistics companies is common, and there is resistance to foreign investment. Therefore, contractual cooperation in logistics is very risky. ③China's logistics standards have not yet been integrated with international standards, which has become a major obstacle to contractual entry. It is foreseeable that when China's logistics industry develops to a certain stage, contractual entry will become an important means for international companies to explore the Chinese market as its entry barriers are reduced.

3. Investment entry. That is to enter the target country through direct investment, transfer the capital together with the company's management technology, sales, finance and other skills to the target country, and establish a branch or subsidiary controlled by the company. Investment-based entry is the main competition method faced by my country's logistics companies at present, and it is mainly divided into: ①Purchasing routes. FEDEX has exclusively owned 10 weekly direct flights to China since 1996, while UPS and UPS have obtained direct flights to Beijing and Shanghai. With this, the two giants in the international express delivery market have established a presence in China. Stand firm. ②Establish logistics facilities. The Port of Singapore is one of the strongest container terminal management organizations in the world. Its annual container throughput has ranked among the top two in the world for many years. It has long wanted to enter mainland China, and this wish has finally come true at Guangzhou Port. At the end of 2002, Singapore Port Group joined Guangzhou Port, and the two parties established a joint venture of 800 million yuan to establish Guangzhou Container Terminal Co., Ltd. As soon as this move came out, it affected the entire logistics industry in the Pearl River Delta. For a long time, logistics in the Pearl River Delta region mainly relied on transit in Hong Kong and Shenzhen. Due to the joining of Singaporean giants, this pattern is bound to change. ③Follow and enter. In early 2002, Mitsui MOL, a well-known Japanese logistics company, announced that it would establish a joint venture logistics and warehousing company with Fujifilm in Suzhou to provide Fujifilm with logistics services in China. This model of Mitsui O.S. Lines and Fujifilm represents the initial form of many foreign logistics companies entering the Chinese market. When entering, they first capture the customers they are familiar with.

For example, UPS and Motorola are long-term global strategic partners. When they arrive in China, UPS naturally becomes their logistics service provider. ④Establish a branch. In the 1990s, the world's four largest express delivery companies, DHL, TNT, UPS, and FEDEX, all set up branches in my country to compete fiercely with China Post EMS. From 1995 to 1999, the average annual growth rate of China Post's international express delivery business was only 2%, and some years even experienced negative growth. The business growth rates of DHL, TNT and UPS are all above 20%, and the business growth rates of DHL and TNT have reached around 40% in recent years. ⑤Establish a joint venture logistics company. In November 2002, the first Sino-foreign joint venture third-party commercial logistics project established by Hualian Supermarket Logistics Co., Ltd. and Qiuyu Global Logistics Co., Ltd. jointly invested 72.5 million yuan and was launched in Shanghai, marking the entry of foreign capital into China's third-party logistics Market entry.

Analysis of competition situation in China's logistics industry

With the gradual opening of the logistics market to the outside world, domestic logistics companies and international companies have entered two different starting points for competition. Use competitive advantages and disadvantages analysis Method (SW analysis method), we can get a rough outline of the competitive situation of my country's logistics industry under the conditions of cross-border competition.

1. The fundamental advantage of Chinese logistics companies is local advantage. ① Since logistics operation requires a certain carrier, although my country's logistics facilities and equipment are not very advanced, they have abundant resources, low prices, and strong competitiveness. ②Logistics is extremely networked. After long-term operation, my country's logistics companies have begun to take shape in their business networks and have established relatively close ties with government authorities. This has undoubtedly raised the threshold for foreign investment to enter the Chinese logistics market. ③Cultural heritage advantages. It is easier for domestic logistics companies to understand customers' needs, behaviors and habits, and it is easier to form good communication between supply and demand. Foreign companies need to pay more in this regard.

2. The disadvantages of Chinese logistics companies are also very obvious. From a macro perspective, the market system is not sound and perfect, logistics factors are divided into departments, and a unified national logistics market has not yet been fully formed. The impact of the long-term planned economy has made our country's enterprises, regardless of size, cover everything from production, supply, and sales to storage, processing, loading and unloading, packaging, transportation, etc., resulting in extreme dispersion and waste of logistics resources. From a micro perspective, the overall strategic planning of Chinese logistics enterprises is not ideal, they lack strategic awareness, and their logistics management concepts and methods are very backward. Because fragmentation makes it difficult to standardize and normalize logistics operations, it leads to an increase in ineffective operations, which seriously affects the international competitiveness and rapid market response capabilities of Chinese enterprises. In addition, logistics enterprises are not highly specialized, have poor internal quality, and have low operating efficiency, and are basically operating in an extensive state.

Professor Gui Shouping told reporters that inland logistics mainly involves more domestic logistics business and less international logistics business, resulting in excessively high logistics costs. Nowadays, the requirement for mainland logistics to gradually move toward internationalization is becoming increasingly urgent.

China’s export-oriented economy is becoming more and more obvious, and international trade accounts for an increasing proportion. In 2003, China's port container throughput was close to 50 million TEUs, an increase of 32% from 2002, surpassing the United States and ranking first in the world. Predictions indicate that by 2010, the world's maritime cargo volume will reach 7 billion tons, of which China's port cargo throughput will be nearly 4 billion tons and container throughput will be approximately 110 million TEUs. Under this trend, if China's logistics industry does not develop in an international direction, it will have a negative impact on China's foreign trade. This is by no means an alarmist statement.

Moving forward in cooperation and competition

In 2004, FedEx announced the establishment of its China headquarters in Shanghai, responsible for coordinating the development of all business in China. It is said that the headquarters at that time had a CEO, financial officer, information officer, human resources officer, as well as technical and sales personnel. It can be said that it has all five organs and functions. This is the beginning of the layout in the eyes of industry insiders. At the beginning, even FedEx executives said that such an organization "is fully capable of coping with various challenges, coordinating the development of various businesses in China, and at the same time grasping the long-term development direction of FedEx in China."

Although Chen Jialiang, President of FedEx China and Vice President of Asia Pacific at the time, stated that the China headquarters would not become an investment company and had no plans to exclusively operate express delivery business in China. However, as China's express delivery and logistics market is about to open up, people still feel from this development that the logistics pattern of Sino-foreign cooperation will undergo new changes.

Dilemma

In the "Measures for the Administration of Foreign Investment in the International Freight Forwarding Industry", foreign express companies can establish joint ventures in China with up to 75% of the shares. However, by 2005 , foreign express delivery companies can set up wholly-owned branches in China. As the time approaches, among the various rumors that flicker, appear, and merge, it seems that FedEx is trying to weigh various interests in order to make the best decision amid the changes on both sides. Not only FedEx, but also world express delivery growth giants such as UPS, TNT, DHL, and EXEL all entered China through marriage with Sinotrans, the leader in the domestic logistics industry.

Almost every express delivery giant that enters China enters China by getting close to the boss of the local logistics industry. In this way, firstly, policy restrictions can be bypassed, and secondly, foreign-funded enterprises can make up for the lack of local resources through joint ventures. In the subsequent development, some foreign giants have indeed gained many benefits and opportunities from their cooperation with Chinese bosses, but for some companies, to a certain extent, this cooperation seems to be just a kind of "harm" .

For example, the fate of several foreign-funded logistics companies that cooperated with Sinotrans was very different. Every company that cooperates with Sinotrans is just an agent of Sinotrans, and no matter who it cooperates with, Sinotrans can earn a lot of profits from it. Since you can collect agency fees from anyone you cooperate with, it is natural that the better the relationship with Sinotrans, the more business you will get from Sinotrans. It is naturally difficult for Sinotrans to balance a bowl of water. Over the past few years, it is said that the turnover of the German DHL company that cooperates with Sinotrans has jumped 60 times, and it has renewed its 50-year cooperation agreement with Sinotrans; the U.S. UPS company that cooperates with Sinotrans has grown its total business in China at a rate of It has also remained above 35 for several consecutive years. After the 15-year cooperation period with Sinotrans ended last year, TNT unilaterally announced that it would no longer cooperate with Sinotrans. According to industry insiders, in its cooperation with Sinotrans, TNT has always been a "receptive" character and has not received much actual benefits. It only represents express delivery business of less than 30 kilograms. This is different from TNT's "world's second largest supplier" "The titles are inconsistent, which has greatly restricted the development of TNT's logistics business in China.

Not only that, when cooperating with domestic companies, many foreign logistics companies can only stay outside the mainstream business and find it difficult to control their own destiny. For example, Sinotrans’ cooperation with foreign-funded enterprises almost always involves express delivery business. In 2002, Sinotrans's turnover reached 13.55 billion yuan, of which the freight service turnover was 10.3 billion yuan, while the express delivery business was only 1.15 billion yuan, and the express delivery business did not account for 10% of the turnover. Among the several large companies that cooperate with Sinotrans, in addition to DHL, the main business of other companies such as UPS is actually in bulk cargo transportation. According to an industry expert, from a global perspective, the market space for freight is much larger, and express delivery only accounts for a small part of the market share. Freight is also the main business of Sinotrans. In cooperation with Sinotrans, these partners obviously do not dare to get too involved in these fields.

Strange bedfellows

At the beginning, in the eyes of some industry insiders, FedEx’s strong position would obviously help it develop into a wholly-owned company in the future. When FEDEX entered China, it chose Datong Logistics as its partner. It is said that Datong's express delivery business at that time was close to that of EMS, which was considered to be very popular. However, around 1999, when the contract between FEDEX and Chase expired, FEDEX did not renew the contract with Chase. Instead, it chose to cooperate with a little-known Datian company that was far less powerful than Chase at the time. This sets the stage for future changes in the landscape.

It is said that in the cooperation agreement signed between Daejeon Group and FedEx, both parties promised that FedEx would focus on China’s overseas business, while Daejeon would be mainly responsible for the expansion of the domestic express network. At that time, some people analyzed that FEDEX intended to maintain FEDEX's management and operating style in China by controlling such a small company. Moreover, after China fully opened up to the logistics industry, it could also obtain sole proprietorship rights at a lower cost. However, over the past few years, Datian, which was unknown at the time, has grown from a small freight forwarding company to a large group with assets of nearly 400 million yuan. Daejeon's development has made a huge move, not only moving its headquarters from Tianjin to Beijing, but also re-establishing a new business development direction: with express delivery as the leader and air transport as the leading, driving the development of general freight and establishing a unique Daejeon logistics service system. For such a fledgling partner, FedEx is obviously somewhat difficult to control.

At that time, some people in the industry speculated that this was a front end for Daejeon to abandon FedEx and "go it alone." At that time, FedEx expressed the possibility of taking a stake in Daejeon’s domestic express delivery business. Not only that, FedEx also announced to the outside world that after the expiration of its 15-year contract with Daejeon, it would extend its cooperation to 50 years. However, less than half a year later, the talk of continued cooperation has been abandoned. On the contrary, FedEx has taken a more practical step towards independent operation by establishing a China business area. It is said that FedEx had previously proposed to Daejeon Group to acquire another 50 shares of Daejeon-FedEx Express and turn the joint venture into a wholly-owned company. However, due to the high price demanded by Daejeon Group, the move failed to reach an agreement.

When the FedEx China headquarters was established, it was also the 5th anniversary of the founding of Daejeon-FedEx. However, on such an important day, the chairman of Daejeon Group arrived late. According to reporters who attended the event at the time, Daejeon head Wang Shusen hurriedly left after attending the press conference. When someone asked about the relationship between FedEx's newly established China headquarters and Daejeon-FedEx, some people admitted that the organization and personnel of FedEx's China headquarters have nothing to do with Daejeon-FedEx.

TNT plans to enclose 50 acres of land in the Beijing Airport Logistics Base and invest 50 million yuan to build the airport logistics base to build the largest comprehensive express transportation center in China, including an express distribution center, freight and comprehensive warehousing center. This series of measures is obviously TNT's careful preparation to seize the commanding heights of China's logistics industry in the future.

Experts point out: Today, the operation and management level of the logistics industry has become higher and higher. If domestic logistics companies cannot keep up, the foreign-funded companies that cooperate with them will also be dragged down. After years of development, the network of foreign-funded logistics companies in China has gradually improved, and they have gradually gained a better understanding of China's national conditions. They can get rid of them as soon as possible. The independence of TNT and FedEx is just the beginning.

Foreign-funded enterprises attach great importance to the relationship between Chinese partners and the central government and local governments, not only because this can facilitate the government’s initial approval of joint venture projects, but good government relations can also ensure that the joint venture company will continue to obtain approval in the future. Necessary operating permissions and assistance, especially with regard to transportation. Foreign-funded enterprises already have good relationships with multinational cargo owners, but they still attach great importance to local customers that Chinese partners can bring, which can help joint venture projects gain more revenue in the early stages.

Foreign logistics chose the opportunity to attack

On February 26, 2005, LG (China) Logistics Co., Ltd. was announced, which also made LG the leader in my country’s logistics field since December 11, 2004. After the full opening up, it was the first foreign-funded enterprise to introduce professional logistics system to China. It is reported that LG established its own professional logistics company in South Korea 6 years ago. Starting in May 2004, LG sent a large number of Korean logistics experts to China to comprehensively investigate and analyze the logistics structure of the Chinese market, and specially built a logistics information system suitable for China. Although the establishment of LG (China) Logistics Co., Ltd. was not unexpected, it still attracted great attention. In fact, some foreign logistics companies arrived earlier than LG.

Powerful players from all over the world are rushing to grab the beachfront

In 2004, Malaysian Transport Minister Chen Guangcai came to Wuxi with a high-level delegation from the country’s Southeast Group and signed a contract with Beitang District of Wuxi City to expand investment in the logistics field. The group will invest US$100 million to build the Wuxi Transportation Automobile Factory in cooperation with Wuxi Jinnan Logistics Co., Ltd. and establish Wuxi Jinnan Driving Training Co., Ltd., the first Sino-foreign joint venture driving school in Wuxi.

Almost at the same time that Southeast Group entered Wuxi, the largest foreign-invested logistics project in Shenzhen, South China International Industrial Raw Materials City, was grandly signed at the Wuzhou Hotel in Shenzhen. The project will invest 2.6 billion yuan and will become the largest industrial raw material supply base in South China.

For this "giant" project of foreign investment in the logistics industry to be settled in Shenzhen, relevant experts believe that the construction of a large-scale industrial raw material trading market has become an active response for Shenzhen and the Pearl River Delta region to join the WTO and build a world-class manufacturing industry. The urgent requirements of the production base. After the completion of this project, it will effectively reduce the cost of manufacturing in the region, and at the same time, it can also enhance Shenzhen's attractiveness to manufacturing companies in aspects such as cost, information, procurement, sales, and export.

On the eve of this year’s Spring Festival, GLP, the world’s logistics and real estate giant that has been sneaking in China, suddenly launched its efforts. GLP Vice President Shen Jinchu said that GLP plans to invest US$2 billion in China to build a coastal warehousing network in the next 5-7 years.

As the world's largest logistics real estate developer and service provider, GLP owns and manages 1,972 logistics warehousing facilities in 70 markets including North America, Asia, and Europe, totaling 27 million square meters. . Yang Song, account director of GLP, said that there are still projects under negotiation in Guangzhou and Shenzhen. At present, GLP has established logistics parks in both East and South China. The next step in its coastal strategy is the Bohai Bay Economic Circle. Starting this year, GLP will implement a large-scale investment plan in the Beijing-Tianjin region.

UPS strides forward

In 2004, a core issue faced by foreign logistics companies in China was "What kind of operating model should be adopted?" Should we establish a wholly-owned subsidiary or a joint venture? According to China's WTO accession agreement: by the end of 2005, China should amend relevant laws and regulations and remove ownership restrictions on foreign-invested logistics companies. In view of this, some foreign logistics companies have decided to adopt the form of wholly-owned subsidiaries. Switzerland's K&N (Kuehne & Nagel) company decided to establish its market position in two ways.

On December 2, 2004, UPS (United Parcel Service) made what it said was the most significant decision in the 16 years since it entered the Chinese market. It invested US$100 million to "redeem" itself from Sinotrans and took the step of becoming a wholly-owned Chinese company. The first step of the journey. By 2005, it will obtain the independent right to operate international express delivery business in China's most important commercial city.

UPS was founded in Seattle, Washington, USA in 1907 and is now headquartered in Atlanta. Currently, UPS is the world's largest express and package delivery company, with services in 200 countries and regions around the world and 370,000 employees worldwide. In 2003, UPS's turnover reached more than 30 billion US dollars, and it delivered 3.5 billion packages and documents to all parts of the world that year. On the world map, it is rare to find places that are not covered by UPS services.

In 1988, UPS entered mainland China to carry out international express delivery business. However, due to Chinese policy restrictions at the time, it could only choose to form a joint venture with Sinotrans, with each party holding 50 shares. In just a dozen years of operation in China, UPS has occupied 80% of the market share of China's international express delivery business together with FedEx (FedEx), DHL (DHL), and TNT (Tiandi Express).

Although UPS has always had a good cooperative relationship with Sinotrans, this government-arranged marriage is not conducive to its accelerated expansion in the Chinese market. Some experts predict that China's express delivery business will grow at a rate of more than ten times in three years. If UPS wants to occupy a more favorable competitive position in the future market, it must be the first to implement its own expansion strategy. Therefore, putting aside the shackles of Sinotrans became an inevitable move.

As early as 2003, TNT, one of the four major international express delivery giants, had taken the lead in choosing to break away from its partner Sinotrans. At the same time, TNT announced a new partnership with the private "Super Mach". At that time, some people in the industry believed that the ultimate goal of TNT choosing small private companies as partners was to control Super Mach and achieve "disguised sole proprietorship."

The separation of foreign-funded logistics companies into independent businesses reminds us from another aspect: in the market competition within China, Chinese companies believe that they have a weak relationship with local governments and the central government, and in China’s domestic market. Advantages in network capabilities, customer relationships in China, local talent, etc. may not be so important.