Looking East to Supply Chain Perspectives and Issues in China

China’s booming economy is turning heads. Is there space for Western companies to establish business there and what supply chain issues will they face?

China investing heavily in transport logistics

As with the rest of the world, mass globalisation has heightened pressures for logistical speed, paving the way for China’s $900 billion Belt and Road scheme announced in 2013, which represents an exciting new era.

In 2013, Chinese President Xi Jinping announced that a new double trade corridor will reopen channels between China and the West (including Central Asia, the Middle East and Europe) made up of both land and maritime routes, with the end goal of improving trade relationships, especially through infrastructure investments.
China was already making significant investments into its infrastructure. Between 2001 and 2004, investment in rural roads grew by a massive 51 percent annually. With economic growth accelerating, logistics development remains a top priority for China’s government. In recent years, President Xi Jinping’s $900 billion scheme has involved the building of sea ports, railway stations, and routes across the globe to facilitate the global supply chain.

Upon completion, the scheme represents a phenomenal opportunity for businesses to enter into mutually beneficial trade relationships with China as they firmly establish themselves on the supply chain map. The scheme will include both land and maritime routes, providing a wealth of opportunities for businesses looking to expand east.

Is there space in China’s hyper-competitive market?

China’s economic growth and infrastructure investments mean there are ample opportunities for Western businesses to establish themselves in the Chinese market, but businesses seeking to take the leap must be prepared for the market’s unique challenges.
Chinese customs can be a significant challenge for companies unfamiliar with the territory, not only because they are more bureaucratic in some areas, but because a large emphasis is placed on relationships and the need to engage with people upfront. To further complicate the matter, customs and regulations vary from region to region, making it important that you understand how to operate across the supply chain.

What experience is necessary to manage supply chains in China

Deciding how to set up your supply chain in China is a complicated process. Where do you store inventory? Do you look for free trade zones or non-bonded zones? How do you communicate effectively and respectfully across regions with differing customs and regulations?

To be successful in China’s hyper-competitive market, the start up process is key.

Global companies making and selling products in China must reassess their approach in China and understand that supply chain excellence saves on cost, creates new revenue, and has a direct effect on brand equity.

Successful companies benefit from trusted and experienced partners who understand the challenges of operating in China. Unipart’s expertise in the area enables us to help our customers make the transition cost-effective and compliant. Our broad automotive network and experience in solution design can be harnessed by automotive companies to deliver more agile and capable supply chains in the East. Using our many years of experience in China, we have built a new and highly responsive supply chain for the world’s leading electric car company that can move product rapidly and grow when required, with minimal notice.

Is China’s shifting economy creating opportunities for your business? Have you considered how your supply chain could benefit from China’s growing infrastructure? See how The Unipart Way could help you look to the East.