Competing through logistics and supply chain management in China

In recent years, effective logistics management has been recognised as a key opportunity to improve both the profitability and competitive performance of firms. Success in the global economy is largely dependent on a company's ability to achieve a superior global logistics competitive advantage. As one of the biggest emerging markets, China represents an enormous potential for companies and the opportunities available for those who succeed in organising an effective supply chain in China are outstanding (Jenkins, 2001). Compared with its counterparts in developed countries, Chinese logistics industry is still in its infancy. All organisations that wish to obtain a global competitive advantage by operating in China must address logistics and supply chain problems. The aims of this research are sixfold: 1) to establish worldwide trends in developing and implementing modem logistics and supply chain. management (SCM), classify the current state of logistics infrastructure in China, Chinese logistics and supply chain management provision, and to compare with those prevalent in western economies, 2) to determine the potential increase in Chinese logistics demand following China's accession to the World Trade Organization, 3) by examining the existing and potential barriers to the supply of logistics services in China, sets out to identify and develop effective logistics and SCM strategies and models appealing to the specific market environment, 4) to contribute to the understanding of both domestic and foreign companies' logistics requirements, 5) to evaluate a logistics service provider (LSP) selection method and rules to enhance the competitive advantage for companies, 6) to contribute to the understanding of a way to develop a modem logistics and SCM system in China. The new contribution to knowledge generated by this research fulfils aims 3,4,5,and 6. To obtain desired qualitative information, a partly structured, partly open-ended interview was developed to enable key questions to be answered, such as companies' existing logistics strategies, major barriers to obtain logistics services, logistics requirements, logistics performance, current collaborative relationships with LSPs, and future development in China's logistics industry. 24 companies in China were interviewed. These are comprised of ten domestic manufacturers, seven foreign manufacturers and seven LSPs. All the companies were interviewed face to face in Mandarin/Cantonese depending on their requirements. All the interviewees were from senior management. A combination of note taking, recording and transcription was used for all interviews. Two case studies were applied for gaining depth in the findings of the interviews. Major issues were further explored such as effective logistics and SCM strategies and models, and a way to develop the modem logistics and SCM system in China. The two selected cases included one domestic and one foreign manufacturer. The observation technique was used for collecting behavioural and attitudinal data in two companies' operation process, particularly in their LSPs selection process and problem solving strategies. From the primary research, the existing and potential barriers to the supply of logistics services in China are examined; two effective logistics and SCM strategies and models are identified and developed. The domestic and foreign companies' logistics requirements in detail are analysed. An LSP selection method for most companies operating in China is developed in a practical way. Three main elements of core competitiveness in logistics cooperation at three different lev~ls are identified. The rules to enhance companies' competitive advantage are analysed. The primary research contributes to the understanding of a way to develop a modem logistics and SCM system in China.