Warehousing in China: All Roads Lead to China breaks it down

April 19, 2007 by SwizStick  
Filed under 3PL, China, Supply Chain Management

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There was a recent article in MSN Money touting warehousing advantages in China, that All Roads Lead to China was kind enough to break down and add his input to:

Regarding value added services:

The trend is towards increase VAS, but VAS in China are still well behind those in the U.S. or E.U.

One firm I spoke to mentioned that for small items, getting accurate labeling was a huge concern as common labor were not familiar with the items and mislabeling was frequent.. so was pick/pack…

I agree. There is tremendous potential for value added warehousing and logistics services in China and there is definitely a growing trend to move these services offshore to China. But the skills gap, language differences, product knowledge, etc are, in many cases, a deterrence to success. Those firms that can establish solid operations with well trained employees knowledgeable in the handling of specific products and services will be in high demand. For now, most companies have a lot of catching up in order to be on a par with those from developed countries.

As both the article and ARLTC point out, the U.S. has a major edge in infrastructure. ARLTC rightly points out that China’s infrastructure push is an effort to improve inland distribution, not necessarily for exports:

China’s inefficiencies in road and rail are large, and the government is putting in hundreds of billions to close that gap… However, they are not building the infrastructure to create a network that will export items, they are doing so for internal distribution…

We’ve talked about this a bit here at 3plwire as well, as the Chinese government looks at developing inland ports along the Yangtze River, and further developing the rail network, including the amount of cargo that can be carried by rail.

There’s lots more insight and info over at ARLTC, but I’ll leave you with this comment regarding China’s cheap labor advantage:

As I pointed out above, cheap labor does not equate to an ability of labels to make it on the right boxes or in the right languages. For those firms that are able to train cheap labor into VAS services, will of course have an advantage, but having a strong quality of service wil be more important than having a cost advantage for many.

It is the single largest reason why international multinationals are still relying on the international providers to manage exports rather than domestic firms. UPS is much more expensive than China Post… but the service is better

Emphasis ours.

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