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Consumer Prod Scm China

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Apresentação na China doProfessor Matt.

Apresentação na China doProfessor Matt.

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  • Headquarters 1 Bailian Group * China 2 Gome China 3 Suning China 4 Vanguard Hong Kong 5 Wumart China 6 Carrefour China France 7 China Paradise (Shanghai Yongle) China 8 Trust-Mart Taiwan 9 Parkson China Malaysia 10 Lotus Thailand 11 Wal-Mart China US 12 B&Q China UK Source: China Chain Store and Franchise Association *Including Lianhua
  • Headquarters 1 Bailian Group * China 2 Gome China 3 Suning China 4 Vanguard Hong Kong 5 Wumart China 6 Carrefour China France 7 China Paradise (Shanghai Yongle) China 8 Trust-Mart Taiwan 9 Parkson China Malaysia 10 Lotus Thailand 11 Wal-Mart China US 12 B&Q China UK Source: China Chain Store and Franchise Association Headquarters 1 Bailian Group * China 2 Gome China 3 Suning China 4 Vanguard Hong Kong 5 Wumart China 6 Carrefour China France 7 China Paradise (Shanghai Yongle) China 8 Trust-Mart Taiwan 9 Parkson China Malaysia 10 Lotus Thailand 11 Wal-Mart China US 12 B&Q China UK Source: China Chain Store and Franchise Association
  • Transcript

    • 1. Retail and Consumer Products SCM in China Matthew A. Waller, PhD 中国
    • 2. Why China? Macro data indicates the importance of China in the global economy
      • Population : #1 in the world at 1.3 billion
      • Concentration : there are more than 170 cities with over 1 million population
      • Trade : 4 th in the world in total trade - $1 trillion annually
      • Growth : Since 1993, GDP has increased more than 570%
      • Web users : #2 behind the US in internet subscribers – 94 million and growing every minute (42.8 m broadband users)
      • B-School Grads : 86 in 1991 – over 10,000 in 2005
      • Cell phones : More than 300 million subscribers
      • Autos : In three years, annual car production has increased from 230,000 to 2.2 million
      • Big Macs : In the last decade, the number of McDonalds has increased from 1 to 560
      Source: Technomics Asia
    • 3. Why China?
      • China is now the world's largest producer of coal, steel and cement, the second largest consumer of energy and the third largest importer of oil.
      • China's exports to the United States have grown by 1,600 percent over the past 15 years
      • U.S. exports to China have grown by 415 percent
      • The European Union's exports to China have risen 600 percent in the past 15 years
      • A Morgan Stanley report shows that cheap imports from China have saved American consumers more than $600 billion in the past decade.
      • China has grown around 9 percent a year for more than 25 years, the fastest growth rate for a major economy in recorded history. In that same period it has moved 300 million people out of poverty and quadrupled the average Chinese person's income.
      China is becoming a very important player globally as well: Source: Technomics Asia
    • 4. Opportunities and Threats
      • High economic growth
      • Significant foreign investment
      • WTO participant
      • Low labor rates
      • Burgeoning middle class
      • Olympics in 2008
      • World Expo in 2010
      • Major exporter/importer
      • Largest economy in world by 2050 (Goldman Sachs); currently 4 th largest
      • Overcapacity/price wars
      • Corruption
      • Poor infrastructure
      • Protectionism/nationalism
      • Intellectual property infringement
      • Weak legal system
      • Looming banking crisis
      • Unpredictable risks (e.g. SARS)
      • Political instability
      • Righting historical wrongs
      Source: Technomics Asia and other research
    • 5.  
    • 6. Logistics Costs as a Percent of Total Sources: China Logistics Information Center, CSCMP
    • 7. % Cost by Mode
    • 8. Provincial Governments
      • Each province has its own trade barriers against other provinces
      • Many products must be sourced within a given province due to these trade barriers and due to local tastes
    • 9. China’s Top 12 Retailers 2005 Annual Revenue (Billions of Yuan) Source: China Chain Store and Franchise Association
    • 10. China’s Top 12 Retailers 2005 Sales Per Store (Thousands of RMB) Source: China Chain Store and Franchise Association
    • 11. China’s Top 12 Retailers 2005 Percentage Growth in Stores and Sales Source: China Chain Store and Franchise Association
    • 12.  
    • 13. China vis-à-vis USA
      • Super Centers only have about 25,000 SKUs in China versus over 100,000 in the USA
        • Longer lead times to the stores requires more safety stock in the stores
        • Consumer products market still in development
      • Sam’s Club has about 6,000 SKUs in China versus less than 5,000 in the USA
      • More transactions per consumer per week in China but less revenue per transaction (over 3 store visits per week for the average SuperCenter customer in China)
      • Food is the driver of business in China: 60% of revenue in China versus 40% in USA
      • Wide isles since there are so many people; another unique strategy for Wal-Mart in China
    • 14. Consumers
      • 70% walk to the store
      • Less than 1% drive a car to the store – this is changing rapidly!
        • Fleets of vans are parked around the city to bring consumers to stores
        • The Beijing store has 150 parking spaces; many times the spaces must be underground; Sam’s Club in Beijing has 300 spaces; this is a facet being ignored by the competition
      • Wal-Mart has an in-house market research team that studies potential new store locations; Endowed a “China Retail Research Center” at Tchinghua University
      • Customer service survey showed Wal-Mart is currently #2 in China
    • 15. Consumers Continued
      • Purchase decisions made by elderly and children at home (Grandparents take care of children while parents work)
        • Product safety classes
        • Food preparation classes
        • Community events
    • 16. 10 Year Gallup Study of Chinese Consumers
      • Size of market in China is not as big as number of people would imply—many are still poor
      • Word-of-mouth communication heavily influences purchases among the wealthy
      • Consumers willing to pay more for style than for function
      Source: “Inside the Mind of the Consumer,” Harvard Business Review , March 2006, McEwen, Fang, Zhang, and Burkholder.
    • 17. Chinese urban households by annual income % of total Source:Mckinsey
    • 18. AC Nielsen
      • 10 year exclusivity agreement
      • 80 retailers and 700 stores participate
      Source: CCFA
    • 19. Key WM Competitors
      • Carrefour
      • Metro
      • Lotus
      • SO Supermarkets
    • 20. Transportation
      • Between 1991 and 2002, the value of goods transported in China increased by about 20% per year
      • 84.6% of the goods transported were industrial goods
      • SOEs: COSCO, SinoTrans, China Post, China Rail
      • Multinational forwarders: UPS, TNT, Maersk, FedEx, DHL, APL
      • Private Chinese companies: PGL, Haier
      “ PGL: The Entrepreneur in China’s Logistics Industry,” Asia Case Research Center, University of Hong Kong, Benjamin Yen, 2004.
    • 21. One Threat to Banking System
      • In the past couple of years housing prices in major cities have doubled
      • 80% of families own their own housing (not too long ago this was close to zero)
      • Housing price / disposable income
        • Beijing = 15.3 years
        • Shanghai = 17.98 years
      • 3 to 6 years is “safe”
      Source: Dr. Zhou, Fudan University
    • 22. Unofficial Policy Toward SOEs
      • Hold on to the big and let go of the small
      • Top 10 largest companies SOEs
    • 23. Privatized SOEs
      • Same people
      • Similar processes
      • Not as different as we often think
    • 24. Private Chinese Companies
      • Many of the managers were trained in SOEs
      • Many of the processes and even departmental names are reminiscent of SOEs
        • Department of Propaganda
        • Department of Militia
    • 25. Openness
      • Lowest import barriers of the developing world
      • Most accommodating of FDI
      • One of the most open to cultural influence
    • 26. Challenges
      • Legal system not well developed
      • Firms’ accounting statements next to meaninglessness
      • Pollution out of control
      • Tax evasion rampant
      • Provincial competition and conflict
      • Egregious corruption in the government
      • Loan default high
    • 27. GDP Depends on Exports
      • 66% of GDP depends on exports
      • From 2002 to 2004 the GDP doubled
      • 90% of the exports are made within a 150 mile stip along the coast
      • Largest recipient of FDI among the developing nations
      Source: Dr. Zhou, Fudan University
    • 28. Resources
      • Over 40% of iron ore shipped via ocean carriage goes to China
      • Price went up 20% last year
    • 29. IPR is a Big Problem
      • Undertake legal precautions (not primary defense)
      • “ IPR protection should be a task for the entire organization, from design … to … distribution.” 1
      • “ Design … in a way that will make it difficult to copy. If you fail to do that, your staff’s creativity and considerable R&D investment may come back to haunt you, embedded in the product of a lower-cost rival.” 2
      • Oded Shenkar (2006), “The Chinese Century” Wharton School Publishing, p. 183.
      • Oded Shenkar (2006), “The Chinese Century” Wharton School Publishing, p. 183.
    • 30. A Few Important Points
      • “ [C]ommercial negotiations in China often carry the weight of national aspirations, focused government planning, and, often just below the surface, the belief that you as a barbarian owe China something for past transgressions” (McGregor p. 24)
      • “ [T]he Chinese system today is almost incompatible with honesty” (McGregor p. 96)
      • Successful negotiations require your arguments to be … “wrapped around what is good for China, not what is wrong with the Chinese government” (McGregor p. 128)
      • Moa: Gu Wei Jin Yong, Yang Wei Zhong Yong, “Make the past serve the present, make foreign things serve China.” (McGregor p.20)
      James McGregor, “One Billion Customers,” Wall Street Journal Books, 2005.

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