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Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
Consumer Prod Scm China
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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 <ul><li>Population : #1 in the world at 1.3 billion </li></ul><ul><li>Concentration : there are more than 170 cities with over 1 million population </li></ul><ul><li>Trade : 4 th in the world in total trade - $1 trillion annually </li></ul><ul><li>Growth : Since 1993, GDP has increased more than 570% </li></ul><ul><li>Web users : #2 behind the US in internet subscribers – 94 million and growing every minute (42.8 m broadband users) </li></ul><ul><li>B-School Grads : 86 in 1991 – over 10,000 in 2005 </li></ul><ul><li>Cell phones : More than 300 million subscribers </li></ul><ul><li>Autos : In three years, annual car production has increased from 230,000 to 2.2 million </li></ul><ul><li>Big Macs : In the last decade, the number of McDonalds has increased from 1 to 560 </li></ul>Source: Technomics Asia
    • 3. Why China? <ul><li>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. </li></ul><ul><li>China's exports to the United States have grown by 1,600 percent over the past 15 years </li></ul><ul><li>U.S. exports to China have grown by 415 percent </li></ul><ul><li>The European Union's exports to China have risen 600 percent in the past 15 years </li></ul><ul><li>A Morgan Stanley report shows that cheap imports from China have saved American consumers more than $600 billion in the past decade. </li></ul><ul><li>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. </li></ul>China is becoming a very important player globally as well: Source: Technomics Asia
    • 4. Opportunities and Threats <ul><li>High economic growth </li></ul><ul><li>Significant foreign investment </li></ul><ul><li>WTO participant </li></ul><ul><li>Low labor rates </li></ul><ul><li>Burgeoning middle class </li></ul><ul><li>Olympics in 2008 </li></ul><ul><li>World Expo in 2010 </li></ul><ul><li>Major exporter/importer </li></ul><ul><li>Largest economy in world by 2050 (Goldman Sachs); currently 4 th largest </li></ul><ul><li>Overcapacity/price wars </li></ul><ul><li>Corruption </li></ul><ul><li>Poor infrastructure </li></ul><ul><li>Protectionism/nationalism </li></ul><ul><li>Intellectual property infringement </li></ul><ul><li>Weak legal system </li></ul><ul><li>Looming banking crisis </li></ul><ul><li>Unpredictable risks (e.g. SARS) </li></ul><ul><li>Political instability </li></ul><ul><li>Righting historical wrongs </li></ul>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 <ul><li>Each province has its own trade barriers against other provinces </li></ul><ul><li>Many products must be sourced within a given province due to these trade barriers and due to local tastes </li></ul>
    • 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 <ul><li>Super Centers only have about 25,000 SKUs in China versus over 100,000 in the USA </li></ul><ul><ul><li>Longer lead times to the stores requires more safety stock in the stores </li></ul></ul><ul><ul><li>Consumer products market still in development </li></ul></ul><ul><li>Sam’s Club has about 6,000 SKUs in China versus less than 5,000 in the USA </li></ul><ul><li>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) </li></ul><ul><li>Food is the driver of business in China: 60% of revenue in China versus 40% in USA </li></ul><ul><li>Wide isles since there are so many people; another unique strategy for Wal-Mart in China </li></ul>
    • 14. Consumers <ul><li>70% walk to the store </li></ul><ul><li>Less than 1% drive a car to the store – this is changing rapidly! </li></ul><ul><ul><li>Fleets of vans are parked around the city to bring consumers to stores </li></ul></ul><ul><ul><li>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 </li></ul></ul><ul><li>Wal-Mart has an in-house market research team that studies potential new store locations; Endowed a “China Retail Research Center” at Tchinghua University </li></ul><ul><li>Customer service survey showed Wal-Mart is currently #2 in China </li></ul>
    • 15. Consumers Continued <ul><li>Purchase decisions made by elderly and children at home (Grandparents take care of children while parents work) </li></ul><ul><ul><li>Product safety classes </li></ul></ul><ul><ul><li>Food preparation classes </li></ul></ul><ul><ul><li>Community events </li></ul></ul>
    • 16. 10 Year Gallup Study of Chinese Consumers <ul><li>Size of market in China is not as big as number of people would imply—many are still poor </li></ul><ul><li>Word-of-mouth communication heavily influences purchases among the wealthy </li></ul><ul><li>Consumers willing to pay more for style than for function </li></ul>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 <ul><li>10 year exclusivity agreement </li></ul><ul><li>80 retailers and 700 stores participate </li></ul>Source: CCFA
    • 19. Key WM Competitors <ul><li>Carrefour </li></ul><ul><li>Metro </li></ul><ul><li>Lotus </li></ul><ul><li>SO Supermarkets </li></ul>
    • 20. Transportation <ul><li>Between 1991 and 2002, the value of goods transported in China increased by about 20% per year </li></ul><ul><li>84.6% of the goods transported were industrial goods </li></ul><ul><li>SOEs: COSCO, SinoTrans, China Post, China Rail </li></ul><ul><li>Multinational forwarders: UPS, TNT, Maersk, FedEx, DHL, APL </li></ul><ul><li>Private Chinese companies: PGL, Haier </li></ul>“ 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 <ul><li>In the past couple of years housing prices in major cities have doubled </li></ul><ul><li>80% of families own their own housing (not too long ago this was close to zero) </li></ul><ul><li>Housing price / disposable income </li></ul><ul><ul><li>Beijing = 15.3 years </li></ul></ul><ul><ul><li>Shanghai = 17.98 years </li></ul></ul><ul><li>3 to 6 years is “safe” </li></ul>Source: Dr. Zhou, Fudan University
    • 22. Unofficial Policy Toward SOEs <ul><li>Hold on to the big and let go of the small </li></ul><ul><li>Top 10 largest companies SOEs </li></ul>
    • 23. Privatized SOEs <ul><li>Same people </li></ul><ul><li>Similar processes </li></ul><ul><li>Not as different as we often think </li></ul>
    • 24. Private Chinese Companies <ul><li>Many of the managers were trained in SOEs </li></ul><ul><li>Many of the processes and even departmental names are reminiscent of SOEs </li></ul><ul><ul><li>Department of Propaganda </li></ul></ul><ul><ul><li>Department of Militia </li></ul></ul>
    • 25. Openness <ul><li>Lowest import barriers of the developing world </li></ul><ul><li>Most accommodating of FDI </li></ul><ul><li>One of the most open to cultural influence </li></ul>
    • 26. Challenges <ul><li>Legal system not well developed </li></ul><ul><li>Firms’ accounting statements next to meaninglessness </li></ul><ul><li>Pollution out of control </li></ul><ul><li>Tax evasion rampant </li></ul><ul><li>Provincial competition and conflict </li></ul><ul><li>Egregious corruption in the government </li></ul><ul><li>Loan default high </li></ul>
    • 27. GDP Depends on Exports <ul><li>66% of GDP depends on exports </li></ul><ul><li>From 2002 to 2004 the GDP doubled </li></ul><ul><li>90% of the exports are made within a 150 mile stip along the coast </li></ul><ul><li>Largest recipient of FDI among the developing nations </li></ul>Source: Dr. Zhou, Fudan University
    • 28. Resources <ul><li>Over 40% of iron ore shipped via ocean carriage goes to China </li></ul><ul><li>Price went up 20% last year </li></ul>
    • 29. IPR is a Big Problem <ul><li>Undertake legal precautions (not primary defense) </li></ul><ul><li>“ IPR protection should be a task for the entire organization, from design … to … distribution.” 1 </li></ul><ul><li>“ 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 </li></ul><ul><li>Oded Shenkar (2006), “The Chinese Century” Wharton School Publishing, p. 183. </li></ul><ul><li>Oded Shenkar (2006), “The Chinese Century” Wharton School Publishing, p. 183. </li></ul>
    • 30. A Few Important Points <ul><li>“ [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) </li></ul><ul><li>“ [T]he Chinese system today is almost incompatible with honesty” (McGregor p. 96) </li></ul><ul><li>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) </li></ul><ul><li>Moa: Gu Wei Jin Yong, Yang Wei Zhong Yong, “Make the past serve the present, make foreign things serve China.” (McGregor p.20) </li></ul>James McGregor, “One Billion Customers,” Wall Street Journal Books, 2005.

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