B2B e-Commerce in China - What is Your Strategy?

1,393
-1

Published on

I delivered this presentation at the Odette conference in Paris during November 2005. It provides an overview of research that the AIAG conducted on B2B e-Commerce trends in China and suggests potential strategies for automotive OEMs seeking to further automate their supply chains in the emerging market.

Published in: Automotive
0 Comments
4 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,393
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
4
Embeds 0
No embeds

No notes for slide

B2B e-Commerce in China - What is Your Strategy?

  1. 1. B2B e-Commerce in China What is Your Strategy? B2B e-Commerce in China What is Your Strategy? Steve Keifer Vice President Industry Sectors GXS November 1, 2005
  2. 2. GXS – B2B e-Commerce in China November 1, 2005Slide 2 B2B e-Commerce in ChinaB2B e-Commerce in China China Opportunity & Challenges Automotive Solutions
  3. 3. GXS – B2B e-Commerce in China November 1, 2005Slide 3 China Market OpportunityChina Market Opportunity ‘95 ‘96 ‘10‘03‘00‘99‘98‘97 ‘01 ‘02 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 2 4 6 8 10 12 Sales-MillionsofVehicles Year China will be the World’s Fastest Growing Market through 2010
  4. 4. GXS – B2B e-Commerce in China November 1, 2005Slide 4 Three Opportunities in ChinaThree Opportunities in China Sourcing of Parts & Materials Domestic & Export Manufacturing Domestic Market Sales Automotive leaders are adopting all three strategies – Invest in wholly owned production capacity – React quickly to local China market opportunity – Source from third party manufacturer – Lower investment while gaining cost advantages – Capitalize on tremendous market growth – Operate independently or with local partner
  5. 5. GXS – B2B e-Commerce in China November 1, 2005Slide 5 Domestic Market ChallengesDomestic Market Challenges Transportation Infrastructure Changing Regulation Aggressive Competition Supply & Demand Capacity Constraints Inter-Modal Links Local Regulation Fragmented Services Tariffs & Quotas Local Content Retail & Distribution Consumer Financing Price Discounting New Entrants Mergers, JVs & Partnerships Raw Materials Over-Capacity First Time Buyers Credit System How do you compete in China’s rapidly changing domestic automotive market?
  6. 6. GXS – B2B e-Commerce in China November 1, 2005Slide 6 Export ChallengesExport Challenges Chinese Production Export Processing Ocean In-Transit Import & Customs Ground Transit European Receiving – Safety Recalls – Engineering Changes – Increases in Demand – Decreases in Demand Lead Time How quickly can you respond to:
  7. 7. GXS – B2B e-Commerce in China November 1, 2005Slide 7 Success in ChinaSuccess in China Retailers and Aftermarket Original Equipment Manufacturers Logistics Tier 1 Manufacturers Forecasts Inventory Payment Your Business Supply and demand signals flow freely through the value chain Business partners respond quickly to changing market conditions Tier 2-3 Manufacturers
  8. 8. GXS – B2B e-Commerce in China November 1, 2005Slide 8 B2B e-Commerce in ChinaB2B e-Commerce in China Defining a B2B Strategy Automotive Solutions
  9. 9. GXS – B2B e-Commerce in China November 1, 2005Slide 9 B2B e-Commerce ReadinessB2B e-Commerce Readiness Multi-National Customers Large & Mid-Size Suppliers Large, Domestic Customers Small Suppliers Your Enterprise Systems Internet or Private Network Internet or Phone Network What level of Enterprise Systems exist for ERP, EAI, B2Bi? How secure and reliable is the power and network infrastructure? Are technical support and consultation available? Which business processes are being automated? What document standards and network protocols are being used? What are SMBs access to PCs, Internet, and Accounting software?
  10. 10. GXS – B2B e-Commerce in China November 1, 2005Slide 10 Infrastructure Challenges in ChinaInfrastructure Challenges in China Vendors 24x7 technical support in Mandarin or Cantonese remains limited Documentation in Chinese remains limited for technology software and services Electrical power infrastructure is overburdened resulting in unpredictable black outs Reliability of the “public” Internet varies based upon provider and location Central and Western regions have poor communications infrastructure Availability of personnel with prior B2B e-commerce experience is low
  11. 11. GXS – B2B e-Commerce in China November 1, 2005Slide 11 ERP Readiness in ChinaERP Readiness in China ERP Trends – Adoption primarily from Western Multi- Nationals – State owned enterprises and private Chinese corporations have purchased but still have limited usage – Most vendors provide modules for automotive and other manufacturing disciplines – Traditional accounting software vendors evolving into business process suites Sample ERP Vendors Digital China Epicor IFS Infor Intentia Microsoft Business Solutions Oracle QAD SAP SoftBrands SSA Global ERP Challenges – Difficult to adopt new business practices during periods of rapid growth – Localized consulting and technical support is in high demand
  12. 12. GXS – B2B e-Commerce in China November 1, 2005Slide 12 SMB Accounting VendorsSMB Accounting Vendors User Friend Software Kingdee Software Beijing Anyi Hangzhou New Grand Langchao Guoqiang Tianjin Tiancai Powerise Software Beida Jade Bird NeuSoft Topsoft Software Tsinghua TongFang Beijing Peking University Founder Superdata Software UFSoft Leading Accounting VendorsSMB Accounting Market – In 2006, 98% of the 12 million small companies in China will be using accounting software Adoption Trends – Manufacturing alone consumes 25% of accounting software usage – Market is highly fragmented with vendors focus on specific geographic region Key Selection Criteria Factors – Cheap price and easy to use – Certified for Chinese accounting rules
  13. 13. GXS – B2B e-Commerce in China November 1, 2005Slide 13 B2B e-Commerce in ChinaB2B e-Commerce in China AIAG’s China E-Commerce Survey Automotive Solutions
  14. 14. GXS – B2B e-Commerce in China November 1, 2005Slide 14 B2B E-Commerce SurveyB2B E-Commerce Survey – Assess readiness of Chinese automotive supplier community – Diverse group of state owned enterprises, private enterprise, joint ventures and wholly owned foreign enterprises – Diverse group of Tier 1, 2, 3 and aftermarket suppliers with domestic and export operations – Business processes, document standards, e-commerce tools – Educate North American OEMs and suppliers on Chinese technology readiness – AIAG E-commerce steering committee to provide a recommendation for the Chinese market Sponsored by: and Analysis performed by
  15. 15. GXS – B2B e-Commerce in China November 1, 2005Slide 15 Survey Demographics 220 Chinese Automotive Suppliers Surveyed Survey Demographics 220 Chinese Automotive Suppliers Surveyed Distribution by Ownership Type Function in Domestic Value Chain Chinese Private or State Owned Enterprises (42%) Wholly Foreign Owned Enterprises (19%) Joint Ventures (33%) 28%Aftermarket Tier 3 Tier 2 Tier 1 28% 51% 55% Multiple responses accepted Does not indicate international value chain function
  16. 16. GXS – B2B e-Commerce in China November 1, 2005Slide 16 Computerization of Business FunctionsComputerization of Business Functions Suppliers plans for automation of other critical cross-enterprise business processes Purchasing From Suppliers Receiving Materials from Suppliers Managing Inventory Shipping Materials to Customers Strong Interest in Automating B2B Processes 100% 75% 50% 25% Today End of 2007 Source: AIAG China B2B Survey sponsored by GXS and QAD – September 2005 – 200 Chinese Automotive Suppliers
  17. 17. GXS – B2B e-Commerce in China November 1, 2005Slide 17 Customer Interaction TechniquesCustomer Interaction Techniques Which method do your customers normally use to communicate materials requests?* Verbal (Phone or In Person) Paper (Mail or Messenger) Fax Computer (Any Method) Manual techniques still dominate most customer interactions Today End of 2007 100% 75% 50% 25% *Multiple responses were accepted Source: AIAG China B2B Survey sponsored by GXS and QAD – September 2005 – 200 Chinese Automotive Suppliers
  18. 18. GXS – B2B e-Commerce in China November 1, 2005Slide 18 Computer Based Customer InteractionsComputer Based Customer Interactions For companies receiving materials requests through computer, which method do you use? E-Mail Exchange Customer Web Portal Direct Terminal Connection Computer to Computer Computer to Computer Doubles to reach typical 20% threshold 100% Today End of 2007 75% 50% 25% Source: AIAG China B2B Survey sponsored by GXS and QAD – September 2005 – 200 Chinese Automotive Suppliers
  19. 19. GXS – B2B e-Commerce in China November 1, 2005Slide 19 Computer to Computer InteractionsComputer to Computer Interactions For computer-to-computer based document exchange, no dominant standard exists in China today. Over 50% use customer preferred format for electronic document exchange Customer Preferred Format XML VDA (Odette) EDIFACT EDI - ANSI X.12
  20. 20. GXS – B2B e-Commerce in China November 1, 2005Slide 20 B2B e-Commerce in ChinaB2B e-Commerce in China Execution of B2B Strategy Automotive Solutions
  21. 21. GXS – B2B e-Commerce in China November 1, 2005Slide 21 Impact Analysis for B2B ProgramsImpact Analysis for B2B Programs Supply Chain China Supply Chain Imports Demand Chain Exports Demand Chain China China Operations
  22. 22. GXS – B2B e-Commerce in China November 1, 2005Slide 22 Three Levels of Technical CapabilitiesThree Levels of Technical Capabilities Small Chinese Corporations Large Chinese Corporations Multi-National Corporations Segmentation helps to identify early adopters – No experience with B2B e-Commerce – Very low participation rates today – Expertise in ERP, EAI and B2B e-Commerce – Large programs being deployed in China today – New to ERP, EAI and B2B e-Commerce – Selected programs being deployed in China today
  23. 23. GXS – B2B e-Commerce in China November 1, 2005Slide 23 Capabilities of Value Chain Participants Example Segmentation Capabilities of Value Chain Participants Example Segmentation Multi-National Corporations (China) Chinese Corporations (Large)Chinese Corporations (Medium) Chinese Corporations (Small) Multi-National Corporations (Imports) High B2Be-CommerceCapabilities Low Volume of Transactions (Varies per Supply Chain) HighLow
  24. 24. GXS – B2B e-Commerce in China November 1, 2005Slide 24 Chinese Enterprise ChallengesChinese Enterprise Challenges Extremely Rapid Growth Product Quality & Customer Support Mergers & Consolidation Increased Competition Minimize Errors by Automating Information Exchange Scale Rapidly by Eliminating Manual Processes Centralize Information for Decision Making Reduce IT Systems Integration Timeframes
  25. 25. GXS – B2B e-Commerce in China November 1, 2005Slide 25 B2B e-Commerce Readiness - SummaryB2B e-Commerce Readiness - Summary Multi-National Customers Large & Mid-Size Suppliers Small Suppliers Large, Domestic Customers Your Enterprise Systems Internet or Private Network Internet or Phone Network ERP, EAI and B2Bi trends are encouraging but still in early phases for many Infrastructure is maturing to meet reliability and capacity needs. Shortages of experienced personnel and 24x7 support slow new IT initiatives. No dominant e-Commerce standard exists in China. XML is most popular. Replenishment and materials management processes are first to be automated. Widespread use of accounting SW, but the market is fragmented.
  26. 26. GXS – B2B e-Commerce in China November 1, 2005Slide 26 Guide to B2B e-Commerce in ChinaGuide to B2B e-Commerce in China Guide to B2B e-Commerce – China Market Opportunity – China Supply Chain Challenges – Technology Deployment in China – Enterprise Resource Planning – SMB Accounting Packages – Technology Value in China – Developing a B2B Strategy in China – Executing on the Strategy – Integration with Large Customers – Integration with Large Suppliers – Integration with Small Suppliers – GXS Capabilities in China B2B e-Commerce Strategies For the Chinese Automotive Market A Guide for North American and European Automotive Manufacturers
  27. 27. GXS – B2B e-Commerce in China November 1, 2005Slide 27 China B2B Experience - GXSChina B2B Experience - GXS – Local presence – 24x7 technical support, consulting and operations – Local language support and understanding of customs – Ability to integrate domestic and international trading partners – Relationships with government agencies and standards organizations – Experience with B2B e-commerce deployments in China – Understanding of US, European and Japanese automotive business practices

×