The ‘Middle Kingdom’ plays a dominant role in low-cost country purchasing policies. However, many companies encounter the logistical complications associated with buying in China. SynerTrade, Europe’s leading provider of purchasing software and consulting, emphasises the importance of a logistics strategy for successful collaboration with China.

Cultural differences, lack of knowledge of the Chinese supplier market and its capacities, the absence of a strategy for many sourcing initiatives in Asia, lead times too short for negotiating in China and insufficient demand in relation to supplier capability are just some of the obstacles faced by Western companies in China. In addition, there is also the problem of logistics.

In reality, whereas the price, the quality of goods purchased and manufacturing lead times are the main criteria for a European buyer when selecting a Chinese supplier, the purchaser views logistics, which is still the weak link in China, as of little importance. This weakness can be explained by the legacy of the centrally planned economy on the organization of companies where logistics (Hoi Qin in Chinese, which literally means behind and labour) was often delegated to the least qualified worker.

While a small number of large export companies located in coastal areas, such as Shanghai or even Shenzhen, have now developed some capacity to manage the logistics of their own business, most Chinese suppliers do not always handle the logistical aspect of their exports. Delivery terms are usually specified as EXW (the seller places the goods at the disposal of the buyer at the seller’s premises), or FOB (the seller delivers the goods to the Chinese port of loading).

A complex geography
Competitive Chinese suppliers are located further and further from the East coast of China, which results in complicated logistics for Western buyers who must then deal with unforeseen circumstances: uncontrollable delivery delays caused by time lost in transportation, receipt of damaged crates or goods mixed up with others, shipments blocked at customs incurring additional charges etc...
All this inconvenience can get blown out of proportion and totally destroy any efforts made by Western companies who wish to do more and more of their purchasing in China.
Nevertheless, as China’s international trade experiences exponential growth, so the country has made subsequent efforts to overcome its weaknesses, but more through its infrastructure (roads, ports etc.) than through supply chain management.

The need to identify local logistics partners
International forwarding agents or large Chinese import-export companies can take care of logistics, but the results are not always satisfactory and are often very expensive, greatly reducing the anticipated savings.
It is advisable to approach specialists in logistics sourcing in China who have a local presence and who have established partnerships with local freight companies. SynerTrade offers a full range of strategic sourcing services to follow up purchasing operations in China including audit system assistance, assisted negotiation with potential suppliers and complete logistics management.
Western buyers can therefore take advantage of their knowledge of the Chinese market, their experts and their relationship with those involved locally. Savings will be optimized through local storage management, combining of shipments and careful follow-up of deliveries.