Seeking Treasure in China
September 12, 2003
By Xiamen Daily reporters Jean Chen & Enid Chen
Photos by Yao Fan and Chen Lixin
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| Varieties of commodities offer more choices. |
"We are glad to promise that China will issue a new policy regarding
the establishment of wholly owned sourcing and investment companies by
transnational companies in the mainland, " Hu Jingyan, Director General
of Department of Foreign Investment Administration, Chinese Ministry of
Commerce, announced during the Symposium on FDI Policies in Export
Sourcing and Chain Business on September 10 at Xiamen International
Conference and Exhibition Center in this CIFIT.
"Made in China" stepping into the
world market
Hu Jingyan announced that in 2002 over one third of the top 500
international retailers have entered the Chinese market. Their
purchasing amount reached USD 30 billion last year, which accounted for
12% of the total export volume.
Andrew Tsuei, Managing Director, Wal-Mart Global Procurement, was
very proud to announce that in 2001 Wal-Mart global procurement made a
strategic move from Hong Kong to mainland China. The Global Procurement
Overseas Home Office has been established temporarily in Shenzhen.
Wal-Mart purchased and exported over USD 12 billion worth of goods from
China in 2002 and it is expected to exceed USD 15 billion this year.
The Carrefour Group has also achieved great success. In 2002, the
total purchasing amount of Chinese department of The Carrefour Group
reached USD 1.6 billion, which represented 66% of their local global
purchase. The promotion of local sourcing has led to some 93% of
products sold throughout China being made in China. Because of their
past achievements in China, Carrefour has positioned itself as the
ambassador of Chinese manufactured products in Europe. Their ambition
is to upgrade "Made in China" to "China marketing".
The Kingfisher Group, not well known to Xiamen locals, was surprisingly successful. Products from China represent 79.9% of total products for Kingfisher sourced from Asia Pacific.
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| Henry Neilson Executive Director of Development in North Asia, Dairy Farm |
"China is critical to our sourcing strategy," Henry Neilson,
Executive Director of Development in North Asia, Dairy Farm, has been
acutely aware of the opportunities brought by the development of
China's economy.
Global retailers acquire great
benefits
Seeing China as a key partner in their international growth,
Wal-Mart stated that, there is great potential in China. "It can expand
our retail operation to provide best value and more variety to our
Chinese customers as well as Wal-Mart stores worldwide."
Steve Gilman, B&Q International Director, Kingfisher, also
pointed out that B&Q China's retail development has significantly
helped Kingfisher's sourcing activities. He showed further detailed
advantages, most importantly, "brand awareness". Kingfisher's brand
awareness has been remarkably improved through B&Q's new stores in
China and their presence in big cities.
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| Steve Gilman B&Q International Director, Kingfisher |
All senior management attending the symposium shared a common view
that the establishment of a wholly owned sourcing and investment
company would greatly help the integration of retail and sourcing.
Contributions to China's economy
The purchasing activity of large chain enterprises in China will be
an important channel leading Chinese commodities to the international
market. When cooperating with the world's largest retail enterprises,
such as Wal-Mart, B&&Q and Carrefour, China can make full use
of these international chain enterprises' large-scale market of
hundreds of billions of US dollars to enlarge the overseas market
quickly.
Furthermore, the establishing of their global sourcing headquarters
in China will make the Chinese commodities more competitive in price by
taking out the middlemen. The retail enterprises will have direct
suppliers and vendors in the cities where they set up sourcing offices.
"Whenever B&Q China enters into a new region or new city, about
100 to 200 new vendors will be selected," said Steve Gilman,
B&&Q International Director, Kingfisher. This in turn enhances
the development of the Chinese retail and manufacturing industry.
Chinese manufacturers, with the assistance of experts from these
international chain enterprises, will develop the capacity to reach
international quality standards. Therefore, more and more high-quality
Chinese commodities of competitive prices will go into the
international market and improve the competitive edge.
Meanwhile, by establishing wholly owned sourcing and investment
companies, chain enterprises will create job opportunities to China.
According to Andrew Tsuei, Managing Director of Wal-Mart Global
Procurement, they provided 12 million job opportunities in China in
2002. "Wal-Mart is the company with the largest number of employees in
the world," he said.
Face-to-face communication
As the establishment of wholly owned sourcing and investment
companies is heating up, how can Chinese manufacturers become qualified
suppliers to retailers?
Representatives from Wal-Mart, Carrefour and Auchan made
presentations on supplier qualifications at the Exchange of Information
on Consumer Products held on the afternoon of Sept. 10 at the Xiamen
ICEC, which provided an opportunity for face-to-face communication
between some internationally renowned retailers and Chinese suppliers.
These representatives held the common viewpoint that they should
simplify the procedures for potential suppliers, who should meet
certain quality standards and go through some evaluation processes.
For instance, Auchan's supplier evaluation will include a commercial survey, quality management system audit and social audit. "Our suppliers should deliver the right products to the right place at the right time in the right condition using the right technology," Miss Cao, HR && PR Manager from Auchan Shanghai Representative Office said.