Chinese carmaker Geely International is looking for global logistics partners with a better understanding of the Chinese market in the wake of a huge drop in exports of finished vehicles and increased complexity in the supply chain.
Logistics Senior Manager, George Ho, told Automotive Logistics this week that the company wanted strategic logistics partners with a presence in China who have adequate knowledge of its customers there.
“We have come to realise the necessity of acquiring strategic business partners who have good expertise in the industry, a global network and the capability of offering customised solutions based on our particular needs,” he said.
Until now Geely hasn’t used global partners to any real extent given the relatively simple demands of their customers and the nascent stage of the company’s export business. Now, however, the increasing complexity of the finished vehicle supply chain is creating opportunities for those companies with established expertise.
According to Mr Ho, LSPs need to better understand the Chinese automotive industry as there exists a very shallow comprehension amongst them at present. This involves a “good understanding of the complexity of cross border logistics operation and the law,” he said.
In terms of export activity, Mr Ho said that the Chinese market has “many idiosyncratic characteristics which might become obstacles for global LSPs if they don’t really understand them.”
Geely was hit by February’s sudden drop in exports and, in line with other China-based carmakers, is faced with uncertainty in the coming months, though car sales there grew by 100,000 units in February compared with the same month last year. The growth followed a 5% reduction in sales tax on vehicles with engines smaller than 1.6-l litres.
The drop in export volumes, however, has lead the company to move more semi- and complete-knocked down units. SKD and CKD are subject to lower import tariffs and are more popular because the local assembly brings more employment opportunities to the import countries, said Mr Ho.
The recent announcements of government aid for the automotive and logistics sectors have also been welcomed by Geely. However, Mr Ho said that such help needs to be used in the right way. “State aid is necessary and will be of a big help at such a crucial and difficult moment… [but] it will take effect only when the auto industry finds the right direction to head for,” he said.
This is the second logistics industry figure in China to call for more attention to logistics provision in as many weeks. Last week Ma Zhengrong, from the Chinese Federation of Logistics and Planning, said that global LSPs needed to stay in China or risk being seen as unreliable, which could jeopardise their business there when the market recovers. Read more about this here: LSPs warned not to burn bridges