China – land of opportunity and challenge for logistics

25-04-2012

The millions of Chinese-made products on our shelves are now so familiar we hardly notice the difference.  But companies doing business in China itself face a very different culture and environment, presenting challenges as big as the opportunities.  Chris Berry, director of international warehousing property and construction consultants sbh, provides a fascinating insight into doing business in China today.

“Over the past two decades or more, sbh has project-managed the development of hundreds of warehouses and distribution centres for leading global companies such as T J Maxx, General Motors, Gillette, Nissan, Rhenus Logistics, L’Oréal, Kimberly Clark and Kelloggs.

With an established international division and projects in Europe and the Far East, we were invited by a global corporate client to project manage a new 75,000m² warehouse in China.  To put it into context, unlike the global economy, Chinese construction sector grew from £200bn in 2007 to £500bn in 2011, now representing some 15% of the world’s construction projects.

While the Chinese government is currently trying to take the heat out of the housing market, it is still encouraging commercial and transport/infrastructure projects and plans to develop some 250 new cities by 2030, away from the established and often over-crowded centres.

Despite our extensive experience in various markets and territories, the differences and challenges we are facing are on a whole new level.  Issues of communication, different nationalities and cultures, times zones, working practices and above all government controls combine to present all the consultants involved with a steep learning curve, but one from which we have gained huge knowledge and experience of the Chinese market.

Instead of co-ordinating the efforts of companies in the same country, with the same language and culture, on a day-to-day basis we bring together and work with consultants from the US, France, India, UK and of course China.  Happily modern technology in the form of video and web conferencing enables us to keep in touch round the clock with everyone involved in the project, though varying time zones do not always make for a good night’s sleep.

High labour costs in the west have driven companies manage projects effectively and to use labour in the most efficient way.  In contrast labour in China is plentiful and a lot cheaper. It is not unusual for a project to have up to ten times more staff than would be the case in Europe. The highest grade of government approved construction contractor may have around 4,500 office staff and up to 35,000 operatives on site per annum, and in addition operate their own large scale steel fabrication businesses.

The Chinese people have a positive work ethic that has enabled the country to lift millions out of poverty in the past couple of decades. Meetings take place round the clock and teams will work late in the night to meet deadlines. 

Above all, the Chinese government and its officials ensure strong state control of every stage and process. Virtually all the on-site work is carried out by Chinese companies who will be fully or partly government owned and registered.  They do look however to foreign consultants to provide the latest design and construction skills working to international best practice, particularly on signature projects, with the final stages handled by local design authorities. Every project needs a Jianli – a government approved inspector who is on site every day for the life of the project.

The cultural and operation differences go beyond the work environment and affect every aspect of life in China – including getting there. Organising flights, transfers and lost luggage are just some of the hurdles to overcome, and the cost of flights may vary almost by the minute, often by as much as 20%.

Once there however, good local transport services and cheap taxis mean that it’s possible to hold meetings at several locations throughout the day, with dinners and drinks with the client and colleagues afterwards.  Different time zones allow overnight contact with the home office – but not as much sleep as one might wish.

Many of these cultural differences only become clear when the visitor is immersed in day-to-day business and one of the most important lessons is to spot, respond to and respect the many cultural variances.

But – China is an exciting, dynamic, vibrant and challenging environment where those who can adapt and work within a different culture can hope to reap big rewards, both personally and corporately.  The sbh team has learned a great deal about the country, made many good contacts and friends and is ideally placed to handle further projects in China."