In this episode of The Negotiation, we speak with Hendrik Laubscher, CEO, and Founder at Blue Cape Ventures. Hendrik has made a career advising brands, investors, VC, and hedge funds to see the future of e-commerce and logistics, so naturally, he has been rather obsessed with how it all works in China. We compare JD’s and Cainiao’s logistics and how they can accomplish their lighting fast delivery times when compared to North America and what those North American companies can possibly learn and integrate from the way they operate. We discuss the much-anticipated IPOs of JD and Cainiao and whether it will change their operations in China, the impact of the Belt and Road Initiative, and why Q4 just might be the most important quarter of the last 20 years for all e-commerce companies who better make sure they get their houses in order now with regards to logistics. Enjoy.
Today on The Negotiation, we speak with Hendrick Laubscher on current and future developments around shipping, warehousing, and logistics networks in China.
At first glance, distribution in China may appear more or less similar to the networks and processes of other countries, particularly in the West. However, Hendrick explains that China, by virtue of its 1.3 billion-strong population and well-known penchant for speed, operates at a scale unrivaled by other markets. He points to eCommerce giants JD and Tmall as prime examples of companies that embody this level of speed and scale.
Another reality that sets China’s economy apart from much of the West is the same level of respect that people give to every worker, regardless of whether they are a street cleaner, delivery truck driver, or C-suite executive. This is because the country is so reliant on eCommerce that they understand that every person who contributes to the process is someone to be equally valued. It is a unique culture that helped China to become a $1.3 trillion market. “There’s nothing that you can’t buy on the internet in China,” says Hendrick. “You can find repossessed ships, airplanes, flats, and cars. Think about that and compare that to what we see in the West.”
China’s speed is unmatched due to the speed of innovation and the demand of Chinese consumers for lightning-fast speeds to be the norm. Also, the Chinese “have almost no influence from outside logistics companies”, with JD, Alibaba and the like having built themselves from the ground-up and, therefore, have only their own data to rely on and learn from.
In the near future, Hendrick sees more warehouses using 5G technology so that the data transferences between various parts of the business will be made quicker. This means movement between 15% to 25% quicker among these warehouses compared to warehouses relying solely on human beings to manage them. There will also be more usage of blockchain as consumers demand more security when making purchases. Other investments will be made to bolster distribution, from autonomous vehicles, planes, logistics partners, and international facilities.
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Despite being the world’s most potent economic area, Asia can be one of the most challenging regions to navigate and manage well for foreign brands. However, plenty of positive stories exist and more are emerging every day as brands start to see success in engaging and deploying appropriate market growth strategies – with the help of specialists.
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