Untitled - China Europe International Business School

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Organization of the logistic chain in the Chinese international trade V.2. Decision-making centers From the interviews and the survey, it seems clear that the decision makers of the logistic chains supporting the trade between China and Europe are located in the main headquarters of the companies (for foreign multinational companies). The headquarters in China only take part at an operational level, implementing the decisions taken at the headquarter, but unaware of the logic behind them. Global headquarters of multinational companies are responsible for the strategic design of the logistic chain from the factory in China (or the cargo consolidation center) to the distribution of the goods within Europe. However, the Chinese guanxi, understood as the personal connections for mutual beneficial business relationships, is reported to influence to some extent the decision-making. For example, several interviewees explained that reporting incidences and assessment about the service of logistic providers can be tendentious and aimed to favor companies belonging to the own network. Even the selection of a port of destination in Europe may also be influenced by the guanxi established by the port Authorities with Chinese companies. Location of the decision-makers in the organization of the logistic chain Decision centers Level of decision Functions Global Headquarter Strategic design of the logistic chain China Headquarter Oversee logistic chain at an operational level � Logistic chain design at a global level � Selection and negotiation with global logistics providers (shipping lines, International forwarders, 3PLs, etc.) � Design the distribution network within Europe (number and location of distribution centers, warehouses, logistic facilities, etc). � Leading projects to improve logistic chain efficiency. � Prepare periodical forecasts of shipments for the shipping company (in order to book space). � Accomplish shipping procedures and prepare documentation. � Monitor shipments. � Follow-up and communication with logistics provider office in China (incidents, delays, etc.) � Report incidences and assessment about the logistic providers. CEIBS Port of Barcelona Chair of Logistics 55
Organization of the logistic chain in the Chinese international trade For foreign companies sourcing from China or with manufacturing plants in China, the main logistics decisions for exports to Europe are taken in the global headquarter of the company. The Headquarter in China may participate in the decision-making through a constant feedback and assessment about the service provided by the Logistics operators. Interviewees agree about a distribution of the decision-making of 80% global Headquarter; 20% China Headquarter. In an opposite trend, to supply the Chinese market, foreign companies are moving the logistics decision centers towards China. As the company’s subsidiary in China gains knowledge and maturity within the country it also makes over the management of the distribution within the country. In the case of Chinese companies, the decisions are taken in the headquarter in China and the size of the company is key. � Big companies: The process is similar as in Europe. There is a logistic department in the company with a specialized team. The person in charge has many years of experience in the company and deep knowledge in logistics. The more experienced the logistic manager is, the more decisions he wants to take and thus fewer decisions are in the hands of the freight forwarders. � Medium and Small companies: Usually, the decision making is a process shared by the purchasing/export manager and the General Manager. If the company is small, then the General Manager is the decision maker. In these cases, logistic decisions rely more on the freight forwarders advice. CEIBS Port of Barcelona Chair of Logistics 56
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Untitled - China Europe International Business School

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