Research Articles Base: Hong Kong Logistics Industry

Hong Kong Logistics

(1) Introduction Since from 1978, China adopted the “Open door policy”, and transformed the Shenzhen area (it is in the northern border of Hong Kong, and one of major industrial zones in the Pearl River Delta) as special economic zone, the flow of cargo, capital fund and people between Hong Kong and Pearl River Delta (its abbreviation is “PRD”) have been increased more than 2,000 percent up to now. [RR1]    The above effects are implicated that most of Hong Kong manufacturers has shifted their factories from Hong Kong to PRD to take advantages of low labor costs and low set up costs. Within the PRD right now, over 40,000 factories and companies are wholly or partly owned by Hong Kong enterprises, and employed more than 5 million local residents. The cargo volume has been increased from 2,700 millions tons in 1980 to about 55,000 millions in 2005. This incurred average 31,000 vehicles or cargo trucks and 280,000 people across the border everyday.   To cope with these impacts, Hong Kong logistics firm change their business strategies, such as set up branch offices in PRD. All these moves are without any support from Hong Kong government. But on the other side, the Chinese logistics industries and infrastructures are growing very rapidly due to the directly supported by the PRD local governments and their commercial sectors. Thus, by taking advantages of geographically convenience and low transportation costs, the export cargoes from PRD through Hong Kong to other destinations such as US, Europe, have been switched to using the PRD logistics facilities (i.e. local container terminals and airports) instead since from 2003. Most of shippers in the PRD are not use Hong Kong as their export hub any more. Indeed, the recent statistics of the PRD cargo export from Hong Kong have shown in the downward trend, that threatens the Hong Kong logistics firms’ continued existence.                              For the economic policies, the Hong Kong government is using Laissez-faire practice for every industry within the territory. They are not actively to have enough policies to enhance the logistics firms’ competitiveness. Even though they notified that the logistics industry is one of largest four major economic sectors of Hong Kong. Without the support from the Hong Kong Government’s policies, the Hong Kong logistics firms are worrying [RR2] that they would be marginalized by their competitors in PRD gradually.                                                      The aim of this review paper is to study the critical determinants in the logistics firms, analyze the effectiveness of their strategies and the Hong Kong Government logistics policies, and develop frameworks/models which focus on the critical determinants of the firms’ internal resources, that could make the firms to cope with the serious challenges from PRD and stay in a leading position.   [RR3]  (2) Literature Review        (3) Frameworks/models     (4) Results     (5) Conclusion     (6) Recommendations                              (7) References                                            Credit:ivythesis.typepad.com

Hong Kong Logistics

(1) Introduction Since from 1978, China adopted the “Open door policy”, and transformed the Shenzhen area (it is in the northern borde...

Case Study of the Hong Kong Logistics Industry

Hong Kong Government Logistics Polices Existing logistics policies are established by Hong Kong Government: -          Hong Kong-Zhuihai-Macau Bridge, which is planned to link to the second export cargo sources in PRD, to provide an alternative transshipment way and speed up the transshipment time between factories and Hong Kong terminals. -          Hong Kong Logistics Park, which will be located halfway between Hong Kong International Airport and the container terminals, to facilitate the cargoes to using different transportation modes. -          Digital Trade Transportation Network (DTTN) system is a unified electronic trade platform, to provide to the logistics stakeholders in Hong Kong to exchange their information seamlessly and efficiently. -          Closer Economic Partnership Arrangement (CEPA) It is an arrangement to promote the economic development, strengthen trade and investment co-operation between Hong Kong Government and China in different areas. The cooperation areas within CEPA directly affect the Hong Kong logistics industry are included: customs clearance facilitation, small and medium enterprises, electronic business promotion, commodity inspection and quarantine. -          Hong Kong Logistics Development Council It is an organization to implement the policies set up by the Steering Committee on Logistics Development. It co-ordinates the Hong Kong logistics development issues, and handles the joint projects between the government and commercial sectors. -          Hong Kong & Greater Pearl River Delta Business Council It is a joint conference between Hong Kong and nine regions of PRD. Their major responsibilities are to monitor and take part the development of different joint projects between Hong Kong and Great Pearl Delta River Region.                            Except Hong Kong-Zhuihai-Macau Bridge not confirm the construction details, the other projects mentioned above are scheduled and implemented.   Policies Evaluation There are different approaches for strategy formulation, each of them are for different circumstances. “BCG Matrix” is the portfolio approach to corporate strategy, while “Porter’s Competitive Model” approach is for industry or business competition evaluation. Thus, Porter’s Competitive Model” is suitable for this case and selected to evaluate the effectiveness of Hong Kong Government logistics policies. By considering five forces in Porter’s Model, some policies could be complied with the forces: - New Entrant Barrier        The DTTN is just launched to the stakeholders in Hong Kong. If it        could be introduced and integrated with the manufacturers and Chinese  official organizations in the PRD region, the cargo sources would be tied up  by Hong Kong logistics facilities. They must use the Hong Kong logistics  services to export their cargoes to the destinations.  However, the responsible party – Hong Kong Logistics Development Council  has no any schedule to promote this electronic platform to the PRD region.   - Determinants of Supplier Power The Hong Kong & Greater Pearl River Delta Business Council has established new facilities to enhance the cargo flows at various cross-border control gateways, such as a new boundary bridge and special customs clearance channels for cargo trucks. Under the negotiations by the Unit, a new automatic toll system will be launched during September 2006, the cross-boarder truck drivers will be able to pay tolls in PRD and Hong Kong’s electronic toll collection gates by means of same smart card, this could smooth the road traffic and facilitate the flow of cargo in both regions.        Hong Kong-Zhuihai-Macau Bridge is an alternative linkage between Hong  Kong and the second large export source – western part of PRD. It will  shorten the transshipment time by two or three days, to truck the cargoes to Hong Kong, instead of transshipping by small vessels right now. The supplier power will be greater by using the above moves, indeed their service quality and profitability will be improved.        – Determinants of Customer Power One of reasons why the shippers in PRD use the PRD logistics facilities to ship out their cargo is the complicated export customs clearance procedures through the Hong Kong entrance. Their cargoes are always stuffed in the cross-border check points, sometimes one whole day, in turn they could not catch the vessel they booked. Their shipment time then is prolonged. Under the implementation of Closer Economic Partnership Arrangement (CEPA), Hong Kong Government has negotiated with the Chinese officials to simplify their procedures, as well as speed up the clearance procedures in our own check points. This could smooth the cross-border traffic of the cargo trucks, and cope with the shippers’ requirement. Then CEPA could exert their influence to the customer power to improving their service standard.   - Threat of Substitute Services Many PRD shippers have complained that the handling fee of Hong Kong logistics services are too expensive to compare with that of PRD, it is almost double of the charge in the PRD logistics services, i.e. around USD100 for each laden cargo container. It is one of reasons why they choose the logistics facilities in PRD to ship their cargoes out to China, instead of using Hong Kong’s facilities. The operation unit of Hong Kong Logistics Development Council have contacted and negotiated with the concerned service providers such as carriers, airport and container terminal operators to deduce the charges as low as they could. This could enhance our competitive advantage from our direct competitors in the PRD region.          Unfortunately, Hong Kong Logistics Development Council could not  persuade some service providers such as container terminal operators to  lower their handling fee.                          Arguments There are favorable and unfavorable situations to implementing the polices mentioned above for the Hong Kong logistics industry: In the positive point of view, the policies could benefit the Hong Kong logistics development: - Build up the efficient distribution network between Hong Kong and the PRD regions. More alternative transport modes could be connected to the Hong Kong logistics facilities.   - Support Hong Kong as international transportation and logistics hub within Asia region. - Strengthen Hong Kong position as a gateway or spring board for foreign     investors to China market.   In the negative point of view, the polices may incur the disadvantages to the Hong Kong logistics industry: - The PRD region would replace Hong Kong position of international transportation and logistics hub. - The number of employee in the Hong Kong local logistics industry would be reduced as more Hong Kong logistics companies move to the PRD region. Then, the unemployment rate in Hong Kong would be increased.                           Credit:ivythesis.typepad.com

Case Study of the Hong Kong Logistics Industry

Hong Kong Government Logistics Polices Existing logistics policies are established by Hong Kong Government: - Hong Kong-Zhuiha...

Logistics and Purchasing Management: Distribution Service

Logistics and Purchasing Management: Distribution Service   Introduction             Channels of distribution are one of the most important elements of marketing and introducing a particular product to a specific target market. They serve to be the intermediary between the manufacturer of the products and its consumers. With its use, companies will be able to effectively and efficiently dissipate its products to its target market. Aim or Purpose             With this importance, this essay will discuss the path of the distribution of the Jardine OneSolution Distribution Company in Hong Kong, to further understand the importance and significance of the channels of distribution to a company and to its consumers. Content             One of the distribution service companies in Hong Kong is the JOS or the Jardine OneSolution Distribution Company, which distributes products, such as networking and servers, and security and storage products, to provide users with integrated solutions through the combination of a complete variety of value-added services and enterprise solutions. It is Asia’s chief provider of integrated information technology solutions and services, and uses an efficient channel of distribution by obtaining their materials and products from various international companies, such as IBM, Lenovo, Microsoft, Compaq, Citrix, HP, Cisco, Trend Micro and Philips. The company serves as the distribution partner of the mentioned companies to other several companies and corporations in Hong Kong and other countries, including multinational banks, airlines, and several governments in other Asian countries. Advantages of using this type of distribution include the organized flow of supplies, due to the inventories and selections, and with this, the company can focus on improvement, such as improving its market entry strategies, and improvement of services. Another advantage is that the company can put additional time, money and effort in using electronic commerce for advertising. However, adjusting the prices of the products, increase in taxation, and changing preferences of consumers are its disadvantages. Conclusion             JOS Distribution can further improve their company by utilizing advanced technology, through the Internet, as this can enhance their brand identity and image in targeting other markets. It can also develop its advertising to attract consumers and shareholders, and engage in employee training and development, to build up relationships and cope with changes.    Credit:ivythesis.typepad.com

Logistics and Purchasing Management: Distribution Service

Logistics and Purchasing Management: Distribution Service Introduction Channels of distribution are one of the most impo...

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