Supply Chain Management Conference 2004
Mail, Express and Logistics in China:
Challenges and Opportunities
China at the Crossroad of the Global Supply Chain
Shanghai, April 15 2004
Supply Chain Management Conference 2004
Agenda
• Introduction to TPG
• China
• Our markets in China
• TPG and China
Supply Chain Management Conference 2004
161,000 employees
62 countries
Network covers 200 countries
TPG Post
Best postal operator
in the world
Mail networks in
seven European
countries
7 billion mail items
TNT Express
Largest in express
in Europe
43 aircraft
19,000 vehicles
187 million
consignments
TNT Logistics
Second logistics
operator worldwide
Number one in
automotive logistics
6.3 million m2 of
warehouses
TPG: a global leader in mail, express and logistics
Supply Chain Management Conference 2004
Market perception
Supply Chain Management Conference 2004
2003 results
Growth2002
€ mln
2003
€ mln
0.38
599
1,058
11,782
0.40
300
767
11,866
20.0%
-49.9%
-27.5%
0.7%
Dividend per share in €
Net income
Operating income (EBIT)
Revenues
585616 5.3%Underlying net income from continuing
operations
623629 1.0%Free cash flow
Supply Chain Management Conference 2004
Core business
• Our business is to deliver the
products of our customers,
and our portfolio of businesses
is derived from that
• Our individual businesses have
strong strategies underpinned
by Value Based Management
Key assets
• Our brand reputation and
pride among our people are
the two most important
assets we manage
Core strength
• We exploit the strength of our
portfolio of businesses
through the TPG-I program
Growth
• New growth opportunities
have been identified in China,
Freight Forwarding and the
consolidation in the European
Postal market
TPG Strategy elements
The TPG Strategy is based on the following elements:
Supply Chain Management Conference 2004
Agenda
• Introduction to TPG
• China
• Our markets in China
a)TPG and China
Supply Chain Management Conference 2004
Fastest growing economy in the world
4,097
2,122
1,204
1,407
398
11,608
4,715
2,394
2,065
1,711
454
8,923United States
Japan
Germany
China
UK
Netherlands
CAGR
’02–’10
Percent
Real GDP development
€ Billions
3.3
1.8
1.5
7.0
2.5
1.7
2002
2010
Supply Chain Management Conference 2004
World’s third largest exporter
570
302
367
288
194
1,232
1,181
1,085
652
574
413
632United States
Germany
China
Japan
France
Netherlands
CAGR
’02–’10
Percent
Export value
€ Billions
8.7
9.5
17.3
7.4
9.0
9.9
2002
2010
Supply Chain Management Conference 2004
Foreign Direct Investment expected to remain high
0
20
40
60
80
100
FDI in China
€ Billions
CAGR=6.6%
CAGR=16.4%
1992 ’94 ’96 ’98 ’00 ’02 ’04 ’06 ’08
In 2002 China has been the biggest receiver of FDI, even
surpassing the U.S.
FDI
€ BillionsCountry
49
48
36
34
24
China
France
Germany
US
Netherlands
MNCs expect to continue to invest
significantly in China
Planned further investment
during next 5 years
€ Billions
6.1
4.9
4.6
4.6
3.8
2.0
“Nissan to invest RMB 8.5billion for
50% of Dong Feng Motor”
Example
Supply Chain Management Conference 2004
Not without risks...
Type of shock
Financial
Energy
Natural
Public health
Triggering event
Local liquidity crisis
Local NPL implosion
Collapse of confidence in local
markets, leading to bank runs
Asset bubbles bursting resulting in
dramatic worsening of NPL in certain
geographies
Input price shock
Distribution shock
Global crude oil price jumps
Dramatic shift in demand distribution
due to weather or partial shut down of
generation factories
Grains shortage
Destruction of major
cities or transport hub
Severe flooding or drought affecting
large area
Major earthquakes (e.g., Kobe)
Partial economic shut
down due to extremely
infectious disease
Unknown/untreatable infectious
disease (e.g., SARS)
Domestic
China National and
Reform Commission
Ministry of Commerce
China‟s Center for
Disease Control
China financial
institutions
Large domestic corps
Leading academics
International
Organizations such as
Asian Development
Bank and the WHO
Three former U.S.
Assistant Secretary of
Treasury
Former senior official of
U.S. Federal Reserve
Former U.S.
Undersecretary of
Treasury
Experts interviewed
Supply Chain Management Conference 2004
…but strong fundamentals
GDP growth contribution
%
61%25%
9%5%
Invest-
ment
Private
consump-
tion
Net export
Foreign reserves
% of GDP
15 16 1318
23
4 5 5 6
60
Government debt outstanding
% of GDP
US
2002
Gov‟t con-
sumption
1998 1999 2000 2001 2002
1999 2000 2001 2002
Strong domestic
investments,
immense foreign
reserves and low
government debt
mean that China
has a better
“immunity system”
to absorb
economic shocks
Pressure for RMB
revaluation while
capital account is
closed may
increase incentive
short-term for
investments
Closed capital
account
RMB is not convertible under the
capital account, thus hot money
cannot flow in and out quickly to put
the currency under siege
Second largest reserves in the world
Low government debt
Economy is driven by strong domestic
investment rather than relying on FDI
China‟s productivity growth has been
one of the strongest in the world
China‟s savings rate is one of the
highest in the world
Strong gov’t
resources
Strong econ
fundamentals
There are many risk mitigating
factors to protect China from crisis
Supply Chain Management Conference 2004
0.45
0.41
0.35
0.43
0.39
0.30
0.26
0.22
0.22
0.20
0.12
85
45
30
10
7
An opportunity for TPG
Direct mail items/capita
2002, unless otherwise stated
Top tier EU
Average EU
2d tier EU
3rd tier EU
China „02
Size of total parcel and express
market/GDP, 2002
Percent
U.S.
Japan
Germany
France
Canada
UK
Czech
Hungary
Poland
China0.25 -
0.35
Portugal
By 2010:
Logistics costs
Percentage of nominal GDP, 2002
10.1
11.5
18.5
US
Europe
China
Supply Chain Management Conference 2004
Strong strategic imperative to invest
Source: Team analysis
Logistics
• By 2010, China will be the 2nd largest
automotive market in the world in terms of
volume
• Generally up to 30-40% of global
manufacturing output will originate from
China by 2010
Express
• By 2010, China‟s express market will be the
6th largest in the world
• China will be a key country in terms of global
supply chains
• China Post is already the 2nd largest postal
operator in the world in terms of people
• The China Post network will likely develop
into the world‟s largest domestic mail network
by 2010
• Rapid evolution of the private and corporate
sector creating huge opportunities for
domestic mail services
China opportunity
Is it possible to
be a global logistics player and
maintain a leading position in
auto logistics without leading in
China?
Implications for TPG
Can TNT claim to
be a global express player in
2010 without having a strong
position in China?
Is there another
similarly attractive market to
enter and apply TPG’s
distinctive mail operator
capabilities than China?
Supply Chain Management Conference 2004
Agenda
• Introduction to TPG
• China
• Our markets in China
• Logistics
• Express
a)TPG and China
Supply Chain Management Conference 2004
Logistics - a world of contrasts
Fully Automated High Bay Warehouse
Supply Chain Management Conference 2004
A common scene on transport
Logistics - a world of contrasts
Supply Chain Management Conference 2004
High logistics costs
Development of logistics costs – top down assessment
Percentage of nominal GDP
Source: Morgan Stanley; China Traffic Statistical Yearbook 2003; team analysis
10.2 9.9 9.2
19.0
14.5
23.0
0
5
10
15
20
25
97 98 99 00 01 02 03 04 05 06 07 08 09 10
China
US
CAGR
1997-2010
Percent
-1.0
-3.7
Drivers
Unprecedented Infrastructure investment (more than €1,000 bn from 1997-2002, and estimated more than €2,000 bn from 2003-2008) is increasing efficiency nationally with prioritization in the golden triangle routes (BJ/SH/GZ)
Professional SCM practices, including related IT infrastructure, are slowly being adopted by the domestic industry
Efficiency gains are translating into price declines and, thus, total logistics costs
Large logistics
market in China
provides an
opportunity for TNT
Logistics
Supply Chain Management Conference 2004
Company
2002 China
rev. (€ m)
Freight
forwarding
Network
coverage
Foreign
players
and JVs
Danzas–AEI
Exel-Sinotrans
Bax Global
APL Logistics
Regional
Regional
Coastal
Nationwide
Hutchison/T&B
ST-Anda
(Sembcorp)
N/A
23
Regional
Regional
Large
SOEs
COSCO Logistics
Sinotrans
Nationwide
Nationwide
Local
players
PG Logistics
JHJ
Huayuntong
EAS
Annto
Key customers
Alcatel, Shell, Unilever, Bristol-
Myers Squibb, Heineken
Nokia, Legend, Siemens,
Samsung, HP, Ford, LVMH
HP/Compaq, Lucent, Motorola
IKEA, GM
P&G, Mead Johnson,
Warner-Lambert, B&Q
Colgate, J&J, Kraft, ESSO
P&G, Philips, Electrolux,
Budweiser, Bayer
Motorola, Siemens
Electrolux, Philips, Kraft,
Cadbury, Kimberley-Clark,
Arche, Robust
IBM, Dell, HP
Avon, Dell, Midea
33
63
10
250
23
Regional
Regional
Regional
Multiregional
Regional
Warehousing
inventory mgmt
Domestic
transportation
VAS (e.g.
SCM)
N/A
N/A
17
113
1
N/A
SGM, Volkswagen
Panasonic, Philips, Acer,
Unicom, Ericsson, Michelin
Active competitors
Supply Chain Management Conference 2004
15.7
4.2
to
4.9
8.1 to
9.3
Estimated automotive market
Million units
2002 2006 2010
Increasing wealth of population
45 million new middle income and 26 million
new high income households by 2010
Favorable auto consumption environment
30% reduction in car tax
Auto financing available
Reduced insurance costs due to deregulation
Improving road infrastructure
Manufacturers have responded by aggressively increasing planned capacity
Annual capacity increases of 1 million plus passenger cars
New models and designs increasing diversity
18-19% CAGR
Key Drivers
U.S.
in
2010
1.11.01.1Buses
Trucks
Cars
1.5 1.7
1.72.2
12.0-13.2
7.4-8.1
3.2
Strong growth of automotive market
Supply Chain Management Conference 2004
OEMs are focused on:
Sourcing and supply chain infrastructure to increase
efficiencies and reduce cost
Incumbents want to improve existing supply chain
management and lower supply chain costs
New entrants currently have RFPs out to establish
efficient supply chains for new production facilities
Customizing product design to meet customers’ tastes
and requirements to win market share from competition
Delivering distinctive brand experience through high
quality customer interactions at dealerships
Increasing availability of financing to customers to
maintain sales growth momentum
Increased competition is putting pressure on OEM
margins
Significant capacity addition and intensifying
competition has led to declining retail prices and
consequently increased pressure on OEM margins
Priority for OEMs to reduce cost by improving supply
chain management and infrastructure
China retail price evolution
for Honda Accord 2.3L
US$
35,900
31,300
12.8%
Nov 02 Jan 03
Chine retail price
evolution for GM Buick
Sail 1.6L SLX
US$
14,400
13,000
10%
Nov 02 Jan 03
Focus on Supply Chain and product variety/customisation
Supply Chain Management Conference 2004
Automotive outsourced logistics market
€ Billions
Automotive logistics estimated at €2.5-3.0 Billion by 2010
Automotive outsourced
logistics market
2002 2006 2010
0.8
1.5-1.8
2.5-3.0
Automotive market
logistics spend
2002 2006 2010
4.1
5.5-6.5
7.2-8.5
Outsourced logistics
spend
2735
19%
2002 2006 2010
Industry revenues
Logistics costs
2002 2006 2010
86
129-152
179-211
4.3 4.04.8%
2002 2006 2010
Supply Chain Management Conference 2004
Local consumption
Increasing wealth of population
45 million new middle income and 26 million new high income households by 2010
Consumer electronics – Increasing competition (especially from local manufacturers) in consumer electronics leading to price decline and sharp increase in volume demand
Server/computers – Installation/modernization of corporate IT systems and development of nationwide IT networks
Telecom equipment – Completion of wireline and GSM telecom infrastructure and building of nationwide 3G network
Exports
Development of China as global manufacturing base by both MNCs and local players
Transfer of ~30-40% of global production to China by 2010 (e.g. Motorola‟s handset production is already today done exclusively in China)
Leveraging China‟s skilled workforce, significant factor cost advantage and rapidly improving labor productivity
Key Drivers
Electronics driven by domestic and export consumption
Strong demand for electronics in China
High production growth for domestic
sales and exports
Total shipments
Million
New mobile subscribers
Millions
HANDSET
EXAMPLE
HANDSET
EXAMPLE
10.5 23.138.8
29.5
40.0
29.0
2000 2002 2004
Domestic
Exports
CAGR =
41%
44.654.5
77.3
2000 2002 2004
CAGR =
15%
Supply Chain Management Conference 2004
Estimated 2010 revenues of key players
€ Billions
14.4
13.5
13.0
12.4
10.6
7.4
7.4
7.0
6.7
6.5
6.3
5.6
5.3
4.8
4.7
3.9
3.7
3.6
3.5
2.5
Putian
Haier
Samsung
Philips
Motorola
Matsushita
Legend
Sony
SVA
Siemens
Nokia
Ericsson
IBM
LG
Panda
TCL
Intel
SB Alcatel
Huawei
ZTE
MNC
Key customer characteristics and requirements
Predominantly MNCs, but local players growing
rapidly
National contracts are possible; contracts
currently being consolidated into 1-2 providers
High preference for logistics provider to
manage entire value chain (i.e. including freight
forwarding)
Freight forwarding capabilities crucial for
inbound sourcing of components and for
exports of finished goods
IT capabilities that can be linked to enable
timely and accurate information flow are
required
Low willingness to share common warehouses
and transportation
Key players account for ~30% of the market
Local
Supply Chain Management Conference 2004
Electronics outsourced logistics market
€ Billions
Electronics logistics estimated at €3.5 Billion by 2010
Electronics outsourced
logistics market
2002 2006 2010
0.3
1.6
3.5
Electronics market
logistics spend
Outsourced logistics
spend
2002 2006 2010
6.58.0
9.9
Industry revenues
Logistics costs
2002 2006 2010
215293
398
2.82.5
3%
2002 2006 2010
20
35
4%
2002 2006 2010
Supply Chain Management Conference 2004
Overall FMCG market growing with GDP
Steady growth in GDP per capita is expected to drive
increasing demand for FMCG
Manufacturers are projected to continue to increase
capacity and output to meet increasing demand
Real GDP per capita 1990-2010
US$
0
500
1,000
1,500
2,000
1990 1994 1998 2002 2006 2010
90-01
CAGR 9%
01-10
CAGR 7%
WEFAEIU
Processed food, beverage and tobacco gross
industrial output
US$ Billions
38.1
53.5
82.5
2002 2006 2010
CAGR =
10.1%
Increase in disposable income as a result of increase in per capita GDP increase
Average disposable income in urban areas expected to grow 14.5% annually from US$950 in 2002 to US$3,700 in 2010
Improvement of distribution channels to reach large population in sub-urban and rural areas (in 2002, about 40% of retail sales in top 34 cities representing 14% of population)
Rapid growth of modern retail formats (e.g. hypermarkets) across China
Increasing customer sophistication resulting in changes in consumer attitude and behavior
Higher demand for a wider range/variety of products
Increased preference for higher price branded products
Higher preference for convenient packaged products
Key Drivers
Supply Chain Management Conference 2004
Fragmented industry but many large MNCs
Estimated 2010 revenues of key MNCs
€ Millions
Key customer characteristics and requirements
Many large MNCs present in China which can
be targeted
Dense regional network to enable “speedy”
distribution
Reliable and accurate information feedback is
an important service requirement
Even with consolidation across BUs, smaller
contract size due to customer preference to use
a minimum of two 3PL providers for risk
diversification and regional nature of contracts
Low willingness to share common warehouses
and transportation
2,000
1,900
1,500
1,400
1,200
710
610
515
450
400
Danone
Unilever
Nestle
P&G
Kraft
Coca-Cola
J&J
Kimberly
Clark
Pepsi
Reckitt
Beckinser
Supply Chain Management Conference 2004
FMCG outsourced logistics market
€ Billions
* Addressable market is defined as contracts larger than € 1 million
Source: Global Insight/WEFA; Morgan Stanley; expert and customer interviews; team analysis
FMCG outsourced
logistics market
2002 2006 2010
0.31.0
2.0
FMCG market logistics
spend
Outsourced logistics
spend
2002 2006 2010
8.710.9
13.6
9.0
15.0
3%
2002 2006 2010
Industry revenues
Logistics costs
2002 2006 2010
145199
272
5.5 5.06%
2002 2006 2010
FMCG logistics estimated at €2.0 Billion by 2010
Supply Chain Management Conference 2004
Agenda
• Introduction to TPG
• China
• Our markets in China
• Logistics
• Express
a)TPG and China
Supply Chain Management Conference 2004
China’s express market will grow rapidly to 2010 …
China’s express market will reach €6.7 Billion by 2010
… driven by China’s expected closing
of gap in express market penetration
Size of total parcel and express
market/GDP, 2002
Percent
0.45
0.43
0.43
0.41
0.39
0.35
0.30
0.26
0.25
0.22
0.22
0.21
0.14
U.S.
Japan
Germany
France
Canada
UK
Czech
Brazil
Poland
China
0.25-0.35
South Africa
By 2010
Italy
€ Billions
1.11.6
2.23.1
4.10.8
1.2
1.8
2.6
1.6
2.4
3.4
4.9
6.7
0.5
2002 2004 2006 2008 2010
18%
23%
20%
CAGR
International express
Corresponds to 0.35 penetration; to grow faster than domestic in line with expectations of industry sources
Corresponds to 0.25 penetration
Domestic express
Sixth largest express market in the world
in 2010 Australia
Supply Chain Management Conference 2004
Players Coverage
Performance
(Transport
days)
End-to-
end
control
Foreign players
DHL
UPS
FedEx
TNT
Local players
EMS
CAE
CRE
Time-
Definite
Door-to-
door T & T
318 cities
218 cities
210 cities
200 cities
~2000 cities
~290 cities
190 cities
Key domestic and foreign players in China
1 day
1 day
1 day
1 day
1 day
1 day
2~3 days
Value Proposition
Industry landscape
International parcel
services are widely
available; all major
international providers
are established
Most international
players partner with
Sinotrans for local
pick-up and delivery
Only on significant
domestic provider:
China Post with its
EMS product
Supply Chain Management Conference 2004
Agenda
• Introduction to TPG
• China
• Our markets in China
• Logistics
• Express
a)TPG and China
Supply Chain Management Conference 2004
China Post
Express
17%
72%
Others
11%
China Post Bureau is both an administration authority and a public enterprise, responsible for the regulatory functions of national postal industry and the management of national postal enterprises
Total revenue is EUR 5.7bil and profit of EUR 13.4 mil in 2002
No of employees: 496,000
Revenue split by activityDescription
Key Financials
20022000 2001
Revenue
Profit
-698 -341
6 13
4,3984,882
5714
3,834
1999
Logistics Network – 2002
• No of vehicles: 39,000• No of airplanes: 10• No of ship: 10• Post Offices: 76,000• No of post routes: 21,000• Length of trunk routes: 3 mil
km• EMS collection point: 1,988
• Covers 28 provinces and
304 cities
• 2 days delivery time
Supply Chain Management Conference 2004
Agenda
• Introduction to TPG
• China
• Our markets in China
• TPG and China
a) current position
b) future
Supply Chain Management Conference 2004
TNT International Express China
Branches starts business operations by end 2003
Branches already in business operations
Beijing
Shanghai
GuangzhouXiamen
Qingdao
Fuzhou
Hangzhou
Shenzhen
WuhanNanjing
Dalian
Tianjin
Xi’an
Chengdu
Chongqing
Kunming
Haikou
Zhuhai
Chengsha
Hefei
Wuxi
Suzhou
Zhengzhou
Jinan
Ningbo
Gateways
• 25 branches, increasing to 50 depots in
2004
• Develop to 2,000 services points in 500
cities via China Post services
• Hub & spoke system with 7 gateways by
end 2003
• 174 brand new vehicles
• 136 PUD vans
• 24 gateway vehicles
• 14 motorcycles
• New data hub in Shanghai,
all branches online to
TNT Express IT in UK
Supply Chain Management Conference 2004
China Logistics Milestones
Auto Logistics:• Formed big JV in 2002 and became No.1 Logistics
supplier in Auto Industry, with over € 100m annual
revenue
• Won € 150m contract for 5 years on SVW inbound
service
• Well positioned for organic growth in SAIC & Non
SAIC Accounts
Non Auto Logistics: • Very small at present, active in Chemical sectors
only
Supply Chain Management Conference 2004
VDC
VSC
Dealer
Anji Logistics is one of the largest logistics service providers (LSP) in China
Their major business today is in finished car distribution,
largest contracts with SVW and GM
From the Vehicle Distribution
Centre (VDC) in Shanghai,
Anji distributes the cars to
dealers via 23 vehicle
storage centres (VSC)
Key Figures (2001):
95 mil Euro revenue
638 employees
200,000 cars p.a.
180 daily trips
90,000 m² warehousing
Anji Logistics
Supply Chain Management Conference 2004
Agenda
• Introduction to TPG
• China
• Our markets in China
• TPG and China
a) current position
b) future
Supply Chain Management Conference 2004
WTO accession will open up many areas
Post-WTO foreign
ownership norms
No change
100% in 2004
100% in 2005
100% in 2005
100% in 2005
100% in 2007
? (no draft agreement)
Minority foreign ownership; Chinese flag
Current foreign
ownership norms
100% ownership allowed
<50% ownership
<50%
<50%
No foreign ownership (China Post, Chinese airlines monopolies)
<50% for international parcels
<50%
Chinese licencees only
No foreign ownership
Area
Warehousing
Trucking
Freight forwarding/ 3PL
Customs brokerage
Express and air parcel
Rail services
Air cargo
Maritime/shipping
Open
Closed
Supply Chain Management Conference 2004
A phased approach to business building
Expansion plans for all three businesses:
logistics: expand current automotive position to other OEMs and
strengthen position in other sectors
express: accelerate growth through discussions with China Post
mail: get involved in restructuring and privatisation of CP
Clear go/no-go decisions on acquisitions and on people and
capital
Clearly defined the milestones for 2004
Identified critical managerial and professional resource
requirements for 2004
Top management team has been appointed
BoM is committed to identify the required resources by end of Q1
Supply Chain Management Conference 2004
Examples
Siemens
Samsung
Independent business units with
nominal China Corporate Center
Mail China
Logistics China
Express China
China Corporate
Center
Mail Logistics Express
TPGHQ
NL
China
Examples
P&G
Ricoh
Coca-Cola
Geography-focused driven by strong
China Corporate Center
Mail China
Logistics China
Express China
China corporate
center
Mail Logistics Express
TPGHQ
NL
China
Examples
Sony
Business units as drivers with
coordinating China Corporate Center
Mail China
Logistics China
Express China
China Corporate
Center
Mail Logistics Express
TPGHQ
NL
China
Three possible management structures
Supply Chain Management Conference 2004
Finding the best management structure
Responsiveness to
local markets
Consistency of
customer/gov’t/
SOE interface
Consistent products
and services with
HQ
Independent global BUs
Cross-divisional
coordination and
resource sharing
Slower response as
business is run from HQ
Multiple customer interfaces;
uncoordinated KAM and
negotiations
Direct reporting ensures high
level of consistency
Key TPG
considerations
High BU power leads to low
level of coordination
Strong China center
Fast adjustments as
business run locally
One face to China,
coordinated negotiations
Lower consistency as link
up to HQ not direct
High coordination due to
strong center
Coordinating China center
Relatively fast response
as key activities
coordinated
KAM and relationship
mgmt will achieve singular
interface
Direct reporting ensures
high level of consistency
Key functions identified
under China center
coordinated
High
Low
Board attention to
China
Attention high only if
divisions raise to Board
China as a separate
business will have full
attention from the Board
Individual divisions still
drive Board attention
Not preferred as coordination is
low and BUs may not be
sufficiently dedicated to China
Theoretically the best option but
added burden to divisions and
low Board attention
Best fallback option if senior
management is committed to
make this work
Access to global
resources
Usually coordinated, but
BUs may prioritize other
opportunities
Top down actions required
to ensure resources are
allocated
Shared accountability
creates incentive to
cooperate
Supply Chain Management Conference 2004
Preferred option
TNT ChinaExpress
TNT ChinaLogistics
TPG China Mail
CEO
TNT Express
TNT Logistics
TPG Mail
China Freight
Forwarding
Marketing
KAM
Finance
Network planning
External relations
CFO
Express Board
Logistics Board
MailBoard
TNT China Board
TPG Board of
Management
Coordination of
products/services
on global basis
Quality
standards
New
products
Support TNT
China especially
by dedicating key
personnel
KAM liaison with
China
Inputs to
developing China
strategy
Division
performance
evaluation to
include how it has
supported China
Key responsibilities
of global divisions
to China businessOverall P/L
responsibilities for
China
Business planning
and budgeting for
each China unit
Coordination of
resources with mail,
express, and
logistics divisions
Running of key
functions for “one
company approach”
KAM in China
Marketing/
branding
Network
planning
Relationship
management/P
R
Finance, admin,
legal
Key responsibilities
of TPG China
Supply Chain Management Conference 2004
Other subjects looked into
Detailed financial planning until 2010
Optimal tax structure
Training (TPG university)
Advertising and branding
Financing strategy
Relationship management
Supply Chain Management Conference 2004
Key Factors of Success
Strategic
• Vision
• First mover advantage
• Preferred partnerships
• Market leadership
• Innovation
• Cost structure
• Formulating a specific, aspirational statement or goal for positioning
• Being first in offering specific products/services or offering to specific
customers/customer segments
• Establishing partnerships with partners that are able to deliver real
business value
• Capturing a leading market share in specific customer segments or
geographies
• Developing the most innovative products tailored to the needs of the
China market
• Achieving a cost structure able to compete with local competitors
Area Key factor of success
Operational
• Acquisition integration
• Investment funding
• Alliance management
• Cost management
• Product/service localization
• Business development
• Image
• Regulator engagement
• Capability to execute integration activities while continue to growth the
business
• Making sufficient investment resources available to realize the vision/
aspiration
• Developing clear measurable JV performance metrics early intervention
in case of alliance underperformance
• Ability to introduce operational excellence into Chinese context
• Capability to assess and understand the local demand characteristics
and develop and market
• Ability to generate new business a rapidly changing market environment
• Ability to a develop superior brand recognition
• Skill of understanding and addressing the needs of the government
Description
Organizational
• Senior leadership
• China BU
• Management continuity
• Talent
• Performance management
• Regular China visits by senior management and
• Creating a direct reporting/communication structure from China
management to CEO
• Recruiting a China management team that is committed to remain in
position for 5-10 years
• Attracting qualified expats while recruiting and developing local
staff/managers
• Create incentives to attract and develop local and expat managers in a
high growth environment