Illustration: Luo Xuan/GT
US logistics giant FedEx, one of the world's top delivery brands, has surprisingly - and repeatedly - mishandled Huawei's packages. Regardless of whether there were any long-armed instructions behind the scenes, the incident should serve as an alarm bell to global companies about the safety of international delivery services.
Courier services are different from other logistics services. If core technical documentation, business tenders and other business intelligence are stolen or damaged during delivery, it may cause irretrievable losses. As such, express delivery companies generally attach great importance to credibility, with emphasis on safeguarding customers' packages and information security. It would be shameless of a government to use state power to "hijack" corporate mail. Logistics is a basic link in the supply chain. Huawei may be able to switch to self-made chips after being cut off from US chips, but if something goes wrong with Huawei's logistics, will it have any contingency plan?
At present, the international supply chain of consumer electronics products requires fast logistics like air delivery, but about 70 percent of the international delivery market in China is spread among the three major giants - FedEx, UPS, and DHL -with domestic courier companies like SF Express only accounting for a small share of China's international logistics market due to a lack of overseas service networks and air transport capacity. China's largest express delivery company SF Express has only 55 cargo aircraft, while FedEx, the world's largest, has a fleet of 680, and UPS has more than 500.
Manufacturing is the soil that gives rise to the logistics industry, and the logistics industry is the guarantee for a strong manufacturing sector. However, during the past four decades, China's industrial development has been characterized by structural problems of valuing production over circulation and valuing manufacturing over service, leading to the country's relatively weak, small and scattered circulation services. Unlike Chinese manufacturers, most logistics companies are unable to tap the global market. China has maintained service trade deficits for 26 years, with transport and logistics being the industry with the second-largest deficit after tourism. Of course, a similar industrial imbalance also exists in other latecomer countries like India and Vietnam.
Without the guarantee of modern logistics, it is difficult for China's manufacturing industry to move up the global value chain. In order to promote the joint development of the manufacturing and logistics industries, the National Development and Reform Commission
in 2007 held the first joint development conference for the two industries. Yet the links between the two industries happen more at the domestic level, with little interactive development in going global. FedEx and UPS have worked with US tech giants like Microsoft and Google to explore the global market, thus staying strong together. By comparison, although China has well-known technology companies such as Huawei, ZTE, and DJI, it lacks the synergy effect from local logistics companies in terms of high-end logistics guarantees.
It is true that China's manufacturers should adhere to the values of openness and inclusiveness instead of narrowly advocating that Chinese cargo be transported by Chinese companies, but they should also guard against possible harm from others. When it comes to the logistics of core technological documentation, information security, and strategic materials, Chinese logistics services should be the top choice. In the US, the first modern express delivery service was founded in 1839. It will take time for Chinese logistics services to play catch-up, and they should not be alone in doing it.
Overseas collaboration between Chinese manufacturers and logistics services should first be reflected by strengthened cooperation in supply and demand as well as the supply chain. China is the largest buyer of international express logistics services, and its big market should give it a bigger voice in the industry. With more outsourcing orders from Chinese manufacturers, Chinese logistics companies will have more opportunities to grow. The two sides can build overseas warehouses together so as to enhance the synergy effect in the international supply chain. Meanwhile, the collaboration between Chinese manufacturers and logistics services could also strengthen security guarantees and emergency logistics support in overseas markets. China's private technology companies and express delivery companies have mostly grown up in a peaceful environment, with insufficient experience in crisis response. UPS, which was founded in 1907, has experienced World War I and World War II, while FedEx founder Frederick Smith participated in the Vietnam War. The advanced security systems and emergency logistics response of US companies offer lessons for Chinese companies.The author is purchasing and supply chain expert with the China Federation of Logistics & Purchasing. [email protected]