Selecting superior business partners in China for a Swedish start-up logistic platform company through market insight
ARC Consulting recently helped a newly established Swedish logistics platform company find suitable freight forwarding partners in China. The comprehensive project incorporated all aspects of vendor selection, including supplier benchmarking, site visits, recommendations, contract negotiations, and training. The client ultimately retained 6 excellent Chinese partners, exceeded their initial expectations. Furthermore, achievable business operation and process efficiencies have been provided.
Chinese freight forwarders have expanded their business into e-commerce in recent years, as a result of the changes in technology. Broadband, computers, and smartphones have become standard in Chinese enterprises. Furthermore, some Chinese freight forwarders have made e-commerce transformation a part of their key corporate strategy for the next three years.
Given the growth in e-commerce, most of the top Chinese freight forwarders and their employees have the skills and capabilities to manage the multichannel terminal business model. Many have their own e-commerce departments to manage their own online business. Many Chinese freight forwarders have the capability to provide full logistics services.
At present, Chinese freight forwarders do not have a strong presence in the Nordic market, so there is a desire to expand there to grow their efficiencies. Moreover, the volume of import and export trade between China and the Nordic countries has been steadily increasing year over year. There will be plenty of opportunities for Chinese forwarders and ARC Consulting’s client to partner in the future.
Most Chinese enterprises have a positive attitude toward new product and business cooperation modes, and are willing to investigate new opportunities.
Phase 1: Benchmarking Study
The China freight forwarder market and, specifically, the top Chinese forward companies, have been analyzed to determine criteria required to select suitable business partners. Specifically:
- Initiated data collection and market evaluation of China forwarders
- Generated an exhaustive supplier list of the top Chinese forwards.
- Filtered the potential vendor list by services provided, locations, shipping lines, geographic coverage, experience, certifications and communications.
- Arranged initial meetings with the ten suppliers who met the criteria
- Recommended site assessments of 7 freight forwarders
Phase 2: Supplier Visit and Selection
To achieve an in-depth understanding of suppliers and lay the foundation for partnerships, ARC Consulting:
- Organized supplier visits for the client’s management
- Evaluated supplier capabilities resulting from the visits
- Generated a short-list of suppliers to move forward and detailed the contract terms for the client to utilize in the discussions with the suppliers.
Phase 3: Support on contract and supplier training
To help our customer ramp up quickly, ARC Consulting provided contract and supplier training support, including:
- Negotiation with potential suppliers and contract creation
- Account registration and training
- Quotation tracking and inputting
To help the client optimize their operations, ARC Consulting conducted benchmarking of similar business models. Some of the actions are as follows:
- Reviewed alternative payment solutions.
- Suggested optimized document flow and booking process from a Chinese perspective.
- Implemented strategies to drive platform localization.
- Provided suitable service demanders.
- Recommended 6 suppliers for commercial agreement based on their area of expertise, quotations, qualifications, and terms and conditions.
- Generated contract conditions that are aligned for Chinese business.
- Offered different payment solutions according to the credit of the customer, for instance, invoice or pre-payment.
- 6 suppliers have been recommended to sign the agreement according to their business area, quotation, qualifications, terms and
- A more upright contract which will work in reality with Chinese customer has been recommended.
- The payment solution can be defined into different methods according to the credit of the customer, for instance, invoice or pre-payment.
- The right and obligation should be more clarified in details, including payment methods, bank account, termination date and so on.
- A more localized platform should be scheduled to be updated.
- A benchmark of current Top logistics platform should be implemented for optimizing the operation and marketing.
- 6 superior Chinese partners have been signed
- Comprehensive solutions on contract adjustment, payment method, document flow, booking process and local support have been introduced.