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The World Connected: Executive Series

April 1, 2013

The World Connected: Executive Series

The World Connected is a global discussion platform on the development trends that are shaping today’s global economy. As a leading global express company, FedEx has unique insights on how the world is connected.

With events held in selected countries several times a year, the executive series engages FedEx leaders in dialogue with local market analysts, business associates  and media. Each roundtable focuses on an issue in global development – such as trade, sustainability, or SME growth – and examines it both from a local perspective and through the lens of broader global trends.

The executive series launched on March 26, 2013 in Beijing, China.

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China Connected
Improving Supply Chain Barriers Will Spur Growth


 

China Connected

The World Connected: Executive Series launched on March 26, 2013 in Beijing, China. “China Connected” looked into trends in international trade and ecommerce at a time when China has become the world’s largest trading partner, exercising increased influence on global markets.

The largest economy in the world is no longer that of any one country, but the economy of global trade.  In Beijing, FedEx Executive Vice President, Global Strategy, Marketing and Communications Raj Subramaniam and Chief Economist Gene Huang, Ph.D. led an in-depth discussion on China’s pivotal role in global trade and ecommerce.

A recap of the event, along with materials and video highlights, will be available here soon.

Additional Resources:

  1. Gene Huang – Key Points
  2. Raj Subramaniam – Key Points
  3. China Fact Sheet

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Improving Supply Chain Barriers Will Spur Growth
By Gene Huang

There is an old Chinese saying that “extremely clean water feeds no fish, overly perceptive man keeps no friends.” This piece of advice was given to the emperor of the Han Dynasty calling for tolerance, in order to collect talents from the society. This statement is now used in China to justify areas of market imperfection. 

As FedEx looks to further its global reach, we may need to remind ourselves of the need for tolerance when dealing with different cultures and politics, while still striving for a higher standard. This is part of the so-called “glocalization” requirements – to understand, work with and ultimately influence local markets.

I recently traveled to Beijing, China, to participate in the China Development Forum organized by the State Council.  I also spoke to media there about China’s role in the global economy, as well as the country’s opportunities for improvement and growth in logistics. It seems that the new leadership team in China understands the importance of maintaining an open door policy, and improving the standard of business practices and the overall quality of the civil society.

Recent studies by the World Economic Forum (WEF) and the World Bank discuss the positive impact logistics improvement can have on a country’s growth.  I used this information to illustrate how a government can improve business practice consistent with the demand of globalization.  For example, there are four key supply chain barriers: 

  • border administration
  • transport and communications infrastructure
  • market access
  • business environment

The WEF study suggests that if every country improved just two of these barriers, global GDP could increase by USD $2.6 trillion (4.7%) and exports by USD $1.6 trillion (14.5%). For comparison, completely eliminating tariffs could increase global GDP by USD $ 0.4 trillion (0.7%) and exports by USD $1.1 trillion (10.1%).
I further pointed out that China’s logistics costs to GDP ratio stands at more than 17 percent, a figure that shows tremendous logistics inefficiencies throughout that market. This, as some Chinese experts pointed out, is part of the reason that China’s export orientation as domestic trade is too costly.

Fish may not survive in extremely clean water, but fish also cannot survive if the water is too murky and sucks out the oxygen. A standardization of policies and policy enforcement at local levels is critically important for China to make the leap forward.  The country is entering a so-called “mid-income trap” with rising costs and weakening competitiveness. China’s entry into the World Trade Organization to a large extent has accomplished cross-border standardization. It is now time for China to standardize internal practices. We applaud progress made in emerging markets and recognize the importance of tolerance and working together toward a higher standard.

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Comments

    MayLyn says:

    It is wonderful to see the success that FedEx has being connected with Global Strategy. I see it already in this wonderful company, and it’s improving everyday! Thank you Gretchen Mathis for posting!

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