UPS Made In China 2.0 Report Reveals Successful Strategies To Guide Chinese Export Manufacturers Through Transformation
• UPS launches service improvements in Beijing, Shanghai and Tianjin to support Chinese exporters’ expansion to global markets
• China’s export manufacturing sector and economy face growing headwinds since 2014
• Export manufacturers learn from Made in China 2.0™ Leaders, who have experienced significant improved business performance
UPS® (NYSE:UPS) announced today the release of the 2016 Made in China 2.0™ also known as the MiC 2.0™ Report, which provides a clear way forward for China’s manufacturing sector as it faces growing headwinds. In order to remain competitive amidst China’s economic transformation, Chinese export manufacturers can learn from MiC 2.0™ Leaders who have implemented successful strategies to achieve better business performance and growth.
According to the MiC 2.0 report, export manufacturers are more pessimistic than before, with 29% of the companies saying the economy is worse than in 2014, up from 16%. Chinese export manufacturers are facing challenges on both demand and supply: two of the most commonly-cited challenges are increasing competition from Chinese companies (39%) and decreasing demand from Chinese customers (37%).
“Against a backdrop of intensifying pressures in China, it is clearer now than before that the future survival and success of export manufacturers would depend on their willingness to make changes to the way they do business,” said Richard Loi, President of UPS China. “Offering a lower price is not the optimal solution to remain competitive. Higher quality products (83%), showing an understanding of the customers’ business (82%) and offering a faster and more efficient supply chain (82%) are the top reasons for customers to switch suppliers. This indicates a need to shift from low-prices to offering higher quality products and providing value-add by building closer partnership with customers.”
“The pillar industries that used to support China’s economy have been losing vitality for a long time, and there is an urgent need for new industries to drive the next round of economic growth,” said Professor Huang Yiping of Peking University’s National School of Development. “But the majority of export manufacturers have yet to take the first step toward industry upgrading. What can be done to convert the successful experiences of leading companies into practical guidelines for tens of thousands of other companies in China? This is precisely the question this year’s Made in China 2.0 report aims to tackle.”
Much can be learned from the MiC 2.0 Leaders – leading companies that have adopted strategies and logistics for developing foreign market growth. MiC 2.0 Leaders are companies in the top 8% of the MiC 2.0 Readiness Index ¹, which assesses Chinese export manufacturers’ preparedness for the future of their industry.
MiC 2.0 Leaders have outperformed other export manufacturers in productivity, market share, revenue and profit, are more likely to be on a growth trajectory and are 7% less likely to see a decline in their business. They provide a model of success for other Chinese export manufacturers, who can learn from the following growth strategies:
- Wider geographical footprint
97% of MiC 2.0 Leaders sell to at least one market in Asia, and are more focused than other export manufacturers on key markets in Asia and Europe such as Thailand (161%), Hong Kong (151%), France (126%), Indonesia (116%) and the UK (115%). Leaders are also six times more likely to sell to Oceania and two times more likely to sell to Eastern Europe.
- Serving a more diversified customer base of both B2B and B2C customers
Two-thirds of MiC 2.0 Leaders (64%) sell to a mix of both B2B and B2C customers while other export manufacturers are more focused on B2B manufacturing, which is associated with lower-margin and lower-quality production.
- Understanding the role of logistics
MiC 2.0 Leaders understand that investing in logistics can add value to key business objectives. They are three times more likely to recognize that logistics can play a highly important role in reducing costs and growing sales, and two times more likely to enhance the customer experience.
- Priorities for the future
MiC 2.0 Leaders are significantly more likely than other export manufacturers to rate improving logistics (170%) and growing sales (168%) as highly important priorities for future success.
- Selling finished vs unfinished goods
MiC 2.0 Leaders are 63% less likely than other export manufacturers to sell mainly unfinished goods, indicating a move toward selling more finished goods as Leaders focus on product innovation and the move up the value chain.
- Identifying the impact of emerging trends
MiC 2.0 Leaders are more likely to recognize that nearshoring (41%), industry e-commerce (29%) and consumer e-commerce (24%) are emerging industry trends that will have a big impact on their business.
UPS provides strong support for businesses in China
Loi added: “As a global trade enabler and leader in integrated logistics solutions, UPS is well-positioned to help export manufacturers in China succeed and export globally. To this end, we are continually enhancing our service capabilities to provide strong support for businesses in China as they look toward global markets. This is why we are implementing service enhancements that include later pick-up time and faster time-in-transit in key cities such as Beijing, Shanghai and Tianjin.”
Customers in Beijing and Tianjin can benefit from faster transit times up to 24 hours, and pick-up cut-off time extension up to 2.5 hours in Beijing and 3 hours in Tianjin. Customers in Shanghai can benefit from pick-up cut-off time extension up to 1.5 hours. These enhancements improve accessibility for China businesses seeking a presence in global markets by providing the flexibility to import and export goods in a timely and effective manner.
In second and third tier cities, UPS is also expanding its presence to meet the needs of exporters. In 2015, UPS expanded into 21 new cities as part of its long term growth strategy in China. These cities are primarily in the Jiangsu, Shandong, Zhejiang and Guangdong provinces and Chongqing Municipality.
UPS’s 2016 MiC 2.0 report is a timely reminder that the necessity for change in the way export manufacturers conduct their businesses remains great. As China undergoes economic transformation, UPS will continue to support ongoing government initiatives such as Made in China 2025 and ‘One Belt One Road’ by expanding its scope of services to respond to customers’ evolving business needs – helping them to improve efficiency, quality control, speed-to-market, cash flow and profitability as they go global.
For more information about the UPS 2016 Made in China 2.0 Report, please visit www.ups.com/lianhe.
1. The MiC 2.0 Readiness Index combines a Recognition Score based on how well companies understand the Made in China 2.0 Priorities and a Performance Score that assess how well companies are delivering on those priorities within their organizations. The MiC 2.0 Readiness Index is marked out of 100 by combining a company’s Recognition score (marked out of 50) and Performance Score (marked out of 50). MiC Leaders have a MiC Readiness Index score of 90 and above.
UPS (NYSE: UPS) is a global leader in logistics, offering a broad range of solutions including transporting packages and freight; facilitating international trade, and deploying advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. The company can be found on the web at ups.com® and its corporate blog can be found at longitudes.ups.com. To get UPS news direct, visit pressroom.ups.com/RSS or follow Weibo (@UPS中国) and WeChat (@UPS中国动态).
About UPS Made in China 2.0TM Report
Research for the Made in China 2.0TM Report was conducted by Lightspeed GMI on behalf of UPS and Caixin Media. A total of 1,000 senior decision-makers in export manufacturing companies across China were interviewed. To qualify for the study, a respondent had to work for a company that exported at least 40% of the value of the goods it produced and have senior decision-making responsibilities within that company. Interviews were conducted in December 2015.
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