Shipping company Maersk's global logistics hub in Chengdu, capital city of Sichuan province. Provided to China Daily

Danish company provides impetus for shifts in Chengdu's logistics

Shipping and oil conglomerate Maersk, consultancy firm Accenture, logistics major DHL, ecommerce major Amazon and cement company Lafarge are as different as chalk and cheese when it comes to their respective lines of business in China.

But a closer look reveals that all these companies have one thing in common - a strong and ongoing Chengdu connection for their global logistics operations.

For a city that was until recently known for pandas and fiery cuisine, Chengdu has indeed come a long way. Logistics, financial services and high-end manufacturing have all combined to make Chengdu a bellwether of the government's "Go West" economic roadmap.

The transformation seems to have more than paid off as a combination of factors like less pollution, investor-friendly policies, robust financing facilities and modern amenities are drawing hordes of multinationals from diverse sectors to set up facilities in Chengdu.

The Copenhagen-based AP-Moller Maersk Group is already a well-known player in the global logistics trade with its extensive linkages to major ports and harbors in the world. Most of the daily operations are, however, coordinated from the company's global logistics hub in Chengdu, capital city of Sichuan province.

Though the Danish company was already present in China, it was only in 2009 that it stepped up its logistics activities by setting up a global service center and a logistics-processing branch at Tianfu Software Park in Chengdu. Despite several scale-ups and upheavals, the Chengdu logistics unit has become the global hub for Maersk.

Alongside the Maersk facilities in Chengdu is a building of Tencent, China's biggest Internet company by sales. Damco, the logistics arm of the group employs about 1,000 people in its new customer service center that occupies the building's bottom three floors. The Maersk Global Service Center, which provides the back office functions for group companies, is located in the same facility in the top two floors.

Maersk has five GSCs, three in India and one each in Chengdu and Manila. The Chengdu center is undoubtedly the fastest-growing GSC of the group. It provides customer service documentation, online booking, online customer service with finance and accounting processes.

"Chengdu GSC has been developed vary fast over the past two years. We will continue to grow the Chengdu center though it is now already covered the support of almost 40 percent of our export globally," says Shao Wei, senior director of the Maersk GSC Chengdu.

Apart from the impressive infrastructure that it has lined up to attract global majors, Chengdu also provides multinational companies an ideal opportunity to trim overall costs and a footprint to the vastly untapped markets in western China.

Multinational companies can also cash in on other factors like developed infrastructure, talented human capital and open investment environment. But the real draw for most logistics companies comes in the form of the excellent transport linkages that the city possesses with other major destinations in China.

Chengdu is already the fourth major air hub in China, with seven direct international flight connections and 12 code-sharing global linkages. By 2015, there will be at least 30 direct passenger and freight flights from Chengdu to major cities in the world.

Yet another factor that has helped industrialization is the cluster approach, especially for shared service centers. Global majors like Accenture, DHL, Lafarge and Amazon rub shoulders with domestic companies like Alibaba and Tencent to set up a robust chain of delivery or service centers.

"We believe that the Chengdu center will provide our global customers with better services and make our business more competitive," says Shao.

The Damco unit in Chengdu functions more like an invisible hand that adjusts and controls the Maersk Group's operations across all major markets, he says.

The Chengdu site contributes about 80 percent to the group's logistics business in China, while the North Asia region including China accounts for one-third of the group's global turnover, says Wang Yuehua, director of Damco Customer Service Center in Chengdu.

"We completed the shift of our customer service function from coastal cities to Chengdu in June. Though it was a very complicated migration process, by having the centralized customer center in Chengdu we have gained a strategic advantage over other peers," she says.

Citing Nike, one of Damco's major clients in China, she says the US company often reached out to Damco from its units in the eastern coastal cities of China to ship products to Europe, which means it has to speak with more than 10 Damco employees to do the same process in different regions of China.

But after the centralization, customers need to make just one phone call, she says. "Every client gets a specific contact person for their business. The centralized service not only makes our clients' work more convenient, but also improves our capability and efficiency," Wang says.

"In Chengdu, we are able to standardize our services, which makes our business much more professional. We are also capable of managing changing customer requirements and to respond in a short time," she says.

Making inroads into the domestic market is another major mission for the Chengdu branch as many of Maersk's clients are clinching business deals in central and western China.

"There is a trend that our clients are moving their manufacturing programs to further inland or to Southeast Asia, such as Hewlett-Packard, which requires us to enhance the knowledge and business ties in the domestic market," Wang says, adding that providing overseas services is one of Maersk's biggest advantages.

The Chengdu site will also look to provide more value-added services, such as information and supply chain management solutions, along with services for physical transportation in China.

The Maersk facility with a total office area of 15,000 square meters currently employs more than 2,000 people, with the average employee age being 25. The young employees as well as the newly decorated office building have become major selling points for the company to attract more talent.

"Many of our international clients had never heard about or seen Chengdu until they came here for inspection or for signing the contract. Most of them are impressed after a tour of our new facilities and are more than eager to work with us," Wang says.

Contact the writers at zhaoyanrong@chinadaily.com.cn and liyu@chinadaily.com.cn

(China Daily 11/09/2012 page18)