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German Companies in ChinaLogistics Processes in Transition
www.pwc.de
June 2018
PwC
China: An important trade partner for Germany
Selected imported productsShare of imports (in %)
In the year 2017, China and Germany traded imports and exports with each other for €186.6 billion in total.
Selected exported productsShare of imports (in %)
In the year 2016, China imported agricultural products for €1.8 billion from Germany. The USA imported agricultural products for the same volume from Germany.
22.513.5 12.3
6.4 7.8
37.525.7
11.8 9.3 5.9 5.7
41.6
2010 2015
Optical, photographic, medical tools
Electronic components
Mineral resources,
fuels
Machines, mechanical
products
Mineral ores, scoria
Other goods
24.619.6
3.2 7.7
44.9
26.316.0
4.3 7.1
46.3
2010 2015
Electronic components
Other goods
Machines, mechanical
products
Furniture, lamps, prefabricated constructions
Clothes
+3.2
+3.6
-1.7 -3.0-0.5 -2.1
+1.7
+1.1
+1.4
-3.6
-0.6
Source: Destatis, Grafik PwC)
2June 2018German Companies in China – Logistics Processes in Transition
PwC
Active areas
Source: http://upload.wikimedia.org/wikipedia/commons/6/69/China-equirect.png
Beijing
Shanghai
XiamenTaipei
Hong Kong
Chongqing
Changchun
Southern coastal region
Western inland provinces
Northeast China
Eastern coastal region
Mid-coastal region
Taiwan
2011
2017
25%
23%-2
2011
2017
51%
42%-9
2011
2017
35%
28%-7
2011
2017
30%
24%-6
2011
2017
84%
76%-8
2011
2017
59%
49%-10
3June 2018German Companies in China – Logistics Processes in Transition
PwC
German companies in China bring their supply chain into line
-25
-20
-15
-10
-5
0
5
10
15
0% 10% 20% 30% 40% 50% 60% 70% 80%
Percentage of companies that complete their value chain in China (%)
Cha
nge
in %
in c
ompa
rison
to 2
011
Research/development10%
Design13%
Manufacturing/assembly47%
Procurement65%
Transport and logistics
62%
Marketing/sales61%
After-sales services53%
4June 2018German Companies in China – Logistics Processes in Transition
PwC
Quality manage-ment
Almost every fourth company in the retail and consumer industry gives good grades in quality management. In contrast, mechanical engineering are much more critical.
Just-in-time delivery
Just-in-time delivery is top-rated by companies in the automotive and mechanical engineering industry.
Staff quali-fications
More than one-third of companies in the mechanical engineering industry experience low competence in staff qualifications. On the contrary: companies in the automotive and retail industry are of the opinion that staff qualifications changed positively.
Validation of the performance of logistics providers in China (2/2)
21%
24%
20%
14%
18%
53%
42%
52%
46%
54%
19%
28%
18%
24%
18%
7%
6%
10%
16%
10%
Total 2011
Retail 2017
Consumer goods 2017
Mechanical engineering 2017
Automotive 2017
15%
18%
12%
20%
20%
40%
52%
42%
38%
44%
31%
24%
32%
38%
24%
13%
6%
14%
4%
12%
Total 2011
Retail 2017
Consumer goods 2017
Mechanical engineering 2017
Automotive 2017
16%
20%
12%
10%
18%
53%
60%
56%
46%
58%
21%
16%
20%
38%
20%
9%
4%
12%
6%
4%
Total 2011
Retail 2017
Consumer goods 2017
Mechanical engineering 2017
Automotive 2017
High Average Low Unknown, n/a
5June 2018German Companies in China – Logistics Processes in Transition
PwC
Automotive and mechanical engineering companies struggle more in finding a qualified workforce
52%
80%
72%70% 68%
60%
Retail and consumer goods Automotive Mechanical engineering
Yes 2011 Yes 2017
+18 -12-12
6June 2018German Companies in China – Logistics Processes in Transition
PwC
External, non-Chinese logistics companies lose orders; own car pool becomes more attractive
Organisation of logistics processes in respective companies
Warehousing services
Customs clearance
Transport services
19%
16%18%
30%30%
36%40%
46%24%
20%
40%32%
26%36%
36%
5%12%
10%10%
14%
Total 2011Retail 2017
Consumer goods 2017Mechanical engineering 2017
Automotive 2017
Internal External, non-Chinese logistics companies External, Chinese logistics companies Unknown, n/a, does not apply to our company
29%28%
20%34%34%
37%44%
38%38%
30%
26%24%
20%18%
20%
7%4%
22%10%
16%
Total 2011Retail 2017
Consumer goods 2017Mechanical engineering 2017
Automotive 2017
43%26%
24%52%
36%
22%30%
36%8%
12%
7%20%
10%2%
10%
29%24%
30%38%
42%
Total 2011Retail 2017
Consumer goods 2017Mechanical engineering 2017
Automotive 2017
7June 2018German Companies in China – Logistics Processes in Transition
PwC
Total
Supervised externally
Supervised externally
Supervised internally
36%
34%
44%
41%
7%
4%
14%
21%
Total 2011
Total 2017
Warehouse logisticsOnly Chinese logistics providers manage to enhance customer satisfaction
Satisfaction with warehousing services
50%
43%
40%
43%
10%
14%
Non-Chinese logistics companies 2011
Non-Chinese logistics companies 2017
33%
35%
58%
51%
6%
5%
3%
9%
Chinese logistics companies 2011
Chinese logistics companies 2017
34%
30%
38%
35%
8%
4%
20%
30%
2011
2017
High Average Low Unknown, n/a
-2
8June 2018German Companies in China – Logistics Processes in Transition
PwC
Supervisedinternally
Warehouse logistics in the automotive branchInternal handling: customer satisfaction declines
Satisfaction with warehousing services
of companies in the automotive industry
supervise warehousing services internally.
41%
39%
36%
33%
9% 14%
28%
Automotive 2011
Automotive 2017
High Average Low Unknown, n/a
36%
9June 2018German Companies in China – Logistics Processes in Transition
PwC
Supervisedinternally
Warehouse logistics in the mechanical engineering branchCustomer satisfaction declines
Satisfaction with warehousing services
26%
23%
33%
35%
11%
12%
30%
31%
Mechanical engineering 2011
Mechanical engineering 2017
High Average Low Unknown, n/a
of companies in the mechanical engineering
industry organisewarehousing services
internally.
52%
10June 2018German Companies in China – Logistics Processes in Transition
PwC
Satisfaction with warehousing services
Supervisedexternallyby Chineselogisticscompanies
Supervisedinternally
Warehouse logistics in retail and consumer goods branchCustomer satisfaction declines
58%
27%
39%
42%
53%
50%
7%
6%
13%
6%
R&C 2011
Retail 2017
Consumer goods 2017
40%
31%
33%
47%
38%
33%
13%
31%
33%
R&C 2011
Retail 2017
Consumer goods 2017
High Average Low Unknown, n/a
of companies in the retail and consumer goods
industry organisewarehousing services
internally or externally with Chinese logistics
companies.
58%
11June 2018German Companies in China – Logistics Processes in Transition
PwC
Satisfaction with transport services
Total
Supervised externally
Supervised externally
Supervised internally
50%
50%
47%
45%
2%
3%
1%
2%
Total 2011
Total 2017
Transportation services Customer satisfaction in total unchanged
62%
54%
38%
42% 3% 2%
Non-Chinese logistics companies 2011
Non-Chinese logistics companies 2017
37%
45%
57%
46%
4%
5%
2%
5%
Chinese logistics companies 2011
Chinese logistics companies 2017
48%
51%
45%
49%
3% 3%2011
2017
High Average Low Unknown, n/a
±0
12June 2018German Companies in China – Logistics Processes in Transition
PwC
Satisfaction with transportation services
Supervisedexternallyby Non-Chineselogisticscompanies
Supervisedinternally
Transportation services in the automotive branchCustomer satisfaction increases
of companies in the automotive industry
organise their transports internally or externally
with non-Chinese logistics companies.
66%33%
61%
67%
33% 6%
Automotive 2011
Automotive 2017
50%
60%
50%
40%
Automotive 2011
Automotive 2017
High Average Low Unknown, n/a
13June 2018German Companies in China – Logistics Processes in Transition
PwC
Satisfaction with transportation services
Supervisedexternallyby Non-Chineselogisticscompanies
Supervisedexternallyby Chineselogisticscompanies
Supervisedinternally
Transportation services in the mechanical engineering branchCustomer satisfaction with Non-Chinese logistics companies drops dramatically
of companies in the mechanical engineering industry organise their
transportation externally with Non-Chinese
companies.
36%83%
33%
17%
67%
Mechanical engineering 2011
Mechanical engineering 2017
33%
47%
58%
53%
8%Mechanical engineering 2011
Mechanical engineering 2017
High Average Low Unknown, n/a
35%
42%
60%
42%
5%
8% 8%
Mechanical engineering 2011
Mechanical engineering 2017
14June 2018German Companies in China – Logistics Processes in Transition
PwC
Satisfaction with transportation services
Supervisedexternallyby Non-Chineselogisticscompanies
Supervisedexternallyby Chineselogisticscompanies
Transportation services in the retail and consumer goods branch Customer satisfaction with Chinese logistics companies rises
of companies in the retail and consumer goods
industry organise their transports externally with
Chinese logistics companies.
43%71%
63%
62%
29%
31%
31% 8%
6%
R&C 2011
Retail 2017
Consumer goods 2017
31%
20%
61%
62%
60%
39%
10%
8%
10%
R&C 2011
Retail 2017
Consumer goods 2017
High Average Low Unknown, n/a
15June 2018German Companies in China – Logistics Processes in Transition
PwC
Total
Supervised externally by Non-Chinese logistics companies
Supervised externally by Chinese logisticscompanies
Supervised internally
Satisfaction with customs clearance
57%
49%
31%
30%
6%
6%
5%
14%
Total 2011
Total 2017
Customs clearance Customer satisfaction with Chinese logistics companies sinks significantly
67%
63%
28%
22%
5%
15%
2011
2017
54%
36%
43%
43%
2%
11%
2%
11%
2011
2017
55%
57%
23%
19%
5%
5%
18%
19%
2011
2017
High Average Low Unknown, n/a
-8
16June 2018German Companies in China – Logistics Processes in Transition
PwC
Satisfaction with customs clearance
Supervisedexternallyby Non-Chineselogisticscompanies
Supervisedexternallyby Chineselogisticscompanies
Supervisedinternally
Customs clearance retail and consumer goods branchCustomer satisfaction with Chinese logistics companies decreases
of companies in the retail and consumer goods
industry organise their transports externally with
Chinese logistics companies.
41%64%
67%
70%
36%
8%
30%
25%
R&C 2011
Retail 2017
Consumer goods 2017
53%
36%
80%
18%
36%
10%
6% 24%
29%
10%
R&C 2011
Retail 2017
Consumer goods 2017
High Average Low Unknown, n/a
53%
36%
47%
42%
32%
37%
5%
9%
11%
23%
5%
R&C 2011
Retail 2017
Consumer goods 2017
17June 2018German Companies in China – Logistics Processes in Transition
PwC
Criteria for selecting a logistics provider
Punctuality and flexibility are important criteria for choosing a logistics provider
8%
36%
38%
43%
53%
65%
66%
66%
75%
77%
90%
39%
48%
51%
42%
44%
30%
29%
32%
22%
21%
8%
50%
14%
10%
13%
3%
4%
4%
1%
2%
2%
2%
4%
3%
2%
2%
1%
1%
2%
2%
1%
1%
1%
Reputation, eg, in social networks
Nearby location
Database management systems
Environmental aspects/sustainability
Price
IT-Security und data protection
Security systems
Quality management
Sufficient capacity
Flexibility
Punctuality
High Average Low Unknown, n/a
18June 2018German Companies in China – Logistics Processes in Transition
PwC
Awarding of contracts to contract logistics providers
Contract logistics providers lose orders at German companies
-13
24%
22%
26%
12%
28%
15%
74%
60%
66%
80%
70%
74%
2%
18%
8%
8%
2%
11%
0% 20% 40% 60% 80% 100%
Mechanical engineering 2011
Mechanical engineering 2017
Automotive 2011
Automotive 2017
Retail and consumer goods 2011
Retail and consumer goods 2017
Yes No Unknown, n/a
-14
-2
19June 2018German Companies in China – Logistics Processes in Transition
PwC
Potential for contract logistics providers (multiple answers possible)
Contract logisticsReturns management expands
5%
51%
46%
64%
31%
33%
36%
15%
28%
31%
9%
25%
28%
47%
22%
28%
34%
13%
28%
38%
0% 20% 40% 60% 80% 100%
None, Unknown, n/a
Materials recycling
Procurement
Packaging
Repairs and spare-parts supply
Assembly
Packing
Complaints handling
Manufacturing
Returns management
2017 2011
+7
-2±0
-2
-5
-9
-17-18
-26
20June 2018German Companies in China – Logistics Processes in Transition
PwC
22%26%
15%18%
13%17%
23%39%
26%29%
33%36%
37%47%
37%36%
44%50%
0% 20% 40% 60% 80% 100%
None, n/a 2011None, n/a 2017
Sales planning 2011Sales planning 2017
Accounting and settling accounts 2011Accounting and settling accounts 2017
Manufacturing 2011Manufacturing 2017
Order management 2011Order management 2017
Complaints handling 2011Complaints handling 2017
Procurement management 2011Procurement management 2017
Quality control 2011Quality control 2017
Returns management 2011Returns management 2017
Potential for contract logistics providers exists
21June 2018German Companies in China – Logistics Processes in Transition
PwC
Industries surveyed
Automotive
Mechanicalengineering
Consumergoods
Retail
25%
25%
25%
25%
22June 2018German Companies in China – Logistics Processes in Transition
PwC
Number of employees
0
0
27
3
30
18
22
46
22
34
0 5 10 15 20 25 30 35 40 45 50
2017 worldwide
2017 in Germany
Under 500 employees 500 to 2.000 employees 2.000 to 10.000 employees 10.000 employees or more Unknown, n/a
23June 2018German Companies in China – Logistics Processes in Transition
PwC
Companies‘ line of business
Manu-facturing
75%Retail
25%
24June 2018German Companies in China – Logistics Processes in Transition
PwC
Contacts
PwC GermanyPhone +49 211 [email protected]
PwC GermanyPhone +49 40 [email protected]
PwC GermanyPhone +49 89 [email protected]
PwC GermanyPhone +49 711 [email protected]
PwC GermanyPhone +49 69 [email protected]
Dietmar PrümmIndustry Leader Transportation and Logistics
Dr. Christian WulffIndustry Leader Consumer Markets Germany
Dr. Klaus-Peter GushurstIndustry Leader Industrial Production
Felix KuhnertIndustry Leader Automotive
Thomas HeckChina Business Group
25June 2018German Companies in China – Logistics Processes in Transition
Thank you.
© 2018 PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, which is a member firm of PricewaterhouseCoopers International Limited (PwCIL). Each member firm of PwCIL is a separate and independent legal entity.
