International Power and China’s Shipping Pattern

Three years ago， we watched a blockbuster: 2012 — “20” and “a half”， an entangling symbol! Nobody knows whether the globe will be broken into two. However， the world economy is to restructure and the shipping market will undoubtedly collapse. Confronting such a great transformation， some say the winter is coming， feeling a chill， while some others are discussing W shape and L shape， predicting an impact wave. No matter it is a chill or an impact wave， great power is anyway contained， which is forming an international power， overthrowing outmoded systems and mechanisms and ushering in the advent of a fresh era master.

Some say that this international power originated in Asia Pacific， impacts the US and then Europe. We see that westerners who like enjoying the sunshine nakedly on the beach with champagne feel a chill and they begin to be in search of warm. In the current world， where is warm? The US President Mr. Obama once said “the American dream will not be necessarily realized in the US”. British Prime Minister Cameron went more directly: China will be our market! International scholars have begun to predict that China’s GDP will double that of the US in 2030. At the critical moment when the shipping market faces a sudden turn， what we need to do is not to run， but to clearly understand the era we live in from a proper stance and to formulate wise development strategies with a new thinking pattern. If we just treat the enterprises from the enterprise point of view or look at the industry merely from the angle of industry， we will be shortsighted with our own survival and crisis and worse still all of our actions may turn out to get just the opposite. If we look at China with a global view， look at shipping from the economic point of view and treat corporate development from the era point of view， we will clearly see an exciting blueprint: global procurement will be located in China， so will global supply. And China will no longer be just a China of itself， but a new China of the whole world.

If our prediction is correct， then an urgent proposition calling for the industry to solve comes — who will undertake the logistics mission of such a global procurement and supply center， the Chinese logistics companies or the overseas counterparts? If it will be the Chinese logistics companies， what is their ace in the hole? What is the core competitiveness for the Chinese companies to serve China and the globe? If it will be the foreign counterparts， China will be another post-war Iraq or Afghanistan without discourse power for economic trade and shipping， which may pose threats to military affairs and the nation. Facing such a great international power， is China ready? And have the domestic ocean shipping， port， logistics and cargo transportation enterprises made full preparations?

Since we have already felt the international power， how will we cope with it? Currently， all the Chinese are shouting a loud slogan — to become bigger and stronger! Besides， we often heard senior officers state that we are bound to transform from a nation with a large shipping volume to a shipping power. Then what is actually a shipping power — digging bigger puddles to build more ports or cast more iron to build larger ships? Personally， I think it is a matter of stance. If we just see a point， then we will think how to make ourselves heat and swell to become large bread， which is so-called “becoming larger”; then， once encountering difficulties， we will tend to contract to become a stone， which is so-called “becoming stronger”. But if we think differently and see a facet rather than just a point， we will have linear thinking and we will consider how to become professional. Only becoming professional can we have core competitiveness and discourse power， and only those controlling the discourse power can become stronger， genuinely strong. Some say that the Chinese style is to innovate， and then what is innovation? Those having never built ships begin to build ships， those without warehouses begin to build warehouses and those who have never been engaged in trade begin to carry out trade. Our esteemed President Hu once said plainly: no Zturn. Then， what is the essence of the Chinese-style innovation — Z-turn! Regarding this issue， the Chinese government， central SOEs and SOEs need to offer a scientific explanation to the Chinese entrepreneurs and all the Chinese taxpayers. And the large number of SMEs would better not blindly follow suit as they are too fragile to pay the price.

At the end of the 20th century， we began to hear the fresh word “logistics”and many companies were renamed as logistics companies. But many Chinese people are confused about logistics. When we are still not very clear about logistics， another new word — supply chain comes. Unlike logistics， supply chain is a new production mode and may make companies thriving and powerful or close down. Then what is supply chain? Supply chain is a legendary dragon with supply as the head， procurement as the tail， logistics as the body and technology as the claw. Supply chain is not simply the supply of materials， but includes capital， information as well as credit and rules; procurement is not simply corporate procurement， but more importantly for groups， governments and regions. Future competition will focus more on industries， regions and nations rather than merely companies; just like a sensor， technology integrates procurement， supply and logistics， making them dynamic， intelligent， safe， fast and accurate. The last but not the least is logistics. Like a person’s backbone linking all the internal organs， logistics serves as the core and mainstay along the supply chain.

We all know that all the industrial revolution aims at enhancing productivity and the core is cost. If we discuss cost reduction merely from the perspective of the enterprises， we will find that enterprises will have narrower and narrower channels to cut cost， because prices of raw materials， human resources and energy are all on the rise. Some claim that management may save cost. It is true that management may cut cost to some degree， but management itself is a huge cost and the meager profit it brings cannot solve the problem of corporate development and profits. Then what is to be relied on so as to enhance productivity and cut cost? The sole answer is to transform production mode. Transformation of production mode hereby is not simply the transformation of a single company， but the whole industry， the society and the world. Marx’s “communism” will no longer merely be an ideal; instead， it has become a vivid reality and the most scientific production mode for the mankind in the upcoming century. Google， cloud computing， Groupon and Alipay all belong to “communism” production modes， which have enhanced productivity， cut cost and created value.

Logistics itself is a cost and China’s logistics is one of the most expensive logistics in the world. Unlike the accurate Rolex watches and the intelligent Macs， China’s logistics is not an integrated or coordinated logistics chain due to the absence of soft power and flexible links， which leads to significant losses between links.

In the storm， we see the rainbow of the world. How will China’s legendary shipping dragon leap the rainbow by making full use of all the favorable conditions? To consolidate! Only through consolidation to pool all the Chinese power can we build a unique international supply chain platform， which is not to separate or even exclude， but to integrate and admit just like airport runways for both taking off and landing. Via this platform， we will gradually build a credible， safe and efficient system to attract international large buyers and to incorporate government procurement and such financial capitals as banks. Eventually， myriads of logistics and production SMEs will be absorbed into the credit mechanism and continuous development and profits will be achieved through the operation of circulation both inside and outside the platform. The value chain is derived from the supply chain， which not only serves China but also the whole world， not only cuts cost but also creates value and not only stimulates employment but also develops new industries. Fresh production modes of China’s shipping logistics have emerged in the new era!

Then， who will build and how to build such a Chinese-style platform integrating logistics， commodity flow and information flow and bringing the resources advantages of several industries into full play? The general public will definitely say the government will take the lead. Why do we think so? Because since our childhood， we began to sing a song “the communist party is our great mother. For important issues， we will necessarily turn to our mother for help”. Since the “new China” has grown up to over 60 years old， such a thinking pattern is neither mature nor scientific. We should call for the government to lend a helping hand to tolerate， support and guide the establishment of such a platform and to lend another visible hand to create a harmonious economic environment and legal environment favorable for the rapid development of shipping logistics companies. However， the establishment of such a platform eventually relies on the market and private enterprises， as the most dynamic productivity comes from the grass roots and the latest production mode is born in the most fierce market competition.

In order to accomplish the abovementioned mission， we shipping companies should enhance our value and above all we need to enhance our status. Only understanding our own weakness can we enhance ourselves， as our weakness determines to what level we can achieve. In the past 20 years， enterprises engaged in shipping and logistics really made some money， but still we cannot rival with trade， finance and technology in terms of the speed and scale of industry development as well as profit making. For instance， since 2000 no forwarding agent has made a profit of over RMB 200 million by virtue of freight forwarder. Our weakness lies in the absence of learning and philosophy. As a social doggerel goes “he who does not study hard in the youth will enter the transportation industry when growing up”， many people still only knows addition and subtraction when the era of exponent and root operation has befallen. It matters not too much that we have no knowledge about multiplication and division， but we need to clearly understand that root operation and division are operated and if we do not know its principle， we will probably be “divided”， which may be the original meaning of the word “elimination”. Noncooperation is another weakness of us， as we prefer individual fight， which leads to vicious competition featuring racking brains to kill rivals. Still， we are technology illiterate， as we would rather believe our two legs but the network. We lack confidence and shipping logistics has been long in a humble status along the whole industrial chain. In the past， we were the last baton bearer， but today we have become the first holder of the baton and our mission is how to bravely rush in the front.

The upcoming 2012 will be a worst period but also a best period; it will be a year featuring most gloomy business but also a year full of business opportunities. Let’s give up the recovery fantasy， as dead people cannot revive， so does the withered industrial pattern of an era. That what is more inspiring than recovery is the emergence of production modes in a new era， which will bring us more rosy expectations. As a matter of fact， we are not bragging， since the Chinese private enterprises have begun to take actions by using the market power. The World International Freight Forwarder Alliance(WIFFA) jointly launched by the shippingchina.com and 102 logistics freight companies from the nationwide ports has taken shape. The WIFFA has begun to discus rules， seek cooperation and business opportunities and it is the first time for China’s freight logistics to step onto the track of independently and spontaneously allying. In the mean time， China Port Shipping Logistics Joint Stock Company invested by the most representative shipping logistics companies in the local regions is under busy preparation for establishment. Via the “cloud supply chain” platform set up by the shippingchina.com， the China Port Shipping Logistics Service Headquarters is to build an international e-commerce center and to initiate centralized settlement， procurement， supply and logistics service for the dozens of companies and hundreds of thousands of shipping logistics companies for every port. The “cloud” platform integrating trade， payment and guarantee and the Chinese-style logistics production mode featuring corporate value， capital value and national value are to be initiated.

As early as 30 years ago， the great Chinese poet Guo Moruo used a line of ancient Chinese poem to praise China’s technological spring. Today， facing the trough of the world economy and the global shipping market， we may as well once again quote Guo’s poem to look forward to the future of the domestic shipping industry: “when the sun rises， the flowers along the riverside become as red as the flame; when spring comes， the river water turns blue green”.