e-Commerce and Supply Chain Management in China
Read this article. The authors provide a broad view of decisions on supply chain management concerning e-commerce in China, considering several factors, including consumer access to the internet and telecommunication infrastructure for a given location. Two case studies are included to evaluate the models included in the article. Pay particular attention to the intersection of IT and non-IT considerations for firm supply-chain management strategies.
Conclusions
In
this study, we evaluated the e-commerce enterprise location in China
with the allowance of cross-border trade and logistics perspective. The
outcome of the study can be of interest for practitioners, who work on
the convergence between online and offline shopping. The essence of the
conducted analysis was unfolded through the two research questions. The
answer to the first research question (What are the success factors of
e-commerce zones in China?) was gained by the systematization of
factors, taking into account international and national scopes of the
problem. In particular, from the international level, factors such as
political stability, access to natural resources, unemployment rate,
foreign exchange rate, business climate, inflation level, duties and
taxies are essential. If the scope of location problem is narrower, then
the factors like number of cross-border e-commerce zones, wages level,
transport tariffs, labour productivity, number of corporate enterprises
of retail trade, and business climate on local basis play a role.
The
second research question (Which locations are favourable for
omnichannel shoppers' development?) we narrowed down the decision
analysis to 31 Chinese provinces. With the limited number of decision
criteria (15 factors), the answer was found by of multi-criteria
evaluation approach. The outcome shows that the most preferable
locations are Guangdong, Jiangsu, Zhejiang, Shandong, Beijing, Henan,
Fujian, Shanghai, Sichuan, and Hubei (Table 6). On the whole, the
findings of our study may guide the investment funds of companies, who
consider China as one of the several places, in which to invest. Also,
the results of the study can strengthen the governmental support of the
regions that are potentially favourable for e-commerce cross-border
development with neighbouring countries. Therefore, from a practical
point of view, our research facilitates the e-commerce start-ups,
especially of those businesses that regard China e-commerce sphere as
the top investment destination. Interestingly, most highly performing
regions in pairwise comparison of GCA were very seldom showing low wages
or exceptional labour productivity. However, highest performing
locations were those, where Internet development was high, logistics
infrastructure was advancing and supporting parcel deliveries, and
retail trade was already showing its significance.
Two case
studies completed for China- related retail operations, where Company A
was already having e-commerce operations in this vast consumer market,
while Company B was still relying on brick-and-mortar approach, while
being launching e-commerce service in the near future. Both of these
companies had chosen Shanghai as their main warehousing and logistics
hub. However, as case studies indicated, this position is not static.
Company A was planning to expand its warehousing network to other
cities, as serving a larger number of cities requires this. Company B,
in turn, has decided not to serve all cities, and was satisfied to
current structure. Both cases illustrate the specifics of the Chinese
retail market – both companies, A & B, were still selling a lot of
items with cash on delivery payment method, while Company B had found
the demands and awareness of Chinese consumer. Cases also illustrate
that producing services in-house is still very common (company A having
customer service, and company B even warehousing and related functions),
even if this is not necessarily lowest cost approach. Both companies
were also forced to use number of different companies in parcel
deliveries to reach different destinations in China.
Both
empirical data parts of this research highlighted that old the Pearl and
Yangtze River Delta centric warehousing model is about to change. These
regions will of course hold important role in the future too, but
further economic growth, growing cities in other parts of China, and
favourable conditions in numerous different locations for e-commerce are
drivers of change. It could be said based on this study that more
northern and central parts of China will gain larger role in the future.
This means that sea ports of this new emerging e-commerce regions shall
gain some market share from currently dominating sea ports. This same
finding is found in domestic logistics optimization models for lower CO2
emissions in China, where container sea ports play key role in import
and export activity. Another general finding arising
from empirical part is the significance of information technology as
well as supply chain management on overall performance, and location
selection of e-commerce and omnichannel environment. In analyzed market
it seemed to be the situation that low labour cost was not the main
emphasis, but that of getting foothold in the growing markets, and
assuring revenue growth. This is important finding for the e-commerce
and omnichannel research as compared to earlier literature, but also for practice.
As further research, we
would like to continue research work on Chinese omnichannel and
e-commerce branch. One of the interesting avenues to follow would be the
expansion of Chinese e-commerce companies to Russia and other near-by
Eurasian countries. This includes also Europe, where expansion and
deliveries could be supported with railway landbridges (Jiang et al.
2018; actually, railway based prompt delivery is already available in
Alibaba offerings). Another avenue to follow is the expansion of retail
operations to nearly 300 Chinese cities, which have a population of at
least half a million. It is typically forgotten fact that China is
having 15 megacities, but the amount of metro area cities is an overall
277.