China is capable of doing everything itself – and it wants to, too. The rapidly growing middle class is increasingly demanding quality Chinese products, and to DSV China, this means that a steadily increasing share of the business both begins and ends with Asia.
"This is particularly what we're focused on: intra-Asian trade," explains Jakob Jeppesen, Executive Vice President, DSV Hong Kong, who, together with Claus Thomsen, Executive Vice President, Shanghai, share responsibility for the region's countries. With more than one-quarter of turnover generated by intra-country trade, DSV currently has employees whose only job is to work on intra-Asian commerce lanes.
"Activities have increased more than 500% over the past five years," says Claus Thomsen, who, together with Jakob Jeppesen and Guillaume Burette, APAC Executive Vice President for DSV Solutions, hosted DSV's board of directors for a four-day visit to Hong Kong and Shanghai. During their visit, the board members gained a deeper appreciation of the sweeping changes which the region has undergone in recent years. And of the developments that have taken place in DSV, not least after the network was enlarged by the takeover of UTi: "Whereas we used to mainly assist the network by managing the business that came in from overseas, now we manage it out here by ourselves. This is a very big difference," Claus Thomsen says.
Enthusiasm and joy
Chairman of the board Kurt Larsen has visited the region several times, but China came to the forefront of the DSV world in earnest when DSV took over DFDS Dan Transport in 2000. Back then, the profits generated by the Asian offices were more modest: 40 to 50 times lower than today, and this trend is reflected on the faces encountered by DSV's board:
"We were met with great enthusiasm and joy by the Chinese employees," says Kurt Larsen, who was impressed by the progress he detected, to put it mildly. Not only at DSV but in the big Chinese cities as well. "They've changed enormously. In China we experience a level of ambition – among the whole population – that outdoes everything we're accustomed to in our part of the world," Kurt Larsen adds. He was particularly impressed by the edifices both in the cities and at the world's biggest container port situated in Shanghai, and which was connected to the mainland by the longest bridge in the world – until 2008 that is.
"This bridge is more than 32 kilometres long, and it was built in just three years. It simply doesn't seem possible!" Kurt Larsen says.
Today, Donghai Bridge has fallen further down the list of longest bridges in the world, replaced by other gigantic Chinese building projects, connecting the country in new and time-saving ways for the benefit of the constantly growing road and rail traffic.
The board members visited Shanghai Urban Planning Exhibition Centre together with members of local and regional managements. In the picture, from left to right: Thomas Plenborg, Claus Thomsen, Jacob Jeppesen, Birgit W. Nørgaard, Kurt K. Larsen, official from Shanghai Urban Planning Exhibitions Center, Annette Sadolin, Jørgen Møller, Robert S. Kledal, Henry Cao.
Listen to China
"We have to be more careful listeners in terms of what's happening in Asia," says Robert Kledal, DSV board member. Robert no longer thinks that keeping an eye on London, Hamburg and New York is sufficient when developing new solutions for the transport and logistics industry.
"My 76-year-old Chinese mother-in-law is much better at handling digital solutions than my own mother, because they take a completely different approach to all this out here," Robert explains. His wife is Chinese and he has been living in China for 15 years. "The average office employee is 26 years old, and these people grew up in a digital age. So, they take these tools to work with them where they
expect the solutions to be just as digitised" says Robert, backed up by the cold, hard facts: Digital (payment) solutions are more widespread in China than in any other country in the world, and online commerce has gradually outpaced the physical retail trade in China; everyone shops online in an e-commerce economy that is setting new records every day.
"Our job is to make sure that DSV is still excelling in three to five years, and in this respect we have to admit that China is leading the digital world. We get our inspiration from our customers out here; their demands far outpace the demand we see in Europe," he says.
Thomas Plenborg, Vice Chairman of DSV's board of directors, also noted the far-sightedness typifying China's infrastructure, not least in terms of urban planning. The board gained insight into this during a visit to the city mayor's office.
"It's obvious how they are increasingly incorporating sustainability into their solutions," he says, mentioning a new urban area in Shanghai's port terminal, which is exclusively powered by offshore wind turbines.
"It was impressive to see how the planning of entire urban areas integrates and includes green areas, wind turbines and the supply grid. Far above the standard we see in Denmark and also far better than the standard we had imagined there would be in China," Thomas says. He sees great potential for DSV to grow in Asia, both in terms of exports but also from intra-Asian trade. Provided that there are ongoing investments in IT:
"They have made great strides here in Asia and it confirms the fact that we need to be prepared both in terms of IT and digital solutions and be willing to continue investing to keep up with developments," he says. Birgit Nørgaard of DSV's board agrees, as she felt "humbled" by seeing the speed of development in China compared to the West.
"All of us were very pleased to see an exceptionally competent management in each division out here, because things are moving very fast; the Chinese have an impressive willingness to change, and as a result they've skipped a few e-commerce steps," says Birgit Nørgaard, who especially noticed the region's increased spending power:
"Imports and exports are more balanced, which is driven by rising Chinese consumption. This largely targets Chinese products, because we are also experiencing a nationalistic atmosphere where is it very fashionable to buy Chinese products. But there are also tonnes of shops selling Western luxury goods, which are still immensely popular, and it is especially here where we have to win business," Birgit says. In this context, she singles out a visit to a dust-free, temperature-controlled warehouse in Hong Kong, from where more than 45,000 individually produced bridal gowns are distributed to customers in Asia, the US and Canada each year.
The operation involves all divisions, not least Solutions, which provides a wide range of value-added services, including ironing, mending and inspection of the gowns.
It is this very type of business – i.e. where we can exploit our full range of services – that we must stay on the lookout for," Birgit Nørgaard says.
Jørgen Møller, board member, DSV:
"We acquired an entirely new appreciation of the size of our Asian organisation which, after the UTi integration, has been enlarged to include many highly qualified managers and staff, who fit in well with our organisation and culture. It is difficult to outrival their enthusiasm." Jørgen has great expectations of the region's future growth:
"Now we're the right size to get our slice of future growth, not least the intra-Asian growth, which is currently the fastest-growing trade lane in the world," he says.
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