Ken Mc Call, TNT’s China Strategy

China market with greatest potential

 Journalist: Since TNT entered China market and set a China headquarters, TNT keeps expanding its China service. How’s TNT’s prospect on China logistics market? Why does TNT decide to establish its China headquarters?
Ken: Looking around the global logistics market, you will find that China is a market most suitable for our investment.

Ken: Chinese economy maintains steady growth and will still maintain such a momentum in the future years. All these achievements are made thanks to China government’s efforts. In addition, China also gets a large growth rate in express, forwarding and logistics.

Some statistics shows that by the end of 2015, China will become the second automobile logistics market in the world. TNT ranks top in the global automobile logistics industry and our automobile logistics business in China is also sound. TNT, together with Shanghai Automotive Industry Cooperation, has invested an automobile logistics company to provide services including logistics service of automobiles and automobile components as well as after-sale service. Through such cooperation, we become the first automobile logistics provider in China market.   

Our advantage service is to provide the comprehensive logistics solutions including automobile logistics and automobile component logistics service. We stand our feet on integrating the total supply chain. Automobile logistics is the core competitive edge of TNT and is our core business in China market. 　　　 　
Generally, we set up our China headquarters based on the following reasons. First, just as I mentioned, China has sound development momentum and very giant automobile logistics market, which fit in with our advantage. Second, China will become the world manufacture center covering 40% of manufacture activities, which means a great opportunity for the industries of express, freight forwarding and logistics. In freight forwarding, we have purchased one foreign company which also has business in Asia-Pacific region. Third, in the express industry we have become the leader in Europe. It is estimated that China will become one of the largest express market in the world. All these are reasons for TNT to choose China as one of ourcrucial market. 

TNT’s headquarters is in Netherlands and is a posts company which focuses on efficient and cost. We will draw on our experience in Europe market in terms of cost and efficiency. In Europe, business promotion can not only adopt the form of TV commercials or newspapers, direct mail is also a popular manner. Currently, direct mail is not popular in China, so we will bring some European experience into China definitely.   　　

In such a modern society, people prefer to communicate via high technologies such as short messages, email and so on, which to some extent reduces the common mail use. We try to reactivate this common mail market with TNT’s specialty, advantage and through our cooperation with China Post to improve the annual post amount in China. In some mature European and American market, each person receives 85 mails each year, while this number is only 7 in China. Therefore we say that China market has great potential in direct mail post. 

In addition, TNT is the most efficient post enterprise in Europe and China post industry is undergoing great reforms, we are willing to help China post industry to facilitate is modernization with our own technology and skills.
　
Local Challenged faced by TNT

Journalist: China market has a rapid economic growth rate, and TNT also hopes to obtain a rapid growth in China. What is the strategy of TNT facing such a rapid economic growth an what is the largest challenges? 

Ken: What I hope most is efficiency optimization. China’s logistics cost accounts for 18%-20% of the total China GDP, while in some relatively advanced countries in Europe and America, this number is 9%-11%. If we can save some logistics cost, this saved fund can be used by government for reinvestment to gain more benefits. We hope to prove our advantage in supply chain efficiency and provide better service in China market. Now the largest challenge for TNT in China market is human resource. You know, China logistics market develops very fast, but the human resource cannot fit in with this development speed. Of course we can introduce some personnel from abroad, but the relevant cost is quite high. In the ling term, it is not practical. For example, in case that we merge a factory, the former employees of this factory will become TNT employee. Our largest challenges are how to train these employees to be skillful to fulfill TNT standard as soon as possible. Therefore, a tough task for me is to develop local human resources in China.

Journalist: Most multinational enterprises focus on their localization strategies and adjust their cooperate governance accordingly. What other strategies does TNT adopt in its localization in addition to human resources?

Ken: In addition to human resource localization, cooperate value and framework are also very important for the long-term development of a company. Therefore, we hope to introduce the global TNT cooperate value and framework into China. Chinese people pay attention to family value so we also introduce this idea in our Chinese business. We try to make all our employees feel like living in a total TNT family and then develop our business based on this. And I also want to emphasize that TNT also have a good performance in human resource attraction, which is also an index to evaluate a company.

 

Balanced Development Strategy
　
Journalist: As you mentioned, in the future years TNT hopes to achieve great development in China. What strategies will TNT adopt in this regard?

Ken: In the recent years, we make rapid progress in our express service. However, this not displays that we only focuses on one service. We hope to achieve a balanced development in express, logistics, direct mail and cargo forwarding in China, which is also “TNT-1” operation model we mentioned to provide customers “one-stop” service by integrating all services.

Journalist: Balanced development is really a good hope. However, TNT still does not achieve this by now. For example, TNT’s automobile logistics develops relatively faster. What is the percentage of automobile logistics in TNT’s total profit? In future, will TNT increase investment in automobile logistics, or maintain the balanced development?

Ken: Indeed, automobile logistics accounts for a large percentage in our total business, reaching 90%. In terms of employee quantity, there are 1,000 personnel in express industry, 4,000 in the logistics industry. However, as to the profit percentage, we cannot still give an exact number.
As to the future development, we indeed face some difficulties now. Compared with that in the previous year, TNT’s growth rate decreases this year. This is normal. Compared with other market in the world, TNT’s growth rate in China market is quite high. In the future years, we plan to increase 200 million Euro investment in both our old and new services. The new investment will cover express, logistics, cargo forwarding as well as some infrastructure including office, fleet, facilities and warehouses.