Shanghai at night. Photo: Allan Leibowitz

The smartest move materials handling companies can make in China is to adopt a dual strategy, according to Tompkins, a global supply chain services provider.

Jim Tompkins, CEO of Tompkins Associates, says China's business climate is changing.
"Now it is all about globalisation instead of 'Chinafication." Chinafication, he explains, is the process of evaluating best practices within the Chinese context.

"The goal is to find the right balance of western best practices and local costs and processes," Tompkins says.

He advises companies to develop operations in China that export back to the US as well as sell to Chinese customers.

"Integrate sourcing from China with product sales in China and make Asia part of your overall global supply chain and customer base," he adds.

The dual strategy recognises that opportunities for sales and distribution will increase as China's middle class continues to grow.

Steve Ganster, senior vice president of Technomic Asia, a Tompkins division, points out that China's materials handling industry has grown aggressively because of continued construction and industrial expansion.

"Materials handling equipment sales have increased 25%-30% a year over the last four years," he notes.

On the other hand, Ganster says China's level of technology, including warehouse management systems (WMS), is still in the embryonic stage, with about 5% of warehouses reporting they have sufficient IT systems.

"Many Chinese companies are writing their own WMS programs that are not built to international standards, and this will only add to their difficulties in globalising," he says.

Tompkins Associates, based in Raleigh, NC, provides global supply chain services and distribution operations consulting. Technomic Asia is a market entry and growth strategy consulting firm based in Shanghai, China.