Working the miracle - Tianjin Binhai Teda Logistics

Working the miracle

Chen Liyi

The Tianjin Binhai New Area is widely expected to be the mainlands next economic miracle, the third shining beacon of Chinas spectacular rise after Shenzhen special economic zone in the south and Shanghai Pudong New Area in the countrys coastal center.

Trying to be a northern flagship for all that growth is Tianjin Binhai Teda Logistics (8348), which has been operating since 1995.

For chairman Zhang Jian, that once- in-a-lifetime opportunity for growth also brings with it new challenges.

Binhai Logistics is a logistics and supply chain solutions provider that has carved out a reputation with its transportation of electronic components and cars.

With its headquarters in the Bohai Sea port city of Tianjin and other logistics centers in coastal cities such as Shanghai, Dalian and Wuxi, the company is eminently well placed to move production materiel and components from suppliers to manufacturers, and finished goods from manufacturers to end users.

Most of the electronics we handle end up overseas, while it is mainly domestic where the cars are concerned, said Zhang.

Japans Toyota is Binhai Logistics biggest client, making up 58.7 percent, 70.7 percent and 70.5 percent of its total revenue between 2005 and last year.

Binhai Logistics delivers finished cars around the mainland from Toyotas manufacturing plant in Tianjin.

The logistical requirements of transporting cars are very different from electronic components, said Zhang, adding that one must be exceptionally careful in moving cars because there is no room for mistakes.

On the other hand, speed and efficiency is the overriding concern in the transportation of electronics such as cellphones because their prices drop quickly with the rapid advent of technological advances.

As such, electronics are usually sent as air cargo, cars by land or sea Seldom do logistics companies deliver on both types of transportation services with a similar degree of excellence, says Zhang, and that is where Binhai Logistics has an edge.

Binhai Logistics has more than 600 clients, including high-profile customers such as handset-maker Motorola.

As Beijing pushes Tianjin into the drivers seat for the nations economy, Zhang is well aware that the company has to plan its responses to the changing environment.

The place to start is improving its storage facilities.

To be able to seize future opportunities, says Zhang, a logistics company must have adequate basic facilities of its own in place.

The Binhai New Area is to be developed into an international shipping and logistics center, as well as a hub for high-tech industrial development, manufacturing and research and development.

In line with this map for growth, the company is expanding its capacity to handle the logistical requirements of light industry items to include the management and transportation of vast amounts of raw materials such as steel, grain and other commodities.

To do so, Binhai Logistics will be building more warehousing facilities, which is the reason the company listed on the Hong Kong stock exchange at the end of April.

It will spend HK$110 million of the funds raised to acquire and develop a Tianjin Port site of more than 90,000 square meters into container-stacking yards and warehouse facilities.

Another HK$21 million will be used to acquire and develop 52,000 square meters in the Tianjin Economic and Technological Development Area into more storage facilities.

After paying off bank loans, the rest of the funds will be used as general working capital and to upgrade the information technology system.

Gearing up the company for future challenges is essential because the opening-up of the mainland economy and development in the Binhai New Area has brought increased competition.

Unlike in the past, foreign logistics companies no longer face restricted access.

But Zhang is confident of seeing off the companys foreign competitors, pointing out that Binhai Logistics has been in Tianjin since its inception of the Binhai New Area and established good relations with the local government.

Foreign companies may also not have Binhai Logistics edge in competing for resources, said Zhang, who is, however, quick to point out that although the company has government support, it is not reliant on it.

The only way the company can stand the test of time and last the distance covered by blue-chip companies, said Zhang, is if it continually reinvents itself, not by living in the past.