Keeping pace and sprinting ahead of the Chinese transformation Hakan Bicil , Chief Commercial Officer February 29, 2016 Long Beach, CA
China: is it slowing down or adjusting to new norms.... • China is progressively becoming a consumption driven country with growing middle class • Imports are increasing • Moving production (e.g. garments, shoes, furniture) abroad (e.g. Vietnam, Thailand) • Significant investments in infrastructure , industries encouraged to move from East to West • Exponentially growing e- commerce………. 2
Moving from Export to Consumption... 3
Booming handheld E-commerce... 32 billion red packets sent out over WeChat during the Chinese New Year holiday • Tenfold more e-red envelopes compared with the 2015 Spring Festival • On the New Year’s Eve only – over 8 billion red packets sent • 516 million participants joined on WeChat for the virtual version of this holiday tradition (compare to 1.357 billion of the total China population) 4
Production Moves to the West and South… Regional GDP distribution 2 (2010 – 2014) CAGR Comments % Unit: RMB Trillion 63.6 ► Economic growth rate in developed city clusters along 8.7% the coastal line has entered 56.9 10.6 Yangtze River Delta ‘New Normal’ stage (lower but stable GDP growth rate) 51.9 9.8 8.7% 6.6 Beijing-Tianjin-Hebei 47.3 ► Despite of late development, 9.0 developing city clusters in the 6.2 5.8 Pearl River Delta 9.1% rest part of China have 8.2 39.8 showed stronger growth than 5.7 5.3 coastal regions driven by: 5.2 7.0 – Industry relocation 4.8 – Migrant workers return 4.4 10.5% 40.6 Less developed region 4.4 home from coastal 35.6 regions 3.7 32.4 29.5 – Etc. 24.7 2010 2011 2012 2013 2014 With economic development entered “New Normal” Stage, coastal regions are facing challenges of economic transition; meanwhile other less developed provinces, especially those in core city clusters, are demonstrating stronger growth potential Note ： 1) Constant price; Pearl River Delta includes Guangdong and Yangtze River Delta includes Shanghai, Jiangsu and Zhejiang; 2)The national total is the sum of provincial statistic number, which could have small bias from national value of National Bureau of Statistics 5 Source ： Statistical yearbook of provinces and cities, EY analysis
CEVA s answer to both trends: domestic network • Own Mature China Domestic Transportation Network • CEVA China Owns Assets for 100+ trucks, meanwhile has 2000+ contract trucks • Online system tracking (TMS) • Tax rebate invoice • 10,450 orders delivered per day on 700 truck loads • Regular Service Coverage of 204 cities in China • Irregular Service coverage of 3000+ cities in China Major Transport Hubs Primary Depots Connecting major transport hubs 6
Conclusion • Yes, China moves from Export to Consumption • Moving production West and South creates new challenges and triggers new logistical answers • BUT: Slow down of exports is a relative slow down of growth... - It is still growing - % wise probably concerning but in absolute numbers still a logistical challenge to be overcome - Investing into and using infrastructure for a more balanced trade is THE key for success! 7
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