arvato has consolidated its position in China as the leading outsourcing provider in the telecoms industry. The company delivered its 100 millionth cell phone in August, which was made possible through the development of logistics processes and a nationwide distribution network. With more than 55 locations across the country, offering total warehousing space of over 65,000m(2), almost every Chinese province is covered. Customers include Chinese distributors, mobile network operators and retail chains.
arvato entered China's telecoms industry at the end of 2008 through a joint venture with the two national mobile operators, Telling Group and SMT Group (Sinomaster). Once the partnership had been set up in Shenzhen, business activities were expanded in stages -- first to Guangzhou and the southern part of the country, before opening distribution centers in 31 provinces and directly governed cities across China in 2011. According to Raoul Kütemeier, Vice President arvato China and Managing Director of the joint venture, the success enjoyed over the past few years lies in the business strategy. “We stand out from the competition in two respects. Firstly, we have a powerful IT system, which combines all of our processes efficiently and secondly, we have strong local teams that operate very effectively in the field and can therefore respond to local challenges with a high degree of flexibility.”
Some 900 employees in the central, regional and local distribution centers ensure that over five million mobile and smartphones are delivered to more than 40,000 retailers on time every month. Distribution in China is fundamentally different to distribution in Germany. Kütemeier explains: “The handsets are either delivered to us, or we pick them up from the manufacturer. We then distribute them to our centers across China.” This is normally carried out in two stages -- first to regional centers, then finally to small, local warehouses serving one province or a number of towns. arvato also uses active inventory control when transferring goods between regions and warehouses. “By coordinating inventory across all distribution centers, we're able to guarantee reliability of supply,” emphasizes Kütemeier, which represents a major distribution advantage. There are over 30,000 different items in the product range.
For the final delivery to individual outlets, arvato uses external carriers as well as its own fleet of approximately 150 vehicles to ensure short delivery times to individual towns. Kütemeier continues, “Chinese customers are used to really high standards of service. Unlike in Germany, next day delivery isn't good enough. In fact our customers expect goods to be delivered to the shop on the same day -- and in urgent cases, within two to four hours.”
arvato services should remain in demand going forward: China has the largest mobile telecoms market in the world, one which experts predict will continue to grow steadily. But despite these positive industry forecasts, arvato plans to target other sectors, too. Kütemeier sums up, “We‘re in the process of expanding our business. We’re already offering logistics and fulfillment services to companies in the IT, high-tech and automotive industries as well.” The arvato manager is confident that other sectors will follow: “To be successful in China, businesses need reliable, dependable and nationwide warehousing and distribution networks -- and that is exactly what we can offer individual clients in the field with our strong local teams.”