Ximing Sun

Are supply-chain relationships more influenced by buyer-supplier relationships or the business environment of the country itself? Evidence from the 'China-Australia' trading relationship

In doing business with China, poor supply chain performance is reported as being caused by either poor relationships between firms in China or the business environment in which firms in China have to operate. This research paper explores the relative importance of these two factors for food supply chains from Australia to China. Results are based on surveys of 84 importers, wholesalers and retailers in China and 22 Australian exporters and wholesalers. They show that the country itself had a greater influence than firm to firm relationships. Firms exporting food to China should therefore keep supply chains as short as possible to minimize the uncertainties associated with the business environment.

China’s grey channels as access points for foreign food products to the Chinese domestic market

Grey channels, which are neither clearly legal nor clearly illegal, are commonly relied on by international firms as a means of accessing Chinese markets. Firms report that they use grey channels to avoid China’s high import tariffs, difficult regulatory hurdles, and inefficient distribution networks. For food products, grey channels involve risks such as unreliability in delivery and inadequate cool chain management, and some authors anticipate that the use of grey channels for such products will diminish when China implements WTO standards. To explore opportunities that may exist in a free trade environment, this article analyzes what a grey channel is, why people use it, how it operates, and what advantages and disadvantages it has in comparison with other channels. This leads to a discussion on the future of grey channels. The analysis is based on in-depth interviews with firms involved in the food trade in China and Hong Kong.

Measuring relationship marketing effect in small-scale fishing in Oman and enhancing efficiency and economic gains for traditional fishermen

This paper aims to measure the effect of relationship marketing and supply chain management practices on small-scale fishermens incomes on the Batinah coast of the Sultanate of Oman. The study also assesses the potential effects of relevant socio-economic, demographic, and fishing operation related factors on the competitiveness of small-scale fishermen. A field survey was conducted to elicit views of fishermen using two types of questionnaires- one for those fishermen who were engaged in relationship marketing with a preferred buyer, and the other for those fishermen who were not engaged in relationship marketing. Two factor analyses were conducted with respect to relationship marketing between the fishermen and their preferred buyer and with respect to the supply chain management practices. Further empirical analyses were conducted that involved three main steps. First, the residual from the logistic regression model carried out in a recently published study was computed, where this residual represents the unpredictable component of the fishermens income. Second, an independent sample t-test was performed to determine any significant differences between the two groups with regard to some relevant variables. Third, the two-stage Heckman procedure was conducted, in which during the first stage the Inverse Mills Ratio (IMR) was computed using the probit model. In the second stage of the Heckman procedure, the residual of the logistic regression (obtained in the first step) was regressed on the IMR and other predictors of relationship marketing related to the fishermen who were engaged in relationship marketing. Our key finding is that the fishermen who are engaged in relationship marketing and adopt practices of supply chain management have a comparatively higher income and competitive advantage over those who are not engaged in relationship marketing. Therefore, there is a need for strengthening relationships between fishermen and supply chain actors. We hope that the finding will be useful for future planning of the small-scale fisheries in the Batinah Governorates.

The impact of the agropolitan project on agribusiness activities in Waliksarimadu, Central Java Province, Indonesia - Using chili farmers as an example

The Agropolitan project focuses on the development of agribusiness systems through supporting agribusiness activities with in selected rural districts in Indonesia. Waliksarimadu is regarded by government as an outstanding example of an agro-politan district in Indonesia. This research examines the perceptions of the local community towards the agropolitan project, paying particular attention to the perceptions of chili growers in the project and its impact on their business activities. The results of the study show that the project brought significant improvements in chili quality due to the enhancement of individual grower’s skills in performing post harvest handling and marketing. As a result, growers were able to access supermarkets, food processing firms and export companies directly. However, the growers had difficulty in accessing financial support, and also felt that they were in a disadvantaged position when dealing with modern retailers, food processors and exporters.

An approach to identifying potential post-FTA opportunities for agribusinesses to access the Chinese market: an Australian case study.

With a population of approximately 1.3 billion people, China is currently Asia’s second largest food and beverage market by value behind Japan. Post-WTO, the opening of Chinese markets represents a significant opportunity to countries exporting or wishing to export food to China. This is particularly true of Australian agribusiness as a Free Trade Agreement (FTA) is being negotiated between the two countries. At the same time, China is experiencing great difficulty in establishing and enforcing a code of practice for food quality, safety and traceability, especially for domestically produced food products, notable among them being fresh horticultural products. This study proposes an approach to evaluate the potential of Australian fruit and vegetable exports to China in a free trade environment. The approach is based on scaled evaluation criteria that encompass the major factors constraining food exports from Australia to China. They include tariffs and tariff barriers, evidence of recent export activity, price sensitivity, potential future demand, demand stability, opportunities for chain improvement and overall competitiveness. A study of 12 Australian food categories revealed six with the highest potential, including fruit. The outlook for vegetables was less optimistic. The evaluation approach used could be applied to any country wishing to evaluate potential opportunities to export horticultural produce to China, or to a more detailed study of horticultural export opportunities alone.

Comparing business relationships of horticultural firms in supply chains between China and Australia

Supply chain related problems are a major impediment to doing business with China, especially where perishable products are concerned. Previous research attributes much of the blame to unsophisticated Chinese logistics and distribution systems, or difficulties in implementing supply chain management (SCM) practices as defined by western literature. One suggestion is that Chinese firms have not yet realized the benefits of SCM, or are not yet at a stage where they can implement them. By comparison, in western countries SCM principles and practices are better understood, in particular the need for strong relationships among supply chain members. Thus as trade with China opens up under WTO agreements, it will become more important to understand the differences in how relationships with others in the supply chain are managed between Chinese and western firms. This research compared the management of business relationships among firms in supply chains between China and Australia. Data were gathered from detailed surveys of 84 food firms in China and 22 Australian food exporters. Most were involved in trade in horticultural produce. Results indicate that both Chinese and Australian firms clearly understand the benefits that can flow from good SCM practices. However Chinese firms essentially act in the belief that their key suppliers and customers are not honest, while Australian firms assume the opposite. As a result, Chinese firms show less trust and commitment to their key suppliers and key customers than Australian firms do. Australian firms therefore have a limited range of chain- building strategies open to them and should adopt a conservative approach. These lessons could apply equally well to horticultural exporters in any western country wishing to establish supply chains with Chinese importers.

North-South supply chain alliances between developed and less developed countries: A feasible fresh produce strategy?

Cross hemisphere (north-south) producer alliances are one way of supplying seasonal fresh produce for an extended period. The persimmon (Diospyros kaki) is a fruit that is widely consumed in Asia. An alliance of Australian growers, the Australian Persimmon Export Company (APEC), has been developing an international supply chain for its branded persimmons for about 12 years. An APEC alliance with a northern hemisphere supplier would allow supply of its brands for a longer season. In Baoji, Shaanxi province, western China, small areas of the same varieties of persimmon as marketed by APEC are replacing traditional varieties. Baoji persimmon growers are quite poor and disadvantaged by their remoteness from wealthier consumers in coastal provinces. Yet, with assistance, their fruit could meet APEC quality standards. Since early 2003, APEC and the Baoji local government have been exploring how to train local Chinese persimmon farmers to use the APEC production and marketing system. APECs chain partners in markets such as Singapore and Malaysia could then receive high quality persimmons in early October, when supply is scarce. Returns would be enough to both increase the income of Baoji persimmon growers and invest in further market development that would benefit APEC and Baoji as chain partners. Pilot scale results to date have indicated that this approach to supply chain building is feasible, however, the ability to fund commercial scale application of the concept by all partners may prove to be a short-term limitation.