Nov 26, 2013

Sony moves international bidding group to China

Sony has moved its international bidding base to cargo-rich China (pictured is the Shanghai Waigaoqiao Container Terminal)

[Shanghai Bureau]
Sony Corp. has transferred the headquarters of the Global Shipping Strategy (GSS) unit, which conducts global tenders for cargo transport worldwide, to China's Shanghai City from Tokyo. International bidding has been done at the Sony Supply Chain Solutions (China), the wholly-owned subsidiary of Sony (China) which handles Sony's local logistics and trading functions, since fiscal 2012. The entire Sony Group currently moves about 92,500 tons of air cargoes and 75,000 FEUs of marine cargoes, but China's presence in its shipments is rather big. "Shipments to/from China possess a significant weight, while Shanghai is home to people knowledgeable about logistics and is near to our production bases. We will decide on the pricing (of transport) and make the necessary adjustments with global traders/suppliers here (in Shanghai) toward the enhancement of the efficiency in the global flow of goods," claimed Tadashi Tanaka, deputy president of Sony Supply Chain Solutions (China), regarding the goal behind the move to China.

Sony considers China as one of the three major markets in the world alongside the U.S. and Japan. Of the total global cargo handlings of the Sony Group, cargoes to/from China account for more than 70% of the total cargoes flown by air and 40% of the shipments moved by sea. In addition, it has factories in seven areas in China that produce smart phones, TVs, projectors, batteries, digital cameras, camera modules and various other products. The company decided to transfer the GSS division, which handles international tenders, to Shanghai since the latter is home to logistics people who have handled massive volumes of cargoes and Sony will be able to build a supply chain there that is closely linked to the local region by unifying its factory logistics, according to Tanaka.

Sony Supply Chain Solutions (China) was established in 1998 as the regional division in the East China region of the Group's logistics/trade unit. It added the term (China) to its corporate name in 2009 after it became the umbrella subsidiary of the said segment in the whole of China. With funding coming from the Chinese subsidiary of the Sony head office, reports are directly sent to the Sony Supply Chain Headquarters, according to Tanaka. The logistics division specializes in jobs for the Group and does not carry out sales to external entities.

The Chinese unit holds the required forwarding licenses in China for air and marine transport. It moves international cargoes through HAWB using its agency network for airfreight cargoes and by issuing bill of lading (B/L) of NVOCCs on top of the direct B/L of shipping companies for marine shipments. Sony also got hold of a customs clearance license for its own cargoes in China. Further, it is able to transport more than half of its domestic deliveries in China within 24 hours with the help of company-owned trucks thanks to the forwarding license that it has secured, making Sony the first foreign capital-funded enterprise to obtain such license in China in 2006, according to Tanaka. It rotates 20 trucks constantly in the East China region through the so-called milk run method. For warehousing, Sony uses external bases in Shanghai, as well as undertakes plant logistics at the seven factories of the Sony Group.

Aside from the above, Sony also makes use of its other trading licenses to undertake such businesses as the trading of products and parts where it purchases the parts and materials and then consolidates the cargoes for shipment to Brazil, the U.S., Malaysia, Europe and other regions. The Group presently employs about 420 workers at its seven factories in the country in the whole of China, including the ones in Shanghai, Beijing, Wuxi, Shenzhen and Hong Kong. Now with the transfer of the international bidding function, several of the people in charge at the GSS were deployed to China from Japan.

[Capitalizing on "swift customs clearance", too]

The Shanghai Waigaoqiao Bonded Zone, which houses the head office of Sony Supply Chain Solutions, was designated by the Chinese government as the Shanghai Pilot Free Trade Zone in late September 2013, together with the Waigaoqiao Bonded Logistics Park, Pudong Airport Comprehensive Bonded Area and Yangshan Bonded Port Area. The detailed regulations on logistics following the transformation into FTZ (Free Trade Zone) are currently being formulated, but Sony has been given the distinction of being a pilot company in the zone's "swift customs clearance" system ahead of the other firms. Only five companies were selected at the FTZ and Sony was the only foreign-funded entity in the list.

With the "swift customs clearance" system, the traffic of cargoes will become free at the four bonded areas so that as long as the customs declaration is completed at the unloading port, the cargoes can be hauled to another area without any changes or modifications. For instance, cargoes unloaded at Yangshan that would be transported to the Waigaoqiao Bonded Zone used to need to clear customs at Yangshan and Waigaoqiao. But under the new system, customs declaration would not be required at Waigaoqiao anymore, as the cargoes only need to undergo carry-in procedures to be able to be placed in bonded storage. The containers that will adopt the new system will be called "special containers." As a pilot company, Sony Supply Chain Solutions was the first to process and haul special containers among the five pilot firms in late September. In this regard, Tanaka commented that, "As long as swift customs clearance is done, the lead time can be shortened by a day. This will then also help in curbing the customs clearance and truck standby time and other costs."

The foreign capital-funded Sony Supply Chain Solutions was probably chosen to test the program ahead of the other firms in the region after its track record in the business thus far was evaluated. "Our company's trade volume stood at the No.5 spot in the Pudong area of Shanghai in 2011 and then held the No.33 place in the whole of Shanghai in 2012 in terms of throughput. We have all necessary licenses for land, sea and air transport related to logistics and we hold an AA ranking among logistics providers (at the Shanghai Customs) and CCC certification (related to product safety," claimed Tanaka. Following the establishment of the FTZ before summer, Sony was visited by the key officials of the central and local governments and the company received the designation from the government after a series of exchanges. Now Sony is thinking of proactively utilizing the new framework, with Tanaka saying that, "As a pilot company, we can expect benefits when the taxes and export-related systems are worked out in the future."

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