Mr. Kang Shuchun, Creating New Blue Economy on Internet

In the session forum “Innovation of New Shipping Mode in Current Economic Situation”, Mr. Shuchun Kang, CEO of Shippingchina.com, delivered an excellent speech. The details are as follows:
Currently there is a popular book named The World is Flat, which is written by the famous economist Thomas L. Friedman. What is the main principle behind this statement “The world is flat”? In my opinion, it means globalization. Globalization can be reflected in several perspectives. Firstly, the role of politics and the region boundary diminish in the future world. Our world is becoming a global village with its region boundary being gradually blurred. There is no boundary within European Union, capital flows faster worldwide and common language and convenient transportation reduce the physical distance between various nations. Secondly, the competition between enterprises engaged in same products has evolved to be competition along the supply chain. This new development structure also leads to the so-called flatness of the world.     
From the current world crisis to people’s keenness on the capital and stock market in a long period, it can be seen that virtual economy does serve the concrete economy and can stimulate the concrete economy. The origin of the current financial crisis is peoples’ over aspiration to money, so mismatch between virtual economy and concrete economy arises.   
The overall concrete economy’s last link is commodity delivery. And the commodity delivery is accomplished through shipping industry. Therefore, shipping industry is not only a transport entity, but also a basis and engine for economy development. For example, port, in traditional sense, is responsible for cargo loading/unloading. However, port nowadays can drag the coastal city economy and plays an important role is booming the surrounding economy. Shipping has become a new industry, and we call it new blue economy.
This new blue economy is booming in China and will become a mainstream economy. I have mentioned that China trade is increasing by leaps and bound. In 2007 China’s trade volume went beyond 2 trillion USD, ranking 3rd worldwide. Not long before I listened to the radio and got the message that China’s export volume ranks 2nd worldwide and ocean transport covers 90% of the international transport system. However, we must also bear in mind that China is a big shipping nation, but is not a strong shipping nation. China’s logistics industry only accounts for 20% of China’s GDP, which is even 10% higher than the GDP of developed countries. Another problem is that China’s overall logistics cost is quite high although its single logistics cost is quite low in terms of warehousing, laborers, vehicles and roads. The reason is that there is no modern and scientific comprehensive logistics system. The lack of linkage in the supply chain has created great waste. How to survive in the current financial storm? I think we should take courage to face it, take it as opportunity. It may mean great commercial opportunity if we can make good advantage of it. The crucial issue is to reduce cost. Where is profit to be generated in this situation of inflation of laborers and energy? I think the only room to reduce cost is on logistics. I also think that logistics cost can be reduced to the largest extent along the whole supply chain.
To this end, I will make an introduction on ShippingChina.com. The mission statement of shippingchina.com is to lower the logistics cost of shippers, ship owners and logistics enterprises. Shippingchina.com is the 2rd generation of the e-commerce website. Why do we say so? Because it does not only center on information connection, it also processes the information and constitutes a new style service in business operation. It integrates the business models of Alibaba as information platform, ctrip.com as concentrated purchase platform and Walmart as a whole logistics supply chain. ShippingChina.com has a total of 250 thousand members including shippers, ports and logistics companies and one million clicks every day. Shipping companies, logistics companies and ports may release their demands on the website. For example, if an American company hopes to set up a representative office in China, some costs for office and employees are required. Actually it can set up a virtual office on Internet and manipulate all the operations in America. Of course this American company can also set an India branch office in the same way. ShippingChina.com can spread this virtual business worldwide by gathering numerous resources and can provide connection between supply and demand with lower cost and highest efficiency. However, this virtual business still belongs to the first-generation e-commerce. In addition to this, we provide a unique business model, that is, Shipping Mart. Shipping Mart centers on the small and medium-sized enterprises and shippers who cover large quantity of resources. Shipping Mart will tidy up the logistics market by dividing the logistics companies into various degrees. Shippers anywhere can order the transport service from Shipping Mart, which will meet the individual requirements of customers. After integrating the order, we will go to the ship owners for connection. Nowadays ship owners face the challenges of fewer cargo resource and excessive carrying capacity. What ship owners concern is how to get more cargo resources to fill in their ships so that they can avoid bankruptcy. Therefore, it is obvious that resource integration is very crucial in the future economy.
The pattern is composed of three parts: We are responsible for the cargo, the Ship[ping Mart system will distribute it and the ship owners are in charge of transportation. There are specific figures. We started to design Shipping Mart in 2006. At that time, we provided cargo booking at 17 ports and the orders reached 300,000 TEUs. The orders were 1,000,000 TEUs in 2007 and the anticipated number in 2008 is 2,000,000 TEUs. Now there are 30 ports and 100 companies join in the Shipping Mart. This concentrated purchase system enables us to negotiate the price with ship owners through which we can provide cheaper transportation rate and attract more companies booking. We expect to reach 4,000,000 TEUs in 2010 and become the biggest online container booking company. The net profit for Shippingchina.com may be USD 5.00 or RMB 5.00 for each container, and our revenue will be millions of USD or RMB each year. This income is different from the traditional income since it is not gained from the advertisement but a specific pattern. The Shipping Mart has its own follow-up plans, covering shipping commerce development and port development. Now we are in connection with some ports. We can also provide one-stop service and online insurance. The insurance bill can be printed after the realization of online insurance. Now we are establishing the cooperation with banks and some overseas companies. We are cooperating with Spain and the CVCRI for Euro-China information pass, and also with Australia, Korea, Japan and other countries to introduce the Shipping Mart worldwide. We are trying to occupy 3% of China container market and targeting in 4,000,000 TEUs in 2010. We will save USD 2 trillions for the shipping industry by saving USD 50 for each container. Meanwhile, we will provide value-added service through the connection with banks and insurance companies. Shippingchina.com has held Global Shipping Summit for three times and will hold it in France next year at the invitation from Le Havre City.
We will announce the new China Port Competitiveness Index since the former evaluation standard is out of date now. We will take port throughput, port development, port construction and overall efficiency as the criteria to get more scientific evaluation. The first China Port Competitiveness Index was released in 2005 which is irreplaceable by other media. It is part of the Shippingchina.com is plan to enhance its infrastructure to be listed on the stock market.
“Who can control the ocean can dominate the world”. I really wish the blue ocean economy become the mainstream of the world economy in the future. Thanks for you attention.