Alongside with inflation and the increasing raw materials costs, parts and manpower, the operating cost of manufactories in Mainland China has surged accordingly. To maintain their comparative advantage, manufacturers strive to reduce costs through various means. "If Mainland manufactories can focus on production, outsource their logistics and repackaging process to a third-party logistics service provider, they can share resources, and centralize distribution of goods and achieve economy of scale. Not only will transportation cost and carbon emissions be reduced, roads will also be less congested," said David Kuk, Managing Director of DCH Logistics Company Ltd. (DCH Logistics).

Traditional logistics services are limited to the shipment of goods whereas modern logistics services utilise new technologies to provide tailor-made solutions for clients' needs. DCH Logistics has designed individualised services according to the types of products. DCH Logistics work on tight schedules to satisfy the fast and changing demand of the market, from purchasing, production to marketing. "Zero inventory management" services are offered to Mainland manufacturers in response to their specific needs. Clients of DCH Logistics include a number of parts suppliers for international electronic brands.

Kuk said, "A vendor who supplies parts to that electronic brand name had in the past, stored the parts produced in their Japanese warehouse. Now, they are stored in our bonded warehouses instead. Before the parts are delivered, they still belong to the supplier. Clients can request for goods delivery, complete tax declaration and settle payment with the supplier at will. Clients no longer need their own warehouses. They can also pay for the value-added and import taxes in instalments without necessarily possess a large amount of upfront capital. Depending on the distance between our warehouse and the clients' factories and provided that clients make their delivery request two hours in advance, we should be able to deliver the products within the two hours."

In addition to electronic parts, DCH Logistics' material storage and management services are also applicable among a range of products ranging from raw materials for food to metal products. In fact, "zero inventory management" is only one of the comprehensive supply chain services offered by DCH Logistics. The Company offers Chinese and international enterprises prompt distribution services that enables faster market penetration. Food logistics services, in particular marks the strength of the company.

"DCH Logistics has large ambient and refrigerated distribution centres. Moreover, a temperature tracking system is installed in the centres and on all distribution trucks. This is a seamless supply chain management and distribution system for cold items. It monitors temperature changes to ensure that goods comply with the acceptance supermarket standards," Kuk added. DCH Logistics also plays the role of shipping agents. Through the worldwide strategic partnerships, goods are delivered to designated overseas clients on behalf of the exporters, assisting them to develop their markets abroad.

Not only do logistics services aim to increase the goods circulation, they also strive to add value. Repackaging is one of them. Kuk explained, "By utilizing the services of DCH Logistics, the factories in the Mainland will be able to concentrate on their production process. Packaging is a seasonal procedure. It will be a waste of manpower for factories to create a team for this." DCH Logistics has established within its distribution centre a 30,000-square-feet repackaging centre. Awarded with ISO, HACCP and other international certifications, the centre is temperature-controlled and free of dust, making it ideal for the repackaging operation. Other than the repackaging of bulk packs into smaller units for retail purposes, the centre also helps Mainland enterprises prepare promotional materials and subsequently dispatch to the local retail outlets. This type of value-added service suits the needs of enterprises of all sizes, helping them achieve the economy of scale and increases competitiveness.

Outsourcing logistics services has become a global trend. As the People's Republic of China Government announced its 12th Five-Year Plan and encouraged the upgrade and transformation of Chinese enterprises, increasing one's comparative cost advantage is inevitable. As mainland manufacturers gradually outsource production to third-party logistics services providers, the big question is: how to select the most suitable logistics service provider? "Mainland clients will select those with international certifications, deliver timely and comply with safety standards," Kuk remarked, "Hong Kong-based logistics services providers have always maintained a high standard in Key Performance Indicators. Hong Kong's e-logistics systems and information technology have further increased the confidence of clients in modern logistics management."