Internet Technology Company Builds Global Logistics Network in Hong Kong

As one of the busiest airports in the world, the Hong Kong International Airport is connected to around 220 destinations worldwide and is closely linked with many key logistics bases in mainland China. The parent group of an internet technology company, in its bid to develop a global logistics network, is building an integrated global logistics centre in Hong Kong and developing it into a globalisation base. The Chief Executive Officer of the company tells of these plans on an anonymous basis.

Establishing a Smart Logistics Supply Chain

Founded in 2013, this internet technology company focuses on building an extensive logistics network providing smart supply chain services. Currently, the company strategy is aimed at building digitalised infrastructure facilities for the entire logistics industry, providing smart logistics supply chain solutions for new retail, and creating a global logistics network. The company will continue to expand its service network and production capacity in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) to support its global expansion of logistics via the GBA.

Building a Global Hub in Hong Kong

Establishing a high-end logistics centre at the Hong Kong International Airport is a key investment project for the parent group of the company to develop a global logistics network. This is expected to be one of the largest and technologically most advanced facilities in Hong Kong. Positioned as a globalisation base, the project is a major part of the parent group’s business plan.

When asked why the parent group chose to invest in Hong Kong, the Chief Executive Officer said the Hong Kong International Airport has an extensive flight network with connections to about 220 destinations worldwide. Hong Kong is also one of the freest economies in the world, with an ideal geographical location, and is linked to a great number of key logistics bases in the mainland. It is for these reasons that the group chose to site an integrated global logistics centre in Hong Kong.

The company also hopes to promote the development of the industry chain through this project, synergising upstream and downstream enterprises to make trading smoother and more convenient. This project also serves cross-border platforms, dispatching e-commerce parcels from the mainland to different corners of the world, and supports the logistics demands of different subsidiaries of the group. Another reason why the company chose Hong Kong was the territory’s close trade ties with European and American countries, making it easier to attract foreign traders to conduct business negotiations and discussions there.

The Chief Executive Officer remarks that during the course of the project, the company has used a lot of local Hong Kong services, especially design, electromechanical, project costing, environmental assessment, and legal services. The services offered by Hong Kong are highly professional, internationalised and reliable, contributing to the smooth progress of the project.

Logistics Talent Drain

The Chief Executive Officer points out that recruiting local personnel with logistics expertise in Hong Kong is more difficult than expected. The main reasons include shortage of talent with the relevant skills and experience.

Resources Complementarity

On the development prospects of the GBA, the Chief Executive Officer remarks that first of all, cities in the GBA with different advantages should complement one another. One advantage of the mainland is plentiful land resources, while Hong Kong is short of land. To maintain the sustainable development of the logistics industry, one of the prerequisites is adequate storage space and sites. In Hong Kong, as warehouses and industrial buildings continue to be refurbished and upgraded, the local logistics industry will face insufficient usable space and rising costs. Moreover, Hong Kong’s logistics costs are higher than other cities, thus undermining its competitiveness. The Chief Executive Officer suggests that mainland GBA cities can best provide land resources while Hong Kong contributes logistics management know-how. To this end, Hong Kong should seek synergised development with other cities in the region to achieve complementarity.

Secondly, the Chief Executive Officer hopes that trade policies in the GBA can be further simplified. Market access policy for trade in goods should promote freedom and openness in order to facilitate the flow of goods and better meet consumer demands.

Thirdly, the local city governments should expedite free flow of talent within the GBA to ensure more effective distribution of human resources. Warehousing and logistics projects are generally located in the suburban areas, making it difficult for them to attract young people and top-tier talent. The company has considered using robots and automation technologies to resolve the labour shortages.

Fourthly, the Chief Executive Officer shares that for the design of logistics techniques, the company uses the services of international consulting companies. For artificial intelligence and information technology, it mainly relies on the R&D team at the parent group’s headquarters. He suggests that the Hong Kong government should encourage young people to start their own businesses, create an environment to encourage innovative technology, and improve the start-up ecosystem by providing assistance to start-ups in their early stages of development.

_{Company interview conducted by PricewaterhouseCoopers Advisory Services Limited}

_{Note 1: The opinions and views expressed are those of the interviewees and do not necessarily reflect the views of HKTDC or PwC. HKTDC or PwC shall in no way be responsible for the accuracy, completeness or timeliness of the information provided by them, and for any loss associated with the use of such information.}

_{Note 2: This English version of the case study is translated by HKTDC based on the Traditional Chinese version prepared by PricewaterhouseCoopers Advisory Services Limited. Should there be any inconsistency or ambiguity between this English version and the Traditional Chinese version, the Traditional Chinese version shall prevail. PricewaterhouseCoopers Advisory Services Limited will not have or accept any liability, obligation or responsibility whatsoever for any loss, destruction or damage (including without limitation consequential loss, destruction or damage) however arising from or in respect of any use or misuse of or reliance on the English version of this case study.}