Resources from Director General of WIFFA, Mr Kang Shuchun making a presentation during 2017 WIFFA Convention (Hangzhou)
Hello Chairman Ding Junfa, Director Tong Shan, Chairman Ding Qiang, and Hello ladies and gents,
Shippingchina Company Limited has been established for 14 years, we have held 12 Conventions, 6 of them are Global Shipping Submit(GSS), 6 of them are WIFFA Convention（WIFFAC）. This is the 6th WIFFAC, here and now, I would like to thank you all for your always support.
When I was a kid, my father told me an ancient Chinese tale of The Romance of Three Kingdoms. I haven’t been able to trace down its derivation, but the memory is fresh in my mind. Once upon a time, a butcher called Zhang Fei, he yelled:”who are buying the pork meat”. A blacksmith called Guan Yu approached, said to him “I am buying”. Zhang Fei Chopped off half of the whole carcass and said ”you are buying as much as I have Chopped off”. Guan Yu dug out a penny and said “you are getting paid as much as I have in my pocket”. Zhang Fei was furious and started to attack Guan Yu, Guan Yu hit back, they instantly tussled together. While the hard fighting lasted, a sandal peddler called Liu Bei came between, he held Guan Yu in one hand, Zhang Fei in other. He shouted “separate”, they then separated and called a truce temporarily. Three of them were looking at each other. Liu Bei started talking “You two are skillful warriors, why fight over some trifle things, why not to do something for our country”.
Guan and Zhang felt deeply ashamed, they decided to become sworn brothers, after then, they had some earthshaking achievement, including the coronation as a king afterwards.
Why I am telling this tale now? The current situation of freight forwarding business is as the same as Zhang and Guan’s fight, one quotes $99, and another lowers the quotes down to $98, the outcome is no winners. Why freight forwarders can’t be “sworn brothers”? “Sworn brothers” is holding together, why to hold together? Is it to keep warm? No, I dislike the phrase “holding together to keep warm”. This phrase is often to describe the vulnerably dying group. We hold together, not to keep warm, but to “create warmness”, to create larger economic results.
When I was attending a conference in Shenzhen month ago, a young spokeswoman was asking: “what is the essence of internet?” My mind blanked out as I was clueless. Is it convenience? Is it rapidness? Is it narrowing the distance between users? In fact, it is a question with no standard answer. From my perspective, the essence of internet can be summarized to three words: Sharing, Coproduction, All-win.
Regarding “Sharing”, Sharing happens in the consumption link, B2C and C2C business pattern is very popular, Bicycle Sharing, Shared-Mall, etc, Sharing is the business pattern of “1+1=1”, “1” is the cost in this equation, Sharing generates increasing net margins by decreasing the marginal cost.
Regarding “Coproduction”, Coproduction happens in the production link, it is to resolve the labor source, which is majorly involved with B2B, the business pattern is “1+1=3”, “1” is the flow/traffic in this equation. Coproduction generates large data of traffic/flow, resource flow/traffic, business flow/traffic through Industrial Cluster, which comes into an innovative product of “Internet plus”, creates value added benefits.
Regarding “All-win”, All-win is to completely smash the idea of “1+1=1.5+0.5”, “1.5” is floor price, “0.5” is profit margin, freight forwarders are competing within this “0.5”- profit margin. When 0.5 is decreased down to 0, everyone will be putting out of business. Smashing the idea of “1+1=1.5+0.5”, establishing the correct concept of “1+1=3”, will make “All-win” come true.
Therefore, at the age of internet, the real competition is not between companies, but is between old concepts and new ideas, between one industry to another, between one interest group to another.
Today‘s meeting is about to cooperation. We establish a freight forwarders alliance through setting up “internet plus” cooperation platforms. The alliance is freight forwarders Internet Cloud, the Cloud is also the theme of this convention Cloud, Road, Business. Cloud is “Internet + freight forwarder”, Road is “One Belt One Road”. It is the road of freight forwarders to expand. “Business” is freight forwarder platforms, freight forwarder e-commerce. This is all today’s convention about and we will have a further discussion on this.
During today’s convention, we are not just oral discussing this, we are taking action to make it happen and implement. We have freight forwarders “allied”. We have registered our own freight forwarders alliance – WIFFA. Three things are on WIFFA To- Do- List: Improve and perfect WIFFA organizational structure, WIFFA business expanding activities and business platforms.
I will elaborate and demonstrate in next.
WIFFA Organizational Structure
I. Credibility and Integrity, is the faith of WIFFA
i). the 1st decision has ever been made is credit
WIFFA was initiated by Shippingchina Company Limited in 2000, what were we trying to do? I went and discussed with Mr He Zhu’an who is General Manager of Huanji International, Mr Zhu Yanjun who is the General Manager of Shenzhen AWS Tomax International Transportation, Ms. Zhao Shuchun who is General Manager of KN Logistics, we have decided credit as the core value of WIFFA, the credibility and viscosity comes along with credit, and also is the foundation of service to Chinawide and the overseas expansion. Henceforth, “WIFFA is International Forwarder Alliance for Credit” becomes to the slogan. WIFFA culture is all members consider credit sacred, ashamed if otherwise.
ii). Membership application, Triple Credit Inquiry
Speaking of Credit, many will think only major companies have credit. The concept of Credit within WIFFA members are regardless the scale of company, we adopt some scientific procedures to run the credit inquiry.
The authenticity: 1. Business license, ensure that company legal name, legal Rep, Address correspond with registered information. 2. Onsite interview, taking onsite photos, ensure that the office exists. With the highly developed in internet technologies, onsite interview may upgrade to remote internet video interview.
Diligent and Legal Investigation: Prior becoming a WIFFA member, a lawyer due diligence will be given. Consultant from Beijing Bairui Law Firm will perform this on our behalf, which will investigate every applicant and the legal Rep background from a legal perspective, ensure they have a clear criminal record, has no record of committing offences against criminal laws in P.R China.
Public Reputation: Prior to becoming a WIFFA member, the applicant will be bulletined within WIFFA member and to the public for a period of time, if any report against the applicant for being discredited or convicted of criminal offence, once it has been proved to be true, the applicant will be vetoed.
iii). WIFFA endorses Inner members’ business transaction
WIFFA is International Forwarders Alliance for Credit, what if bad debt arises? WIFFA will guarantee that with Financial Protection, the transaction between Chinese Members, protected members are entitled to a financially protection up to CNY100, 000. The transaction between Chinese members and oversea members, oversea members are entitle to CNY100, 000(approx USD15k) financial protection, Chinese members are not entitled for the financial protection under this circumstance（Transaction between China members and overseas members）.
WIFFA financial protection is a small amount guarantee, which is more for the sake of responsibility and credit branding. In the coming steps of planning, we will work with insurance companies to set up a more comprehensively systematic Financial Protection guarantee, also to manage the business transaction risk and financing difficulties. This has been under discussion with several banks and insurance companies for the time being.
iv). Members Assessment, create WIFFA Credit Rating
WIFFA founding members（6 stars members）: Who have joined WIFFA prior to January 31, 2014. Founding members are entitled for most favored services.
WIFFA 5 stars members: Who have joined WIFFA for a constant three years period, and participated more than two branches/coalitions, and are proved a clear criminal record. Five stars members are entitled for WIFFA special recommendation and certification.
WIFFA 4 stars members: Who have joined WIFFA for a constant two years period, and participated more than two branches/coalitions, and are proved a clear criminal record. Four stars members are entitled for priority of organizational activities and projects.
WIFFA 3 stars members: who have joined WIFFA for less than constant two years, participated more than two branches/coalitions, and are proved a clear criminal record.
II. Services, are WIFFA original intention
i). WIFFA derives from freight forwarders, WIFFA doesn’t practice freight forwarders businesses, WIFFA aims to improve freight forwarders business from difference angels.
ii). “internet plus” is the method of our service.
iii). Third Party Open Platform operation is the best and rapidest way to realize WIFFA value.
III. Perfect WIFFA organizational structure, make members reservation for WIFFA
i). WIFFA organizational structure design
ii). WIFFA Special Coalition Committee
WIFFA Special Coalition Committee is to enhance members’ influence, to become the status of “megamerger”, internally, to enhance the competitive power, externally, to enhance the competitive power. It will provide members even bigger and wider market and economic benefits.
The classification of WIFFA Special Coalition:1. LCL; 2. DG; 3.refrigerating; 4.project; 5.bulk; 6.train; 7. Truck; 8.inland river 9.Americas lines; 10. European lines; 11. Northeast Asia transportation; 12. Southeast Asia transportation; 13. Mid-East transportation; 14.African Transportation; 15. OBOR projects; 16.cross border logistics; 17. Finance services; 18.Governmental projects contractors; 19. Cross border e-commerce platform; 20. Custom broker; 21.others.
The operation system of WIFFA Special Coalition: the Chairman of Coalition responsibility, WIFFA headquarter provide the platform, resources, regulation, each coalition is responsible for business pattern design, executing and sales expansion.
iii). WIFFA Overseas Branches
WIFFA overseas branches are a reversed “WCA” business pattern, which utilizes the channels and credit of WIFFA members to provide freight forwarding broker service and marketing extension services for WIFFA members. WIFFA Oversea Branches are not the business pattern of “point to point”, it is pattern of a China platform covers both China and Overseas markets in both ways. It is secure to operate, networks comprehensively and rapidly, and provides big data solution for the credit value increment.
Regional division of overseas branches: 1). Countries. 2). Ports. 3). Regions. 4). others
Rights and Interests of WIFFA Oversea branches
1). Overseas branches shall set up overseas branches under WIFFA with the goal to help and lead members for the overseas related freight forwarding business.
2). Overseas branches shall make proposal of regulation for overseas branches and fees scale shall report to WIFFA management, the execution can be preceded after approval.
3). WIFFA headquarter will assist to develop branch members and the required relevant resources.
4). Overseas branches shall provide the services to WIFFA members for both oversea areas and China domestic areas.
5). Overseas branches shall be feeling obligated to assist branch members to acquire the overseas orders and the project planning should be revealed.
6). Overseas branches shall play as an agent role to provide necessary assistance for WIFFA members over their visit and marketing research trip.
iv). Connection of members and branches
Connection between branches: Chinawide branches, overseas branches, Project Coalition are coordinative, WIFFA secretariat will be in charge of the coordination.
Connection between branches and members: each of the branches, coalitions are eligible to institute the rules for its members for the entrance, invite the enterprise to join on WIFFA ‘s behalf. WIFFA members join the branches (domestic and overseas), coalitions on their free will, there is no restriction or limitation, it is a two ways consensual selection for both branches, coalitions and members.
Members of branches, coalition’s members must non-exceptionally become to WIFFA member first.
The sign-up of Special Coalition and oversea branches and members are on-going, welcome aboard.
The establishment of WIFFA business platforms
Before the introduction, we have to answer one question: If internet is to decentralization, then do you think freight forwarders will be eliminated by internet? I have read a literature: container shipping forecasts freight forwarders as an independent 3rd party may no longer existing in another 50 years. Will freight forwarders as an intermediate role be enhanced or eliminated？
We are analyzing this now, freight forwarders as the intermediates of international trades and international logistics, we take sea transportation as an example, there are over 1000 foreign trade oriented enterprises in China, importing and exporting is up to 200,000K times per year, the quantity of medium and large scale of shipping carriers are less than 100, the process of international trade transportation is not just the movement of cargo, it is a complex pack of services, which contains customs, inspection, warehouse, land transport, container terminal, documentation, etc. Can all these be provided by the quantity of less than 100 shipping carriers? Absolutely No way, freight forwarders are not being eliminated and freight forwarders are irreplaceable.
Freight forwarders as intermediates are not just irreplaceable but also being enhanced. At the age of Big Data, the most valuables are not vessels nor trucks nor terminals, but are Big Data traffic/flow. Freight forwarders as the intermediates of international trades and international logistic contain a large amount of cash flow, cargo flow and business flow. From the originally passive services pattern, it is now turning to active profit model pattern. Today’s freight forwarders help advance the freight payment, customs payment, tax reimbursement and even provide the services of bill purchase. This means that freight forwarders are no longer playing an irrelevant role, on the opposite, freight forwarders are gradually upgrading to the level of international supply chain suppliers. Regardless of shipping carriers, airlines, land transportation or warehousing providers, even terminals, the crown of international supply chain provider will belong to freight forwarders only. Personal view of this, freight forwarders as intermediate will not be eliminated, on opposite, it will be in several times larger than its current scale. Freight forwarders will eventually become to be the most influential, distributional and profitable, a leading business group within international supply chain.
Since freight forwarders won’t be eliminated and will be enhanced in future, we then need to discuss what should we do and do better?
VI. Platforms are the achievement of WIFFA
1. “WIFFA FF Space Booking “Market Maker Online Space Booking Platform. This is a space booking platform between freight forwarders, platform designs as follows:
Vendors: 5-10 freight forwarders from each WIFFA branch, who are able to provide the competitive price quote, as known as the market makers type freight forwarders.
Buyers: WIFFA members, who must be an authentic freight forwarder company.
Freight rate: Relatively constant contracted rate, both vendors and buyers must obey once reach out an agreement online.
Guarantee: WIFFA provides the guarantee through a security deposit required from vendor party; the security deposit will be invested as company stake in a year later. There is also security deposit required from buyer party, which will also be invested as stake after a year.
Branch: program will start from 10 of China branches as a trial.
Route: From China to the worldwide ports, where the price or service routes have overwhelming superiority.
Payment: Bank Collection
Time: March 2018
Register and inquiry: email@example.com
2. “WIFFA Slow Bird” freight forwarder transport hiring platform, “WIFFA Slow Bird “is the big data platform between freight forwarders.
Cargo service: international trade transportation.
Vendors: Freight Forwarders
Buyers: Freight Forwarders
Vehicle resources: Freight Forwarders
Billing & Invoicing: NTOCC platform.
Transaction: between freight forwarders.
Vehicle: Container truck, truck, others
Business coverage: Chinawide
Tracking: 3rd party tool
Expanded value added Services: insurance, fuel filling, financing, and mortgage.
Payment: bank collection
Time: Go alive in May 2018
Sign-up and inquiry: firstname.lastname@example.org
3. “WIFFA Imported wine gallery” O2O platform, WIFFA Imported wine gallery O2O platform is a freight forwarders crowd-funding cross-border commerce platform.
Wine vendors：Freight Forwarders + Freight Forwarders
Wine types: All kinds (such as Merlot, Shiraz, Cabernet Franc, Sauvignon Blanc,Chardonnay,etc)
Online sales: Higoskyer e-commerce platform, ecological marketing.
Headquarter: registered in free trade zone.
Distribution: Free trade zone + offline experiencing store.
Branding: China leading Wine I2C model brand
Operation control: Online Platform + Offline Experiencing Stores.
Financing method: Crowd-funding
Sign-up and inquiry: email@example.com
4. “WIFFA Headquarter Economy” block chain center platform
We are all familiar with supply chain, which is a close circle from supply to production. At the age of internet cloud computing, block chain may generate big data and traffic, even more feasible to implement “Co-production, Sharing, All-win” effect. Block Chain is a new concept with different elaboration, derived from the database of decentralization from Bitcoin. Broadly speaking block chain has more application value. Block Chain is not applicable for single enterprise, it is applicable for an industry, a business group, a interest group, by integrating of all the capital, finance, or taxation, or business, or documentation, or human resources of the an industry or a business group or an interest group to big data, it creates new margin growth point. Supply chain is a horizontal combination, and block chain is a vertical cooperation.
Block Chain = traffic + platform + Cluster head quarter. Traffic comes from every Freight Forwarder, who shares the same business pattern. Cluster Headquarter is the HR center of the industry. Speaking of HR, at the age of internet cloud, the traditional companies with many employees usually have bad finance reports. Employees, offices, office phones, administration and company training, enterprise culture may be eliminating from the internet tide.
Freight forwarder is center link of international trade and international transportation, which contains rich traffic, which also is the foundation of development of block chain. Therefore, how to implement “WIFFA Headquarter Economy” block chain platform?
WIFFA Headquarter will be established at the policy preferential park to provide the “butler “services for freight forwarders.
WIFFA will develop Chinawide Freight forwarders “block chain” platform products, acquire the sound supports from the park government, assists freight forwarders to register their branches and subsidiaries in the park. Platform delivers the secretariat services for its financing, tax, documentation and block chain products. Based on “WIFFA headquarter Economy” block chain center platform, we will be able to actualize the all-win status of member companies, platform, park, bank, clients “1+1=3”.
Sign-up and inquiry: firstname.lastname@example.org
V. Founding International Freight Forwarders Crowd Funding Company
I have just shared WIFFA organizational structure and WIFFA platform planning, but who will implement, who will take the whole operation? They are WIFFA members, the entire audiences, and all the freight forwarders across worldwide, as WIFFA and WIFFA products belong to everyone, every China freight forwarder and every freight forwarder.
At the time of introducing the original intention of initiating WIFFA, I have elaborated three points, of which the last point is enterprise operation. Method to enterprise operation is to establish a freight forwarding crowd-funding company. Planning as follows:
1. Initiators + crowd funding + platform
Initiators: 1+25 Shareholders. There are 50 Limited Partners, there 24 to be filled.
Crowd funding: Natural Person investment, Nominal holder is LP, certified by the third party.
Platform: above platform products and new products.
2. The company is currently seeking for strategic cooperation and Venture Capital.
3. The company will provide services Chinawide and connects to the world.
4. The company is under capital market operation, attempts being an oversea listed company.
Times changes, everyone is looking for success, how to make success? Success is a myth, which is not below your feet, not above your head. Open-mindedness is success.