The Class of 2016 exploring the extraordinary Li & Fung Explorium, a high-touch retail and wholesale omni-channel innovation hub in China

Thursday 16 March 2017 – Russia is the biggest country in the world and spans nine time zones, but is home to only 200 million people compared to the 1,4 billion people in China, the world’s second largest country by landmass. Of late Russia has come to see itself as a country with two front doors, St Petersburg to the west and Vladivostok to the east.

China’s economy continues to grow at around 6% per annum and is globally connected as one of the biggest importers and exporters of goods. The Russian economy has been contracting at a rate of about 3% per annum as a result of sanctions imposed after its invasion of Crimea.

“Both countries are major players on the international stage and continue to shift the nexus of global power toward the east, away from the US and Europe. Both are part of BRICS, the key reason for combining both as twin destinations for the Wholesale and Retail SETA (W&RSETA) International Leadership Development Programme (ILDP) Class of 2016,” says Louise Claassen, programme director, executive education, Henley Business School Africa.

“China is one of the most important countries in the world at the moment. The South African economy, like many others, is deeply linked to its growth and success. Most of South Africa’s retailers source products from and rely on Chinese logistics companies to deliver goods to African shores. A deeper strategic and cultural understanding of this country can only benefit South African leaders and companies,” she says.

The meetings, visits and experiences were designed to introduce the ILDP retail and wholesale leaders to China and Russia from both a business and cultural perspective.

Meetings and company visits included Shanghai Li & Fung, the world’s largest retail logistics company; The Explorium, a high-touch retailer and wholesale omni-channel innovation space; and a presentation on the “Rise of China” by Simon Schaefer of Deloitte. The group also visited Rolex and had a strategy season on ‘Chinese Characteristics’ with Prof David Gosset of CEIBS Business School.

In Beijing meetings were held with MasterCard, Alibaba and Sundig, an electronics and appliance retailer similar to Dion Wired that partners with Alibaba to provide an end-to-end omnichannel experience.

 

Moscow and St Petersburg

The programme in Russia covered four key areas: to expose delegates to the Russian economy; South Africa’s relationship with Russia, challenges that entrepreneurs face in this economy and how they overcome these; and aspects of retail and logistics in Russia.

In Moscow the delegates visited the South African Embassy and had dinner with Yan Yanovskiy, founder of First Nation Societe Bancaire and co-founder of the Bioenergy Corporation. Deloitte covered “Models of Success in the Russian Retail Sector”, and a visit to TNS covered “Understanding the Russian Consumer”.

In St Petersburg, Simon Schaefer of Deloitte spoke about IKEA and a meeting with DHL covered the freight-forwarder’s view on different retail models in Russia.

Ms Claassen says that an objective of the China/Russia immersion was to help ILDP delegates develop as leaders with a global outlook. “The journey dispelled, or at least challenged, many of the perceptions about China and Russia. ILDPs actively considered how learnings from these markets could be applied back home,” she says.

In the words of one of the delegates: “Looking beyond the present. Traveling the world to learn and work and then coming back to plough back into your own country”.

According to Prof Gossett (CEIBS,Shanghai), China is, for the first time in history, projecting itself onto the rest of the world. As Africans’ we can see the effect throughout our continent. It becomes important for South Africa to understand how to engage giants such as China and Russia.

He sees Africa as the next frontier and a important global player. At a personal level, Prof Gossett’s comments provoked the ILDPs to consider the way we are and should be projecting ourselves as leaders in their respective spheres. 

Ms Claassen says: “Through our engagements with different organisations as well as through discussion with different Chinese and Russian locals, we learnt how central the use of technology is to individual lives and organisations. The uptake on omni-channel is much more entrenched in these markets – especially in China – than in South Africa at both B2C (business to customer) and B2B (business to business) levels.”

Jon Foster-Pedley, dean of Henley Business School Africa, says, “A key insight is that a deeply collaborative approach is necessary to make it work, together with a mindset that sees traditional competitors as partners. Progressive, innovative thinking is necessary to fully unleash the power of the network. Technology plays a central role as an enabler.”

Li & Fung spoke of itself as a ‘network orchestrator’. They are experts in building enduring partnerships with a range of small, medium and large enterprises throughout the network. This provides unparalleled agility and responsiveness in addressing client needs.

The full omni-channel experience, with Alibaba and Suning: Seamless end-to-end bricks and mortar and virtual shopping at a whole new level

Wherever the group travelled, the idea of having firm plans (for China a 10-year plan and for Li &Fung a three-year plan) was of central importance. This was balanced with the idea that disruption and a degree of chaos was necessary to encourage change, and that change was generally a positive thing. As one delegate said: “Continuous innovation and development is required to consistently be sustainable”.

Russia versus China

“The retail and wholesale relationships between South Africa and Russia are not particularly strong. There are not many consumer brands in Russia made in South Africa, nor in South Africa made in Russia. And yet Russia was a rich experience for the Class of 2016 as a comparator to vibrant China, an unexpected and uncomfortable mirror for us as South Africans, and a surprising source of opportunities,” Mr Foster-Pedley adds.

According to the delegates, there appeared to be some interesting parallels between South Africa and Russia. Both experienced a slowdown in GDP and a preoccupation with the past instead of the future. Both are quite inward looking. For both countries there are opportunities, and the potential for closer relationships that may be beneficial in terms of trade.