1 Keynote Speech: The Status and Trends of Global Purchasing Development and the Development of the Belt and Road Speaker: Mr. He Liming President of International Federation of Purchasing and Supply Management (IFPSM) Chairman of China Federation of Logistics and Purchasing (CFLP) Hong Kong, November 3, 2018 Congratulations to the 45 th anniversary of the establishment of the Institute of Purchasing & Supply of Hong Kong (IPSHK)! And thanks to the support of the Government of Hong Kong Special Administrative Region (HKSAR) to the work of the IFPSM and IPSHK! Founded in 1973, IPSHK is one of the key members of the International Federation of Purchasing & Supply Management (IFPSM), representing the Hong Kong region in Asia Pacific. This year is the 45 th anniversary of the establishment of IPSHK, and also the fifth anniversary of the Belt and Road Initiative. On September 7, 2013, President Xi Jinping visited Kazakhstan and proposed to jointly build the Silk Road Economic Belt. In October of the same year, President Xi, in his visit to Indonesia, proposed to jointly build the 21st Century Maritime Silk Road. Since then, the Belt and Road Initiative has entered the world's vision and gradually triggered global resonance. Around the theme in this conference, I would like to share with you: 1. Current status and trends of global procurement development 2. Remarkable results achieved on "One Belt, One Road" development 3. Opportunities brought to Hong Kong by the One Belt, One Road 1. Current status and trends of global procurement development Looking back at the development of global sourcing and supply management practices and theories over the past 100 years, we can discover the relationship between industrial development and changes in corporate procurement management.
2 According to the development process of modern enterprise production management, the procurement management can be divided into four stages: 1900~1960: "By warehouse production mode" procurement management stage 1970~1980: "Order-to-order production mode" procurement management stage 1980~2000: "Public-time production mode" procurement management stage 2000~: "Supply chain management production mode" procurement management stage Changes and evolution of procurement management: Plan Process Strategy Price Total Cost Total Value Since the 21st century, the rapid development of globalization and network information technology has brought about tremendous changes in the way the global economy operates, its production methods, and its circulation methods. New procurement strategies and optimized supply chain management are implemented in order to: Become an inevitable choice for sustainable development of the company Become a key part related to the core competitiveness of enterprises The performance of procurement trends under economic globalization in the coming years: i. Purchasing from a simple linear relationship to a complex mesh supply chain management Mergers and acquisitions of global multinational companies continue to occur, forming giant companies, integrating and deploying limited resources around the world; Specialization has led to an increase in outsourcing trends. Many large and medium-sized companies focus on their core business; and Integrated outsourcing of those non-core businesses. ii. The concept of procurement has been transformed into supply chain strategy, and to create economic value in a more innovative, open and green way to achieve sustainable socio-economic development. Clarify the relationship between raw materials and total cost; Recognize the complexity of the supply market and consider market changes when calculating total expenditures; Create a supplier procurement matrix to effectively analyze the market, clarify the positioning strategy, and improve the execution of procurement;
3 Emphasize leadership and collaboration in supply chain integration for R&D, procurement, production, marketing, finance and social responsibility. iii. The upgrading of procurement and supply chain towards data and intelligence. Further development of the Internet, big data and cloud computing degree of digitization of the procurement and supply chain platform will be significantly improved; Application of new technologies such as Internet of Things, artificial intelligence, and blockchain: o Smart supply chain will drive the development of industrial Internet; o Smart supply chain ecosystem gradually formed. iv. The functions and roles of procurement are developed in a professional and international manner Widespread needs and a new world changing the functions and roles of procurement; Its strategic status and importance continue to improve; Towards professionalism, specialization and internationalization. 2. Remarkable results achieved on "One Belt, One Road" development Let s look at the overall layout and implementation results of One Belt, One Road. Since President Xi s proposal of building the One Belt, One Road in 2013, more and more countries have responded enthusiastically. The One Belt, One Road initiative has become China s participation in global open cooperation, improving the global economic governance system, promoting global common development and prosperity and the main ways of building a community of human destiny and the Chinese program. i. Building the Belt and Road has identified five major directions: The Silk Road economy has three major directions: first, from northwest China, northeast Asia, Russia to Europe, and the Baltic Sea; second, from northwest China through Central Asia, West Asia to the Persian Gulf, and the Mediterranean; and third, from southwest China through the Central South Peninsula to the Indian Ocean. The 21st Century Maritime Silk Road has two major directions: one is from the Chinese coastal port through the South China Sea, through the Straits of Malacca to the Indian Ocean, extending to Europe; the second is from the Chinese coastal port through the South China Sea, extending to the South Pacific.
4 In the past five years, the "One Belt, One Road" has greatly improved the level of China's trade and investment liberalization and facilitation, and promoted China's open space from the coast, along the river to the inland, along the border, forming a new open pattern of land and sea linkage, East and West mutual aid. In the past five years, our trade in goods with the Belt and Road countries has accumulated more than US$5 trillion, and foreign direct investment has exceeded US$60 billion, creating more than 200,000 jobs for the local governments. China s foreign investment has been an important engine in driving global foreign direct investment growth. The joint construction of the Belt and Road is becoming China's plan to participate in global open cooperation, improve global economic governance system, promote global common development and prosperity and the building of a community of human destiny. ii. Seeing the development from the Belt and Road development index In 2017, the China Federation of Logistics and Purchasing (CFLP) carried out research on the Belt and Road development index and established an index system framework. (1) The economic growth momentum is good, better than the world level in the same period. The Belt and Road economic development index reflects the economic achievements of the Belt and Road Initiative over the past five years. It covers six regions including Asia Oceania, Central Asia, West Asia, South Asia, Eastern Europe, Africa and Latin America, and nearly 70 countries and regions along the route. In the past five years, the One Belt, One Road economic development index has steadily increased. In 2017, the index rose to , an annual increase of 6.4%, indicating that the economic development speed of the countries along the route is at a relatively high level, significantly higher than the global GDP growth rate of 3.15% in 2017, and higher than the developed economies' GDP growth rate of 2.2% in the same year. (2) The trade index has improved in recent years, but it has fluctuations. The Belt and Road trade development index experienced a process of first falling and then rising. Overall, from 2013 to 2017, China's foreign trade growth rate along the Belt and Road countries
5 was 1.4 percentage points higher than the overall growth rate of foreign trade during the same period. In 2018, the trend of good development continued. From January to July, China s import and export volume along the Belt and Road increased by 11.3%, which was 2.7 percentage points higher than the overall growth rate of foreign trade during the same period. (3) Bilateral investment remained stable overall. In 2014, China opened the two-way investment with countries along the Belt and Road. China's investment in countries along the Belt and Road is mainly non-financial direct investment, mainly in the form of cross-border mergers and acquisitions, greenfield investment, etc. The industries involved in foreign investment are mainly energy, transportation, real estate, science and technology, and agriculture. The countries along the Belt and Road involved mainly in investment and setting up enterprises, with industries mainly in energy and transportation. (4) It is a rapid growth in human communication. The Belt and Road has significantly promoted tourism and cultural exchanges between China and countries along the route. Since 2013, the Belt and Road human development index has shown a rapid incre ase, from 100 in 2013 to in 2017, an average annual increase of 11.6%, significantly higher than economic, trade and investment growth. 3. Opportunities brought to Hong Kong by the One Belt, One Road At present, the Belt and Road has moved from the concept of the initiative to an accelerated implementation phase. As the world's financial center and the freest economy, Hong Kong has the unique advantages of location, economy, trade, finance, professionalism and humanities in the construction of the Belt and Road that we can play an important role. By participating in the Belt and Road, Hong Kong will have a bigger stage in this important period of development and opportunities. i. Take advantage of Hong Kong's location and institutional advantages.
6 As an important gateway and international hub for the Maritime Silk Road, Hong Kong has a unique geographical location that is backed by the Mainland and facing the world ; Building on the advantages of Hong Kong's "one country, two systems" policy and the independent customs zone status; Promote collaboration between Hong Kong, the Mainland, the One Belt, One Road countries and regional partners to develop the Belt and Road market. ii. Leverage from Hong Kong's economic and financial advantages. As a global trade center, international financial center and international shipping and logistics center, Hong Kong can play the role of an international supply chain hub and promote the smooth flow of the Belt and Road trade; At the same time, Hong Kong can serve as an investment and financing platform for the Belt and Road infrastructure and provide financial support for the Belt and Road construction. iii. Take advantage of Hong Kong's professional services and humanities. As one of the most globalized cities, Hong Kong is a global information and communication center with international-level professional talents and services. It has rich international experience and diverse humanity exchanges. It can play the role of communicate, exchange and cooperation in the construction of the Belt and Road ; With the full support of China, Hong Kong will continue to exert its advantages in major development strategies such as the Belt and Road and the Guangdong-Hong Kong-Marco Greater Bay Area, and will inject strong momentum into the future development and leadership in the global market opening trend. Finally, some key facts about IFPSM: Non-political, non-profit, independent international organization; The most authoritative international organization in government procurement, corporate procurement, logistics and supply chain management; An union of 45 National and Regional Purchasing Associations worldwide; 250,000 procurement professionals. I wish the IPSHK 45 th Anniversary International Conference a great success! Thank you all!