China’s Belt and Road Strategy
The final big topic is China’s Belt and Road Strategy, also known as the Silk Road Initiative. If China is setting up a network of interconnected sites to seamlessly move its products from China over land, sea and air to its biggest market, which is Europe in terms of proximity, a lot of the initiative’s success is going to come down to this: How does it manage a railway line? How does it manage a port? Can it get the efficiencies? Can it make it successful? Can it be profitable? Can it be profitable in such a way that the state-owned company that runs the port is successful? Do the consumers who buy the product feel the price is reasonable? Does the Chinese supplier feel that the price to ship makes it economical for them? Do the little transit towns that connect the railway lines and ports feel that the rail company is doing a good job, they’re paying a good salary, volume is going up and it’s worthwhile?
The insight is that stakeholders need to feel that they’re gaining something. But for that to happen, the port or the railway line has to be profitable—but not at the expense of a stakeholder. It’s too early to say what is happening, but signs are encouraging. There are some hiccups, but that is normal for any infrastructure project anywhere in the world.
For SLIDES members, we have put together a strategy showing you how we would optimize and debottleneck a port facility that has been neglected for a long time and has just been taken over by a new entity. You can see the steps involved, priorities, roadmaps, analysis, and the quick wins you can push through. How do you manage the stakeholders if you are taking over a port that’s been mismanaged to bring it back to profitability? Unless that port is brought back to profitability, value cannot flow to each stakeholder, and if the value cannot flow to each stakeholder, the stakeholder is unhappy, and you don’t want that.
One of the deepest insights about the Belt and Road Strategy is that it comes down to managing a logistics line and managing it proficiently, profitably and humanely—and that applies to any project anywhere in the world, especially those built in emerging markets.
This is an excerpt from Monday Morning 8 a.m. newsletter, issue #12.