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Introduction
In comparing the logistics capabilities of India and China, it is evident that China has the best logistics infrastructure compared to India; this is due to China shifting from an export-led economy and focusing on domestic consumption and e-commerce adoption, which has been perceived as a facilitator for new logistic investment opportunities (Amling & Daugherty, 2020). Chinese focus on online shopping behavior and domestic consumption of the middle class has driven change along with industrial real estate investment. The Indian logistic infrastructure is lacking since they focus on foreign consumption.
Focus on foreign consumption is evident in the case of UPS, whereby their attempts to push growth focused on forming alliances with companies such as AFL Private Ltd to gain access to international delivery. UPS shifted its attention to other Asian markets such as Malaysia and China while leaving the domestic market wide open to invading rivals. On the other hand, India has lagged in e-commerce since it has attracted numerous global companies such as Flipkart and Amazon. However, China has strong e-commerce startups and local companies such as Alibaba, which are successful. Therefore, the Chinese logistic infrastructure is much better than India’s since it has focused on domestic retail consumption and e-commerce.
Proposed investments and regulatory reforms that would improve logistics for firms such as UPS
One of the proposed regulations and savings reforms is implementing the Goods and Services Tax (GST). However, other subsidiary taxes like exercise, service tax, and value-added tax (VAT) were subsumed while imposing a standard GST on most products and services across India. The implementation of the GST improved the logistic infrastructure by rendering the states’ geographical margins irrelevant and paving the way for rationalizing the Indian logistics capabilities. The new GST tax reform enhanced the turnaround time and supply chain, reduced transportation cycle times, and led to warehouse consolidation (Amling & Daugherty, 2020). The new tax reform ensured that the inter-state toll posts were removed, which was beneficial to numerous industries due to the improved transportation efficiency.
Nonetheless, the new tax reforms might be challenging to undertake successfully due to corruption. One of the significant issues affecting the Indian economy at the local, state, and central government levels is corruption (Obamuyi & Olayiwola, 2019). Numerous factors have contributed to corruption in India, such as officials siphoning money from government projects and the trucking industry in India being forced to pay a large sum of money in bribes on an annual basis to the police or regulatory stops on interstate highways. As well, India has a low warehousing capacity that has outdated facilities and lacks adequate IT infrastructure.
The best strategy for UPS to grow in India and the best growth segment market
The best strategy recommended for UPS to grow its operation in India is a blue ocean strategy. This strategy involves companies seeking uncontested market spaces that make other companies’ competition irrelevant. A blue ocean strategy consists in creating unique and new ideas or products via innovation. For instance, UPS can make DHL irrelevant in the courier market segment, and UPS can achieve this by creating new services not offered in the courier market segment, such as providing customized courier services at an additional fee. This means that the best market segments for UPS’s growth are courier services, shipping services, and express delivery. UPS needs to grow internally through acquisition since it has been evident that DHL has become the leader in both domestic and international segments by merely acquiring Blue Dart.
References
Amling, A., & Daugherty, P. J. (2020). Logistics and distribution innovation in China. International Journal of Physical Distribution & Logistics Management, 50(3), 323-332.
Obamuyi, T. M., & Olayiwola, S. O. (2019). Corruption and economic growth in India and Nigeria. Journal of Economics & Management, 35, 80-105. doi:10.22367/jem.2019.35.05
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