Regional supply chains must be ready to integrate with Chinese tech systems: report

CHINESE businesses are driving supply-chain modernisation in the Asia-Pacific - but the trend raises concerns about the region's readiness for tech compatibility with Chinese partners.

"Chinese technology innovations will continue to proliferate in the region and that participation in supply chains across Asia will increasingly demand interoperability with Chinese standards," a recent industry report noted on Tuesday.

The joint report from logistics player Toll Group and Australian consultancy Asialink Business pointed to Chinese investments in emerging markets, such as Indonesia and India, that are posting strong demand for e-commerce products and services.

Already, Alibaba's Cainiao subsidiary relies on advanced warehouse automation that includes autonomous vehicles for delivery. The group's e-commerce fulfilment network benefits from synergies with the Alibaba-owned TMall marketplace and Alipay payment platform, to boot.

With Internet giants like Alibaba revolutionising supply-chain management, "businesses will need to invest in technology that will allow interoperability" with their systems, the report said.

As such, the report warned that "regional markets that are not as far along the technology adoption curve risk missing out on interoperability with more advanced supply chains in Asia if investment lags", with higher difficulty for small businesses that cannot afford the investments.

The report also called on governments to take a role in promoting supply chain modernisation, which has largely relied on private-sector investment and innovation. For instance, policymakers can encourage small businesses to adopt automation with incentive schemes.

"Government and business must also recognise that China's leading position in supply chain technology and its growing focus on partnerships with other regional markets will likely mean that Chinese standards will become increasingly common," the report added.

Said Thomas Knudsen, managing director of Toll Group: "Businesses face a challenge to transform legacy supply chains for the future. But we also have a unique window of opportunity to reorganise and become more adaptive and interoperable with partners in the region."