With its new China e-Auto Hub, business-to-business network provider GXS aims to facilitate a level of supply-chain collaboration that has been missing from the automotive market in the world's most-populous country, according to company officials.
The China e-Auto Hub offers all the organizations in the automotive supply chain -- manufacturers, suppliers, dealers, after-market retailers -- a means to exchange electronic information relating to such things as product design, production planning, and materials procurement.
For larger companies, the hub is designed to connect directly into whichever ERP system they are running; smaller companies can access it through a Web portal. The exchange is exclusive to data communication by companies within China's borders. For international interaction, GXS (Gaithersburg, MD) directs customers to its Trading GridSM global B2B system.
In connecting China's automotive players, the e-Auto Hub will encounter a plethora of data-interchange standards. Since the country's growing auto segment is home to multinational companies with varying standards for data exchange -- from ANSI EDI and EDIFACT to XML and VDA -- the hub will handle them all, says Steve Keifer, vice president of industry and product marketing at GXS.
To facilitate its endeavor, GXS struck a partnership with Entercom, a Chinese telecom company that has close ties with the Ministry of Information and Industry and other state agencies. The e-Auto Hub also won the endorsement of the National Development and Reform Commission (NDRC) of China.
"Having government support is key" to operating successfully in China's auto industry, Keifer says. The government has relationships and influence with domestic companies, many of which are still stated-owned, he notes. By pairing with China Entercom, GXS not only taps into the associated government resources, it also gains access to the telecom's existing customer base.
GXS chose the automotive industry for its latest exchange because of the growth opportunities Keifer says are inherent there. Keifer expects an annual growth rate of 8%-10% in China's auto sector. Citing statistics that show only 10 cars per 1,000 people in China versus hundreds per thousand in the U.S., Keifer says he's confident that there is "plenty of room for growth there."
Pricing for access to the exchange will range from $20-$40 per month for small manufacturers to anywhere from $1,000 to $20,000 per month for larger companies, depending on the volume of their activity.
As for the security of intellectual property, a major concern among manufacturers operating in China, Keifer says the auto hub is equipped with typical security measures such as password-protected access, but adds that companies using the hub should choose their partners wisely. "We're not trying to, by design, solve any IP issues."
GXS signed its first customer -- Dongfeng Peugeot Citroen Automobile Ltd. (DPCA) -- to the e-Auto Hub in March.
This article originally appeared in the May 2006 issue of Managing Automation magazine.