In 1985, Ms. Zhang Yin used her savings of $3,800 to open a paper trading company in Hong Kong. By 2010, Ms. Zhang’s personal fortune exceeded $4.6 billion, making her the wealthiest self-made woman in the world. What is her success recipe?
Her success recipe is based on a “piggybacking strategy” by taking advantage of the imbalanced of container movements between U.S. and China. In 2014, U.S. imported over 2 million TEU (twenty-foot equivalent container unit) containers of goods from China for retailers such as WalMart and Target. With over $35 billion trade deficit, U.S. is exporting much fewer containers to China. The imbalance of importing and exporting containers forced ocean carriers to charge $4000 for shipping a 40-foot container from China, but only $1000 to China. By piggyback on those otherwise empty containers, American Chung Nam Inc. is the largest U.S. exporter (in terms of volume via container) exported over 300,000 containers of waste paper to its Chinese sister company: Nine Dragons Paper Industries -- the world’s largest cardboard for use in boxes to export Chinese goods. By taking advantage of availability of low cost waste paper, low shipping cost, and huge demand for cardboard boxes in China for exporting goods, Nine Dragons produced over 9 million tons of cardboard and packaging materials and achieved $3.8 billion in sales in 2011. It is the success of Nine Dragons and American Chung Nam has made Ms. Zhang one of the wealthiest women today.
Piggybacking is not just a powerful concept for making profit; it is also powerful to creating social value as well. Despite inadequate infrastructure in East Africa, Coca-Cola bottlers deliver over $500 million worth of product to 1800 “manual” distribution centers operated by 7500 micro-entrepreneurs. These micro-entrepreneurs use push carts or even bicycles to distribute the product to small retailers (who are also micro-entrepreneurs) in congested areas, making frequent but small deliveries to these cash-strapped micro-retailers. By piggybacking on the existing distribution network of Coca-Cola in Africa, Cola Life, an independent UK charity, hopes to bring “social goods” such as oral dehydration salts, high dose Vitamin A and water purification tablets to rural villages using a wedge-shaped container called an AidPod that fits between the Coca Cola bottles in their crates, thus reducing distribution costs and carbon footprints (Figures).
By piggybacking on some existing systems, one can develop many innovative supply chain ideas to achieve the triple bottom line (profit, people, and planet).