2. What are China’s
logistics?
•Logistics are the management of
transporting goods from one point to another.
•China is no longer an export-driven model.
•Although their wages are low, they are steadily
rising.
•The government wants to reduce their need for
foreign dependence.

3. The Situation
•The main focus of China’s business is technology
focused sectors and high value capabilities.
•Their latest 5 year program, ratified in 2006,
focuses on a knowledge led, innovative economy.
•Greater domestic consumption is a main goal.
•This plan will reach into all industries, not just
technology.

4. Economy Talk
•The way China handles it’s goals is very unique.
•Their economy combines the size of the US
market with the variety of the European market.
•China’s goals, however, are no different from
the goals of other countries.
•It is the first country to maintain an enormous
manufacturing base, develop a market of 1.3
billion consumers, and build on its ability to
provide the world with high-value goods and
services all at the same time.

5. Father of the Economy
•China has taken on a multi-dimensional role.
•Companies must make sure their strategies
enable them to respond to China appropriately.
•While other economies took centuries to
evolve, China is attempting to achieve its
economic transformation in a fraction of the
time.
•China‘s approach to the value chain is also
unlike the approach taken by any other country,
and its evolution will be carried out very much
on its own terms.

6. Economies, Logistics, and
Statistics, Oh My: The Trilogy
•Retail sales in China exceeded $827 billion in
2005—nearly a 13 percent increase from 2004,
and the country's biggest growth since 1997.
•One estimate predicts retail sales, controlled by
the government, raising private incomes and
encouraging domestic spending, will continue to
increase and will top $1.2 trillion by 2010.
•This growing market is no longer subject to low-
cost, low-quality products.

7. Economies, Logistics, and
Statistics, Oh My: The Middle
•With nearly 2.5 Billion people, the
opportunities to sell high-end products and
services in China are growing.
•For example, China's consumer electronics
market, which has soared by an average of 15
percent per year since 2000 and reached $55
billion in 2005, or its luxury goods market,
which generates sales of more than $2 billion a
year.

8. •For technology firms, China's 410 million mobile
phone users (the largest market in the world) and
more than 100 million Internet users are an extremely
attractive proposition.
•As the sophistication and influence of the Chinese
consumer increases, so does the country's
confidence.
•This can be seen in the development of indigenous
standards as part of China's efforts to cultivate its own
technology industries and reduce its reliance on
foreign technology.
Economies, Logistics, and Statistics,
Oh My: The End

9. From East Coast to West Coast
•The country's new confidence is being felt
beyond its borders, as Chinese companies
venture abroad.
•This "go global" strategy is increasing China's
influence in overseas economies.
•Given the lessons they have learned from
operating in their own emerging economy,
many Chinese companies are placing a
particular focus on developing countries in
Africa and Latin America.

10. Overseas Control
•China takes in their larger Western competitors
by using their price advantage, their deeper
understanding of emerging markets and the fact
they are often more welcome to operate in such
places.
•Understanding and monitoring China's
aspirations to export indigenous technology
standards overseas will also pay dividends.
•This is particularly true in those emerging
markets where China is nurturing its economic
and political influence.

11. Accenture
•Accenture Plc, a major supplier of accounting
and transaction services to the financial services
industry worldwide has misstated its interest in
its businesses in Malaysia.
•Consequently Accenture’s reported
earnings may well have been overstated.
•Accenture has consolidated the earnings of the
Malaysian incorporated Accenture Sdn
Bhd claiming it to be a wholly-owned
subsidiary.

12. •However the records of the Malaysian
Government’s Companies Commission
reveal that Accenture Malaysia is owned by
three Malaysian nationals who own all of that
company’s stock.
•The company is the main entity via which
Accenture conducts its business in Malaysia.
•Accenture has been in business in Malaysia for
well over 30 years.
Accenture Part Two

13. •Their Malaysian operation would be
considered a lucrative one. Accenture has been
presented with the Malaysian records, but
maintains that “Accenture Sdn Bhd has been
and continues to be a wholly owned subsidiary
of Accenture plc.”
•Accenture is maintaining that its financial
statements are accurate even in light of the fact
that the records of the Companies Commission
are considered conclusive.
Accenture Part Three

14. Accenture Part Four
•Accenture was once known as Andersen
Consulting, and was part of Arthur Andersen
(AA), once one of the largest audit and financial
consulting partnerships in the world. AA lost
most of its business after it was discovered that it
had helped Enron Inc conceals the financial
obligations which led to Enron’s demise.
•Accenture stock is traded on the New York Stock
Exchange to which it has reporting obligations.

15. The British Are Coming!
• Accenture (UK) Ltd was engaged by GB Gas
Holdings Ltd (a trading company of Centrica) to
design, supply and maintain a new IT system,
including a billing system for GB Gas’s
customers.
•The system was designed to enhance the
customer experience and was of critical
importance to Centrica’s business.

16. Gas•The contract between the parties defined a “fundamental
defect” as a fundamental breach of the warranty provisions
in the contract “which causes a severe adverse effect on the
British Gas Business”. Problems with the system emerged,
including a failure to bill customer accounts and customer
satisfaction subsequently decreased.
•As a result of the failures with the system, GB Gas had to
pay out compensation to customers, pay increased gas
distribution charges, employ additional staff to deal with
increased customer contact, write off millions of pounds of
unbilled or late-billed supply of power and purchase a new
IT system to deal with the problems.

17. •Accenture denied there was a “fundamental defect” and refused to provide
assistance to GB Gas.
• Inevitably, GB Gas racked up huge costs in dealing with the failed system and
trying to keep hold of its customers.
•The contract excluded “indirect and consequential” losses.
•However, the High Court held that the losses claimed by GB Gas flowed directly
from the breach of contract and were therefore not excluded.
•GB Gas was entitled to claim for discretionary compensation paid to
customers, increased gas distribution charges, additional borrowing charges and
various other “customer service” charges such as extra stationery and
correspondence costs.
•Accenture appealed the decision.
•The Court of Appeal agreed that these heads of loss claimed by GB Gas were
direct losses.
•In particular, the Court of Appeal upheld the High Court’s decision that the ex
gratia payment of customer compensation was a direct loss.
•The decision is a significant victory for GB Gas and a careful reminder that a
claim can still be made for direct losses even where an exclusion clause is in the
contract.
Lawsuit

18. In Conclusion…
•Logistics is the transportation of goods
from one place to another.
•China has a multi-dimensional role in the
economy.
•Accenture is a company which made false
records for Malaysia.
•British Gas filed a lawsuit against Accenture
once they breached their contract.

19. Citations
Mankiw, N. G. (2009). Principles of Economics Fifth Edition.
Mason, Ohio: South-Western Cengage Learning.
Phillips, K. (2008). Bad Money. NYC: Viking Group USA Inc.
S.E. Frost, J. P. (1962). Basic Teachings of The Great
Philosophers. New York: Doubleday, a division of
Random House, Inc.
Smith, A. (1910). The Wealth of Nations. New York City:
Random House.