Volvo Group sees opportunities in China's e-commerce boom

BEIJING - China's e-commerce industry needs better logistics solutions, an opportunity that Swedish commercial vehicle manufacturer Volvo Group is ready to seize.

"One very interesting development where China has a lead is in the e-commerce sector. That increase is very positive for Volvo because we see that sophistication of transport is very important in e-commerce, that's why the demand for our type of solution has been increasing," said Martin Lundstedt, president and CEO of Volvo Group.

The solutions the company has been trying to offer are autonomous, electric, connected vehicles that improve efficiency and safety, according to many Volvo executives at an industry forum in Beijing this week.

On the sidelines of the forum, the company demonstrated a self-driving truck that can drive itself from one hub to another, using sensors and GPS to monitor its surroundings. When encountering obstacles, the truck brakes automatically.

According to Lars Stenqvist, chief technology officer of Volvo Group, while the company will continue to add new features to the prototype, it is in discussions with partners about the applications of such vehicles, first in confined areas such as mines.

"We are ready to take the step from demonstrations into commercialization together with our customers. That could be in any country in the world," Stenqvist said.

While China's passenger cars sector has seen rapid growth in recent years, its commercial vehicle industry has been relatively lagging behind, said Cen Yanqing, chief engineer at the Research Institute of Highway of the Ministry of Transport.

"Truck accidents have become a major part of all traffic accidents in China. There's a lot of room for improvement," Cen said.

As companies tackle logistical bottlenecks and improve services, e-commerce is creating demand for high efficiency vehicles with smarter technology, said Lundstedt.

Logistics is a key challenge for companies like Alibaba and JD.com especially during shopping events such as the last weekend's Single's Day shopping festival.

Postal and courier companies handled at least 331 million packages on November 11, but that number only represents some of the 850 million orders placed that day.

JD.com has already tested out new technology to improve deliveries. Richard Liu, JD's CEO, said in a conference earlier this year that the company intends to use drones and driverless trucks for deliveries.

Fully autonomous commercial vehicles which can operate in complex environment such as city centers are still some way off, Stenqvist said, but lower level of automation could always help.

China is putting great emphasis on the development of its own autonomous vehicles industry, with the government setting up industry standards, according to Zhou Wei, chief engineer with the Ministry of Transport.

"Self-driving vehicles will improve safety and efficiency, so we'll definitely support them," Zhou said.

While e-commerce is potentially a game-changer for Volvo Group, Lundstedt said the company could also benefit from the country's overall transformation into an innovation-driven and sustainable economy.

"Our set of competitive advantages is aligned very well with the priorities of China," Lundstedt said.

The Belt and Road Initiative, which involves infrastructure projects across the globe, could bring opportunities both at the design and construction phase and after the infrastructure was built, Lundstedt said.

"It will be an initiative where we can use our technology in a good way," Lundstedt said.