A Look at HP's Modern-Day Silk Road

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July 23 (Bloomberg) -- Hewlett-Packard Vice President of Operations Tony Prophet discusses Hewlett-Packard's use of rail transport in China with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

The genesis of this was the challenge we saw in two thousand eight and 2009 in coastal china.

We saw labor challenges, labor turnover, absenteeism.

So it was too expensive and workers were coming from china anyway.

Exactly.

Labor force was fueled by these migratory growth.

The workers, 70% of them were coming on migratory workers.

Our decision was to move them and put the factories where the workers were coming from.

Instead of putting the people on trains, find a way to put the product on trains.

We moved inland and now we are landlocked.

Our strategy to solve this landlocked situation was to develop a new land route.

Rather than coming all the way back to the coast, streaming all the way back to rotterdam or homburg, we developed and pioneered a new land route across china, across has extend -- into germany.

It takes a third less time, cost a third of air freight and has one 30th the greenhouse gases.

Faster, cheaper and more environmentally friendly.

How does a keep you competitive?

This is such a competitive as this.

Hp seated the top spot of pc sales to lenovo.

You need any help you can get to maintain an edge.

Hp was the first mover to go west.

At the time we decided to go west, the industry was very skeptical, including the company you just named.

If you observe what happened in the years that followed, you saw all the companies, and i will name them -- lenovo, dell, toshiba -- they began to move west.

They tried to emulate our strategy.

We have a first mover advantage.

We thought through the logistics first hand we have the added scales because we have -- we have the added scales to fill trained that our competition does not have.

A lot of people may not realize this is the biggest metropolitan area in the world.

There are tens of millions of people there.

What does it mean for the workers?

Does it give you an edge in attracting talent because migrant workers who were going to the coast can stay closer to their families.

Absolutely.

In 2010, i toured some of those coastal operations and talk to the people.

I asked where they were from and they were from these inland cities and very few of them were from the immediate areas adjacent to the factories.

About 70% of those workers were migratory workers.

Today, about 80% of the workers are the indigenous people from the immediate province.

There closer to their homes and families, they don't have to spend holidays traveling back and forth, they are eating their native cuisine and people around them speak the dialect they speak.

It's a much better lifestyle for them and better quality of life.

It's good for the workers, good for hp, and good for our bottom line.

They are known for their spicy food, so they can have all they want.

Could this model be in other countries?

Lex -- the exact analog?

Possibly.

There are other things we are doing with a similar sort of thinking.

If you think about our shipments coming from coastal china or singapore, see shipments from asia were developing a new route.

Rather than going through the suez canal, rotterdam or homburg, we are developed in a new ce route.

I'm sure you'll hear our competitors talking about it in the future.

We are moving into the port of athens great that government has privatized a couple of births there with the chinese carrier and these are state of the art.

So now we are taking the sea route.

Rather than going into northern europe, we are steaming and it takes us five fewer days.

Less inventory, less impact on the environment, lower cost.

Interesting.

This text has been automatically generated. It may not be 100% accurate.

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