The influence of China-Europe Railway Express on the production system of enterprises: A case study of TCL Poland Plant

  • LIU Hui , 1, 2 ,
  • GU Weinan 1, 2 ,
  • LIU Weidong , 1, 2, * ,
  • WANG Jiaoe 1, 2
  • 1. Key Laboratory of Regional Sustainable Development Modeling, Institute of Geographic Sciences and Natural Resources Research, CAS, Beijing 100101, China
  • 2. College of Resources and Environment, University of Chinese Academy of Sciences, Beijing 100049, China
*Liu Weidong, Professor, specialized in economic geography and regional development. E-mail:

Liu Hui, Professor, specialized in regional sustainable development. E-mail:

Received date: 2020-11-29

  Accepted date: 2021-03-21

  Online published: 2021-07-25

Supported by

Strategic Priority Research Program of Chinese Academy of Sciences(XDA20010103)


Copyright reserved © 2021. Office of Journal of Geographical Sciences All articles published represent the opinions of the authors, and do not reflect the official policy of the Chinese Medical Association or the Editorial Board, unless this is clearly specified.


The implementation of the Belt and Road Initiative and the increasing frequency of the China-Europe Railway Express (CER Express) have brought new improvement to the production system of enterprises along the Belt and Road regions. On the basis of summarizing the evolution of production system of enterprises, this paper takes TCL Poland Plant as an example to conduct an in-depth study on the characteristics of the plant's current production system and its differences from the original production system, and analyzes the impact of the CER Express on its current production system. Some conclusions can be drawn as follows. (1) CER Express had a great impact on the production system of TCL Poland Plant, which is mainly manifested in the following aspects. First, the transport of raw materials by CER Express improves the time efficiency and shortens the whole supply chain. Second, CER Express acts as a “moving inventory”, which realizes the flexibility of raw material inventory and “zero inventory” effect based on the punctual transport. Third, the time and inventory effects brought by CER Express speed up the response to European market. The comprehensive benefits brought by CER Express lead to a more punctual and lean production system, meet the diversified needs of consumers on account of product quality and diversification, and improve ability to expand European market. (2) On the basis of abandoning the original “Rigid Mass Production” system, we argue that TCL Poland Plant formed a unique production system—“Global Fluid Just-in-Time” which absorbed the essence of Toyota Production System based on the punctual transnational transportation of CER Express. (3) The differences between the current and the original production systems of TCL Poland Plant are mainly focused on the following aspects: the difference of transport and storage mode of raw materials, and the changes of production line, production mode and quality inspection organization, etc.

Cite this article

LIU Hui , GU Weinan , LIU Weidong , WANG Jiaoe . The influence of China-Europe Railway Express on the production system of enterprises: A case study of TCL Poland Plant[J]. Journal of Geographical Sciences, 2021 , 31(5) : 699 -711 . DOI: 10.1007/s11442-021-1866-4

1 Introduction

Production refers to the process of transforming tangible and intangible inputs into goods or services. The definition of the production system of enterprises first appeared in economics (Song, 2013) and refers to the organizational process related to all production activities of enterprises. The changes in production systems are accompanied by the changes in production technology. Technological changes are a breakthrough in the accumulation of human knowledge from quantitative changes to qualitative changes. This breakthrough also brings about changes in production systems and various interest relationships (Song, 2013). The production system of an enterprise is the basis for the survival of an enterprise and the decisive force for its development (Xue et al., 1997). At the same time, the production system of an enterprise is a process of dynamic change. Its structure is constantly adjusted with changes in different historical stages (Song, 2013). With the progress of science and technology, the changes of transportation and the wide application of information technology, production systems of enterprises had undergone major changes, mainly from small batches-large sizes to large batches-small sizes (Figure 1).
Figure 1 The evolution of enterprise production system
Some studies on production system of enterprises have been done. However, these studies are more focused on the nature and characteristics of a certain mode of production organization and its application in enterprises. Youssef et al. (2004) believed that there are two types of products. One is that products with high market demand need to be produced by MTS (make-to-stock), and the other is that products with low market demand need to be produced by MTO (make-to-order). With the progress of globalization and the application of modern technology, the mass production based on Fordism system could no longer meet the changing market demands, and could not adapt to the new environment of product diversity. It resulted in low production efficiency and loss of competitiveness (Amin et al., 1990; Sayer, 1990; Storper et al., 1992). For the research of Post-Fordism Production System, more emphasis was on the application of lean production based on flexible production in production system of enterprise (Scott, 1988; Liu, 2012; He et al., 2016). From the perspective of geographic research, Zheng et al. (2003) and Sun et al. (2015) studied the theoretical background and connotation of flexible production, as well as the realization form of “flexible space” in economic geography. They also proposed the new industrial space under flexible production. This new concept enriched the theory of enterprise location selection and had a more important impact on the theoretical research of economic and urban geography. Therefore, the significance of the existing geographical research on the production system of enterprises lied in the discovery of the spatial form and spatial influence that this type system can achieve.
In addition to the researches on the nature and characteristics of production systems, some other researches mainly focused on the influences on different production systems of enterprises. For example, Liu et al. (1998) discussed the process and influence mechanisms of spatial evolution caused by changes in the production system of global automotive industry. Poon et al. (2000) and Hesse et al. (2006) discussed the influence of government policies on the production system of multinational enterprises. Storper et al. (1991) and Wang (2017) discussed on the impact of institutional support, knowledge spillovers, and technological environment behind flexible production system on the diversity of enterprise production system. In addition, the improvement of transportation conditions also has an important impact on the production system of enterprises. The technical conditions of air transport, container transport, and railway transport have caused time and space compression (Field, 2004). For example, Dell had combined its six major production bases with global suppliers and logistics centers through the Internet and modern transportation to maintain the company’s global operating system.
With the in-depth advancement of the Belt and Road Initiative, China-Europe Railway Express (hereafter CER Express) has become an important platform for transportation cooperation on the Silk Road Economic Belt (Liu et al, 2019). Current studies on CER Express mainly focus on their characteristics and organizational models (Xu, 1997; Otsuka, 2001; Gu, 2015; Wang, 2015; Wang et al., 2015; Wang et al., 2017), and game analysis of CER Express after subsidies (Liu, 2015). Some studies also focus on land transport accessibility and the competition between railway transport and ocean transport (Mo et al., 2015; Sun et al., 2016; Lu et al., 2018). A few studies have explored the scope of the economic hinterland of the outbound gateway along the route of CER Express (Wang et al., 2017). Taking CER Express as an example, there are also some cases about the impact of traffic technology on the production system of enterprises. For example, several major e-commerce platforms of China have set up purchasing centers near Duisburg, Germany. Chongqing, which is not bordered, coastal and does not produce coffee bean, has built the world’s third largest coffee trading platform (Guan, 2017). As the Belt and Road Initiative has been recognized by more and more countries, the increasing number of CER Express routes and schedules has not only provided companies with transportation options, but also allowed companies to rely on this space compression technology to change the production system, so as to more flexibly arrange the transportation of product parts, product development and sales, and more effectively connect the markets of China, Central Asia and Europe. However, the existing studies are mostly news reports (Guan, 2017). Few research papers deeply explore the impact of CER Express on the production system of enterprises from the theoretical and practical aspects.
Based on the above analysis, this article adopts methods of in-depth analysis of qualitative discussion based on field survey data and case investigation of TCL Poland Plant to explain the impact of CER Express on the existing production system of TCL Poland Plant, and compared the existing production system of TCL Poland Plant with the traditional production system. This article also reveals characteristics and differences of the original and current production system and the mechanism of the CER Express to the transformation of enterprise production system, and provides theoretical support for the construction of the Belt and Road Initiative and the development of CER Express.

2 The profile of CER Express and TCL Poland Plant

CER Express referred to the high-speed freight train services from China to countries along the Silk Road Economic Belt (mostly in Europe). Since its opening in 2011, 24 cities in China have opened CER Express services to 31 cities of 16 countries abroad. Till the end of August 2019, there were 75 normal operated CER Express routes, which formed a normalized transportation system, principally including the Chongqing-Xinjiang-Europe Railway, the Hefei-Xinjiang-Europe Railway, the Suzhou-Manzhouli-Europe Railway, the Wuhan-Xinjiang-Europe Railway, the Yiwu-Xinjiang-Europe Railway, the Zhengzhou-Xinjiang-Europe Railway, the Chengdu-Europe Railway Express and the Chang’an Line (Xi’an to Europe). Among them, the Chengdu-Europe Railway Express operated in 2013 is the main line that affects the production system of TCL Poland Plant. It starts from Chengdu and passes through Kazakhstan, Russia, Belarus, etc. to Lodz station in Poland, with a total length of 9826 km and an operation time of 11 days. At present, this line operates on Mondays, Tuesdays, Thursdays and Saturdays, and has achieved stable bidirectional operation after 2015. Like other CER Express routes, the Chengdu-Europe Railway Express adopts the mode of shipping container or fully-laden carriages, forming a “five fixed-point scheduling system” with fixed locations (places for loading freights), fixed routes, fixed time (punctual time), fixed train number and fixed price (stable transportation price). In particular, the advantage of time shortens the production cycle of enterprises, which is mainly reflected in the shortened time of supply chain from raw material sourcing, transportation, assembly to sale. And it also provides a possibility for the transformation of production system of enterprises along the routes. Enterprises can re-plan and rearrange the production, so that products can quickly satisfy the demand of the local market in Europe.
TCL Technology Group Corporation Limited was founded in 1981, covering the main segments of the consumer electronics industry chain. With the process of globalization, TCL has accelerated its expansion and layout in overseas emerging markets, and has formed several overseas production bases (Figure 2). In 2004, TCL completed the merger of Thomson of France, and Thomson Poland Plant was transferred to TCL Poland Plant that has been in operation until now. TCL Poland Plant becomes the most-invested factory by TCL along the Belt and Road. TCL Poland Plant is subordinate to an overseas LCD TV assembly base of TCL Multimedia Holdings Limited and is specialized in the production and sales of LCD TV in Europe. The raw materials required for its assembly line account for 80% of the total cost, and most of them come from China. The raw materials mainly contain core components and electronic components of upstream LCD TV panel (Figure 3). In 2016, TCL Poland Plant abandoned the traditional mode of ocean transport and began to use Chengdu-Europe Railway Express as the main route to ship raw materials needed for production from Chengdu (China) to Lodz (Poland) (Figure 2). The packing volume of raw materials accounted for one third of the freight volume of Chengdu-Europe Railway Express that is from Chengdu to Lodz (Figure 2). In addition, TCL Poland Plant is located in Zyrardow (Poland), which is only one hour’s drive from Lodz railway station. Due to its location in the heart of Europe, Zyrardow became a logistics center and transportation hub in Central and Eastern Europe. The transportation and sales of goods from Zyrardow can cover most European countries in 3-4 days.
Figure 2 Global layout, supply relationship of TCL production bases and raw materials transport routes of Poland Plant (GS(2016)1665)
Figure 3 Raw material supply and product sales of TCL Poland Plant

3 Changes in the production system of TCL Poland Plant

3.1 Traditional production system of TCL Poland Plant (2004-2015)

TCL Poland Plant began to operate in 2004, and in 2016, it began to use CER Express to ship raw materials. Before 2016, raw materials transport for TCL Poland Plant was mainly completed by traditional ocean transport. Part of delivered raw materials were used for production and assembly. Most of the finished products are low-cost TV sets. The finished products quickly assembled were used to replenish the finished products warehouse and were put in according to the demand of the market and customers. When the market demand was insufficient, the finished products warehouse would be overstocked. The other part of raw materials was used for the overstock storage of the warehouse, so as to meet the temporary production when the market demand is large, to solve the shortage of finished products in the warehouse (Figure 4).
Figure 4 The original production system of TCL Poland Plant—“Rigid Mass Production System”
Before 2016, TCL Poland Plant mainly adopted the traditional “Rigid Mass Production System”. The supply speed of raw materials was always unable to catch up with the market demand, so mass production was the only way to meet the market demand. According to the field survey of TCL Poland Plant, the traditional production system could be mainly manifested in the following aspects. First, this production system pursued economies of scale and led to a low degree of market response so that it was unable to satisfy the demand of European market in time. Second, the product type dominated by TV was relatively single. The production flexibility and adaptability were weak. Third, the rigid standardized mass production of products weakened the control degree of product quality. Fourth, the overstock of components and finished products led to a certain degree of waste of resources and space. Fifth, long time of the overstock of finished products and the rapid updating of products caused the waste of some overstocked finished products.

3.2 Current production system of TCL Poland Plant under the influence of CER Express (since 2016)

With the acceleration of globalization, the spatial compression effect brought by the development of transportation technology has an important impact on the world economic and geographical pattern. The global enterprise production presents the trend of “fragmentation”. Different links of enterprise production process form spatial separation at domestic or international scale (Cheng et al., 2019). A large number of components suppliers and warehouses gather around enterprises to meet the needs of enterprise production. However, a huge cost of the storage of components and finished products requires enterprises to have punctual logistics and reduction of warehouse costs. The development of two modes of transportation that are air transport and railway container transport has brought enterprises punctual logistics (Coe et al., 2012). Air transport plays an important role in the circulation of high added value products and fresh products. Therefore, in the airport-centered Airport Economic Zone, enterprises with high added value products usually gather to enjoy the convenient and punctual logistics of air transport. Railway container transport is suitable for punctual logistics of products with large volume or quality and relatively low added value.
3.2.1 The influence path of CER Express on the production system of TCL Poland Plant
TCL Poland Plant is mainly engaged in assembly and sales in the midstream and downstream of industry. Components (LCD screens, etc.) are mainly from upstream domestic of China, with low added value, relatively heavy quality and high air transport costs. As the Belt and Road Initiative has been increasingly recognized by more and more countries, relations between China and countries along the Belt and Road are increasing, which provides convenient conditions for the efficient and stable operation of CER Express. In 2016, TCL Poland Plant began to use CER Express to transport raw materials. which has promoted the continuous improvement of production system from the aspects of timeliness of raw materials supply, inventory and market response, etc. (Figure 5).
Figure 5 The influence path of CER Express on production system of TCL Poland Plant
First of all, TCL Poland Plant had been committed to shorten the time of raw materials transport for many years, but the effect is obviously insufficient. The opening of CER Express brought new opportunities, in that the time of components transport via CER Express (Chengdu-Lodz) was reduced from 38 days to 22 days compared with the previous ocean transport (Shenzhen-Gdansk or Shenzhen-Hamburg) (Figure 2). At the same time, the stability of CER Express makes it easier to manage the supply chain system that integrates the supply of raw materials, production, and sales. The shortening of raw materials transport, which is the key factor affecting the duration of the whole supply chain, has become a basic condition for TCL Poland Plant to change its original production system.
Secondly, according to the orders of the market and customers, raw materials in need are transported to Poland by CER Express and are produced in time. The problem of the overstock of raw materials is solved, which improves the inventory turnover rate and contributes to realization of the “zero inventory” of raw materials. Therefore, the transnational transport of CER Express can be understood as a “moving inventory” that brings about the flexibility of components warehouse. Simultaneously, the original warehouse used to store raw materials has been transformed into a new production workshop, and the production lines have increased from 1 to 5.
Thirdly, the benefit of transport time and “zero inventory” effect of raw materials brought by CER Express can make the plant quickly respond to the market demands. The production arrangements of the plant are often to receive the components and other raw materials in the morning and use one day’s production to quickly put the finished products into the whole European market. The speed to respond to the demand is greatly improved. Through the convenient road transportation system in Europe, the finished products can be transported to Frankfurt and Paris within one day, and reach to customers all over Europe including Lisbon and Madrid within three days. As a result, it realizes the “zero inventory” of finished products.
Therefore, through the comprehensive effect of time, inventory and market response, the production system of TCL Poland Plant has gradually become a new one (i.e., flexible unit production of multiple assembly lines). TCL Poland Plant can produce color TV products with latest technology simultaneously with China under this production system. The mobile phone and white household appliances have also begun to be produced in TCL Poland Plant, which greatly improve the diversification of products. The competitiveness of TCL Poland Plant in expanding the European market is greatly enhanced.
3.2.2 Current production system of TCL Poland Plant (“Global Fluid Just-in-Time”)
On the basis of absorbing the essence of Toyota production system, TCL Poland Plant takes the punctual transnational transportation of CER Express as the carrier to ensure the timely supply of raw materials, so as to realize lean production with “Just-in-Time” as the core. As a result, the production system of TCL Poland Plant presents a new type that can be defined as “Global Fluid Just-in-Time”. It forms a sharp contrast to Toyota’s “Local Fluid Just-in-Time” (punctual logistics between raw material suppliers and assembly plants in Toyota City) and it is reflected in the cross-regional scale of “Just-in-Time”.
The production system of “Global Fluid Just-in-Time” includes three connotations. The first is that rapid reverse pull of information flow is dominated by market demand. The second is the punctual and rapid raw materials transnational transportation flow of CER Express. The third is the production flow of internal punctual assembly brought by the rapid raw material transportation of CER Express. Specifically, the producing is according to the order demand of European market (i.e., make-to-order). The feedback application of information technology flow makes “Just-in-Time” replace the expensive “Full material preparation” system (Guan, 2017). The components needed are transported on time by CER Express, which realizes the timely supply of raw materials on the assembly lines and “zero inventory” of raw materials. The surplus inventory space is used to increase production lines, so as to realize the on-time assembly and synchronous production of diversified products on multiple automated and unitized production lines, and to ensure the delivery to the market within the specified time (Figure 6).
Figure 6 The current production system of TCL Poland Plant—“Global Fluid Just-in-Time”

3.3 Differences between current and original production system of TCL Poland Plant

With the development of technology in transportation, communication and production, subcontracting activities for manufacturing standardized components can span a larger space. Therefore, TCL Poland Plant gradually use “Global Fluid Just-in-Time” with lean production as the main production system to replace the original Fordism Production System which mainly focused on rigid production. The differences between current and original production system are mostly reflected in punctual CER Express transport, “zero inventory” effect, “Just-in-Time”, lean production, and significant improvement of quality and market benefits (Table 1).
Table 1 Differences between original and current production system of TCL Poland Plant
Original production system (2004-2015) Current production system (2016-)
Components transport Ocean transport CER Express transport (especially the “Chengdu-Europe Railway Express”)
Duration 38 days 22 days (The entire supply chain is shortened, especially transportation link)
Raw materials inventory Overstock of inventory “Zero inventory” (CER Express acts as “moving inventory”)
Production lines One Five (Original inventory space becomes production lines)
Production modes Rigid and mass production Unitization, “Just-in-Time”, and lean production
Type of products Single: color TV Diverse: LCD TVs, mobile phones, etc., and other foundries
Quality of products Exist certain problems of quality Diversified quality inspection
Market response Weak Strong
3.3.1 Punctual transnational transport of CER Express
The punctuality and convenience of raw material transport in TCL Poland Plant is one of the most important factors to promote the transformation of its original production system. The traditional raw materials transport is mainly by sea, making the whole production process take a long time. Relying on modern information network technology, punctual transnational transport of CER Express, and effective supply chain management, the supply chain of TCL Poland Plant is shortened especially in the raw materials transport, which effectively reduces the transport time of raw materials, and lays a solid foundation for TCL Poland Plant to realize fast and instant assembly and timely response to the European market.
3.3.2 “Zero inventory” effect
The original production system of TCL Poland Plant mainly relied on the ocean transport to ship the raw materials, which had poor timeliness. This situation made it necessary to increase the batch size of raw materials to improve the inventory. In addition, there should be inventory reserves of raw materials between working procedures at each stage of production, resulting in a large amount of overstock of raw materials. The current “Global Fluid Just-in-Time” of TCL Poland Plant adopts CER Express to transport punctually. Raw materials can be directly put into production in Poland. “Just-in-Time” can decrease the inventory of components, while the CER Express acts as a “mobile inventory”.
3.3.3 “Just-in-time” and lean production
Before 2016, it took a long time for TCL Poland Plant to transport raw materials from China by sea. Therefore, TCL Poland Plant had to rely on the inventory of mass production to meet the demand of the European market, resulting in a large amount of overstock of raw material. After adoption of the punctual CER Express in 2016, the space of raw material warehouse of TCL Poland Plant was transformed into the space of production lines as the result of punctual CER Express transport. The components assembly also adopted the form of unitized hybrid assembly to realize the balanced production of various products. The corresponding production mode was changed into the flexible production that has the characteristics of “Just-in-Time” and “lean production” (Bryson et al., 2005; Womack et al., 2019).
3.3.4 Significant improvement of product quality and market benefits
Due to the poor timeliness of transportation, the plant could not satisfy the market demand in time under traditional batch production mode, causing the emphasis of the continuous and uninterrupted production. Defective parts could not be found immediately, which led to the maximum production at the expense of quality. In the current production system of TCL Poland Plant, there is sufficient time to discover and solve quality problems in the material source and production process in time for pursuing zero defects in components and finished products due to the better timeliness of CER Express. Additionally, the punctual transportation of CER Express has brought about lean production and diversification of product, which makes the production of various products flexibly adapt to market changes as well as meet the diversified needs of the market promptly.

4 Conclusions and discussion

4.1 Conclusions

Taking TCL Poland Plant as an example, this paper deeply studies the influence of CER Express on the production system of enterprises. Main conclusions can be drawn as follows:
(1) CER Express has important impacts on the production system of TCL Poland Plant. First, it reduces the time cost of raw material transport, significantly improve the logistics efficiency, stabilize and shorten the supply chain time. Second, it reduces the waste of raw materials inventory, and the transport of finished products basically realizes “zero inventory”. The whole circulation link was changed from the rigid circulation system into the lean circulation system. Third, it enhances the ability of TCL Poland Plant to expand and respond to the European market. Fourth, the comprehensive effect of time, inventory and market response brought by CER Express has greatly improved the production efficiency, product quality and product diversification of TCL Poland Plant. All the impacts make the production system of TCL Poland Plant gradually become flexible and unitized production.
(2) On the basis of abandoning the traditional Fordism Production System which mainly focuses on “Rigid Mass Production”, TCL Poland Plant absorbed the essence of Toyota production system—“Just-in-Time”, and formed a new production system—“Global Fluid Just-in-Time” by taking the punctual transport of CER Express as the basic guarantee. In this new production system, the CER Express acts as the “mobile inventory” of components.
(3) The current “Global Fluid Just-in-Time” of TCL Poland Plant is obviously different from the original production system, and also different from Toyota Production System (“Just-in-Time”). Compared with the original system, the efficient and punctual CER Express is the basic guarantee for the successful implementation of current production system, which avoids the low efficiency of raw material transport. The “zero inventory” effect, “Just-in-Time” and lean production brought by the punctual transport of CER Express avoid the original rigid production and waste phenomenon. The zero product defects and improvement of market benefit indirectly brought by CER Express avoid the problems of poor product quality and weak market response. Compared with Toyota Production System, the current production system of TCL Poland Plant transforms from local system to global “Just-in-Time” system, which makes the original one leap up in regional scale.

4.2 Discussion

The operation of CER Express has played an important role in the new production system of TCL Poland Plant, which further indicates that the technology change of modern transportation can have an important impact on the production system of enterprises. There are also other cases to prove the influence of CER Express like Nanjing High Accurate Drive Equipment Manufacturing Group (NGC), which has set up a branch plant in Duisburg, Germany. NGC transports the components of products from China to Duisburg through CER Express so as to establish a substantial connection with the European market. However, it should be seen that the stable and efficient operation of CER Express couldn’t realize without the support of the Chinese government and countries along the routes of CER Express. These are all closely related to the in-depth implementation of the “Belt and Road Initiative” and the increasing international relations between China and other countries. Moreover, TCL Poland Plant is also affected by other factors to a certain extent, such as enterprise culture similar to China, high education quality of employees, recruit of local high-quality personnel in R&D center. These factors cater to the needs of continuous innovation of technology and production system of TCL Poland Plant.
Of course, there are still some problems in CER Express itself, which also have a certain impact on the production system of enterprises. First, in the past eight years, the volume of CER Express has increased by more than 300 times. In the face of such rapid development, the market participants, especially the foreign side, are obviously lack of preparation. The capacity and time of port reloading of the countries along the routes have become a major constraint points in the transport of CER Express. Furthermore, the capacity of the European destination station is gradually saturated. The CER Express brings stable timeliness to enterprises only on the basis of the cooperation of countries along the routes. The port reloading capacity and basic guarantee provided by the countries should be focused in the future research. Second, the smooth operation of CER Express is based on the freight subsidy of local governments in China to enterprises. There exist problems such as disordered competition among local governments in China and waste of public resources. This also shows from another side that the effect of CER Express on the production system can’t be separated from the policy support of governments. In addition, the effect of CER Express also may be associated to a complex geo-political system. Therefore, though CER Express has brought more positive effects on the production system of enterprises along the routes, future studies need to give more attention to the self-problems of CER Express and the influence of geopolitics, and explore the deep reasons for the effect of CER Express.
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