Chinese couriers follow in footsteps of e-commerce to go global
Photo: cinic.org.cn
 
With major Chinese e-commerce players gradually expanding their footprint overseas, the country’s logistics firms are taking quick steps to follow suit. Recently, several express delivery businesses in China announced ambitious expansion plans to build overseas logistics infrastructure. It’s anticipated that the most convenient delivery services in China may begin to benefit people in many other countries.

Last week, JD.com, a Chinese e-commerce powerhouse, announced that it will forge a “comprehensive strategic partnership” with Google, receiving an investment of $550 million from the tech giant. Richard Liu, the founder and CEO of JD.com, set a new target for the company’s logistics business immediately after the fund-raising news broke out. He promised that in 10 years, JD Logistics will be capable of delivering packages to every corner of the globe within 48 hours.

The company has already built its global supply chain framework. It’s reported by the Economic Information Daily, an economic newspaper affiliated to the Xinhua News Agency, the transaction volume of cross-border e-commerce surged 375 percent annually during JD.com’s June 18 promotion period and the success is attributed to the company’s overseas logistics capability.

JD Logistics is definitely not the only Chinese courier seeking a global footprint. ZTO Express, the express delivery company that went public in the US in 2016, has recently announced to form a joint venture with Turkish Airlines and Air Pacific in a bid to develop freight flight services.

ZTO Express is known to boast the largest market share in China by delivery volume, with a capacity of handling 28 million parcels per day. Based on its agreement with the two airline companies, the newly formed joint venture would be headquartered in Hong Kong.

Meanwhile, YTO Express, the Alibaba-backed courier, is reported to join hands with Cainiao and Air China to build an international logistics hub at the Hong Kong International Airport.

The project, expected to be put into operation in 2023, has attracted a total investment of 12 billion Hong Kong dollars to cover a floor area of 380,000 square meters.

YTO Express actually set its eyes on the global market long ago. In 2017, it acquired a majority stake in On Time Logistics (OTEL), a public company listed in Hong Kong, which is now renamed as YTO Express (International) Holdings Limited. The logistics network of YTO International now has over 60 operating facilities and over 1,000 agent offices worldwide.

Many analysts believe the competitiveness of Chinese businesses will be enhanced if the country’s logistics firms could integrate more into the global supply chain, according to the Economic Information Daily.

Also, industry insiders believe many Chinese couriers are ramping up efforts to develop overseas markets partly because their expansion has slowed down in a more saturated domestic market.

According to China Post, the cross-border delivery volume (including packages to Hong Kong, Macao and Taiwan) in 2017 reached 830 million, up 33.8 percent annually, while the growth rate for the whole sector stood at 28 percent. Due to a higher unit price, although international business merely occupies 2.1 percent of the total express deliveries, revenues from the sub-sector account for over 10 percent of the total.

Besides, courier companies in China don’t want to miss that chance to cash in on the cross-border e-commerce business at a global level. “The strategic goal of the express delivery companies is to vie for the opportunities brought by the booming cross-border e-commerce, “Wang Liping, a researcher with Shenwan Hongyuan Group, a China-based company engaged in securities investment and asset management.

According to a report released by iiMedia Research, by 2020, China’s cross-border e-commerce trade will reach a market size of 12 trillion yuan, accounting for 37.6 percent of the country’s total exports.

Liu Shaokun, vice chairman of Air Pacific, said that with the ongoing e-commerce boom, the global express delivery sector would continue to gain growth momentum. “It’s expected that by 2020, the market size for global logistics will reach $340 billion,” he said.  

 


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