Entrepreneur built Chinese equivalent of Fedex with just six men and a van

Photo: Bestchinanews
China’s largest express delivery firm SF Express has completed its year-long back-door listing in Shenzhen over the past weekend, after being valued at an estimated 44.8 billion yuan and acquired by a listed company. Wang Wei, one of the most low-profile magnates in the country, has volunteered to step into the limelight this time by ringing the bell at the southern city’s local bourse.

SF Express, dubbed the “Fedex of China”, merged with Maanshan Dingtai Rare Earth & New Materials, a public company one month ago, with the latter being renamed as S.F. Express. The combined company now has 4.18 billion shares worth 275.9 billion yuan based on today’s trading price of 66 yuan per share.

Wang Wei, the founder and now the general manager of S.F. Express, holds 64.58 percent of the merged company, and has become the fourth richest man in China according to Forbes Real Time Net Worth as of February 28, 2017 with an estimated net worth of USD 26.2 billion. Since the plan of listing was released, shares of SF Express have been soaring; Wang is even eyed by some analysts to be able to surpass Jack Ma and Wang Jianlin, richest men in China.

“I think what is so impressive about Wang is that his industry is one where there are no short cuts to success. His rise to the top was driven by a great deal of hard work and toil,” Steven Irvine, the founder of Week in China told Sino-US.com. Wang Wei has been profiled in the Hong Kong-based publication’s 2016 edition of China’s Tycoons, a listing of 150 top business leaders in China.

According to Week in China, Wang was born in Shanghai in 1971 and moved to Hong Kong as a child. He founded SF Express in 1993 with around USD 13,000 borrowed from his father, and “started China’s biggest courier firm with just six men and a van—Wang himself included”.

As demand for cross-border express delivery services grew, Wang was among the earliest parallel traders, earning profits by shuttling across the Hong Kong-Shenzhen border. With good timing and hard work, Wang’s company soon filled the market void and gained 70 percent of the express delivery business along the route.

SF Express has gone through ups and downs over the years. It was reported by a Xinhua feature story that in 1999, the entrepreneur had collateralized his personal wealth nine times to buy back equities from his agents when he realized chain stores for direct sales could revitalize his business caught in trouble with bad agents. By 2003, SF Express seized the market opportunity to become the first private courier firm that used chartered airplanes to deliver goods when freight rates dropped.

In 2005, Wang collateralized the entire company to the Bank of China for a USD 550,000 loan to fund SF Express’ expansion, according to Hong Kong’s Next magazine. It was risky but it worked and Wang has never looked back since.

Recent years, China’s booming e-commerce has brought courier companies fat profits and robust development. It is reported by Next magazine that in 2010, Wang acquired a luxury house in Kowloon Tong, a residential area that houses many of Hong Kong’s billionaires. That’s when the Hong Kong media realized the young entrepreneur had made big fortune in his business in mainland China.

Some analysts attributed the rise and development of SF Express between 1993 and 2013 to its own profits and bank lending. The courier company is believed to be rich in capital before going public. In 2011, Wang is cited by the media as saying that his company would not go public. However, the industry has boomed in recent years, and with many competitive players sprouting and cutting into the profits of the established one, Wang’s company seems finally charmed by the capital market.

Some industry insiders believe that a pricing war and rising labor cost have forced courier firms to look for funds. With an upbeat market, all the major couriers in China have taken steps toward a listing in the past two years.

In order for its financial book to look good, SF Express is reported to have shed its less profitable ventures while only listing its logistics business. Industry analyst Zhao Xiaomin told jiemian.com that the market and capital seem more attracted to the courier’s primary business, while shareholders may object to using profits from logistics to burn money on the company’s slack development in sectors like business and finance.

The success of SF Express, according to Steven Irvine, was achieved through building a logistics organization that combined great reliability with stringent cost control, while good timing enables his business to be greatly boosted by the rise of e-commerce in China.

“Thanks to his ambition, vision and execution abilities, he created a nationwide industry leader and a multi-billion dollar business by the time he was in his early 40s,” Irvine told Sino-US.com, “To do that from scratch is one of the classic entrepreneurial success stories that defines modern China.”  

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