China’s online retailing creates express dichotomy

With China’s online retail sales continuing to rapidly grow, reaching 1.85 trillion yuan (US$300 billion) worth sales last year of which 9.2 billion deliveries were made worth 143 billion yuan, according to the Xinhua News Agency, the delivery market is looking increasingly attractive.


China’s online retailing creates express dichotomy


With China’s online retail sales continuing to rapidly grow, reaching 1.85 trillion yuan (US$300 billion) worth sales last year of which 9.2 billion deliveries were made worth 143 billion yuan, according to the Xinhua News Agency, the delivery market is looking increasingly attractive. This has created a dichotomy between domestic Chinese express players who are increasingly looking outside China and the international delivery giants wishing a greater foothold within China.

While competition in the domestic delivery space is dominated by at least a dozen home-grown players including Shanghai-based YTO Express, Shenzhen-based SF Express and China Postal Express & Logistics, China’s National Post Office granted licenses in 2012 to FedEx and UPS to operate in China’s domestic express market.

The two were limited however, to operations in only select cities. FedEx was granted a license to operate in Shanghai, Guangzhou, Shenzhen, Hangzhou, Tianjin, Dalian, Zhengzhou and Chengdu while UPS was granted a license to operate in Guangzhou, Shenzhen, Tianjin, and Xi’an.

And while UPS and FedEx continue to push for a more open domestic market, nearly a dozen Chinese domestic firms have applied for international business licenses from the State Post Bureau of China, according to Bloomberg. These companies hope to take advantage of the growing cross-border online shopping trend with STO Express, for instance, recently announcing plans to establish its first overseas logistics hub in Japan. It also plans to expand into Malaysia and Singapore later this year.