Foreign couriers seek clarity on China ruling to open domestic sector HONG KONG — The world’s top integrators are waiting to see how the recent ruling by China’s State Council to liberalize domestic package delivery will play out across the multibillion dollar market dominated by a multitude of small low-cost operators. A State Council statement said it had been decided to “fully liberalize” the market for parcel delivery to promote competition between domestic and foreign firms. The foreign couriers that met certain criteria would qualify to operate in the market, although no outline was given of the criteria or whether there would be any restrictions. This lack of clarity is familiar to companies with operations in China where regulations are regularly amended, new rules and introduced and sectors liberalized. A UPS spokesman said the integrator welcomed the government’s plan to further open up the domestic express sector in China, but also highlighted the unclear nature of the ruling. “While we need to better understand how this will be reflected in the regulatory environment, we look forward to working with the authorities to further streamline a sector that is critical to China’s competitiveness,” the spokesman said. The China market is growing rapidly, driven by incredible numbers being generated by e-commerce. According to China internet research company iResearch, online shopping is expected to grow at a compound annual growth rate (CAGR) of 24.7 percent until 2027, with the grow merchandise value of e-commerce reaching $3.6 trillion by 2017. iResearch estimates e-shopper penetration will further improve from 45.8 percent last year to 54.1 percent by 2017 when the number of e-shoppers will reach 460 million, an important guarantee of the rapid development of Chinas online shopping market in the next several years. According to State Post Bureau data, from January to August this year the “national courier service enterprise business” volume totaled 8.16 billion packages, up 52.7 percent. Revenue from the sector grew 42.3 percent to $20 billion, an increase of 42.3%. The market is too big to ignore, and FedEx welcomed the State Council’s decision to further open the domestic express market “and create a level playing field between foreign and domestic express firms.” However, the U.S. giant said it has been operating in the mainland domestic delivery market since May 2007 and has a “reliable, flexible transportation network” in the country. “We are and will be operating the domestic business as usual in China,” FedEx said in a statement. State Council Development Research Center of Market Economy Institute deputy director Wang Wei said the foreign couriers would bring a “more advanced and mature philosophy, mode of operation, technical and management capabilities” to the market that would have a positive impact on Chinese enterprises. “The essence of China’s opening up of its delivery market is to facilitate quality growth and enhance logistic distribution network development,” a DHL spokesman said, adding that the global integrator’s strength lay more in its internationalized network. “Last mile delivery is a universal challenge for our industry. All delivery companies need to accommodate varied customer requirements at a reasonable cost in order to compete effectively. For our time definite international shipments, we already have a strong last mile network in place in China, although we are constantly reviewing ways of optimizing our operations and enhancing service,” the spokesman said. DHL has the licensing and registration to operate, pick up and deliver shipments ordered from overseas, which allows the courier to provide door-to-door delivery for international packages. Under the law that prohibits foreign companies from delivering mail, the overseas couriers must obtain municipal licences to deliver packages in China, something that gives local firms an advantage. The market is dominated by state-owned China Post that earned $2.36 billion from delivering mail last year. A mail and express conference in Hong Kong earlier this year heard that more than 35,000 express delivery firms operated in China, but most were in the local hero category with little sophistication and low costs that enabled them to ship packages for $0.32 each. Share JOC NEWS - SEPT 30 2014
Posted on: Wed, 01 Oct 2014 05:02:32 +0000
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