Foreign giants dominate China's overseas express mail business

Eighty percent of China's overseas express mail services are provided by four foreign logistics giants -- FedEx and UPS of the United States, Germany-based DHL and Dutch TNT, according to a research report.

Executive vice chairman Ding Junfa of the China Federation of Logistics and Purchasing, head of the research, said foreign competitors dominate overseas express mail, shipping and logistics businesses aimed at foreign manufacturers and the catering sector.

"Domestic competitors will find it hard to break their domination in the short term," Ding said.

The report jointly compiled by the National Development and Reform Commission and the Ministry of Commerce said nearly 98 percent of the clients of the four foreign giants in China were joint ventures or wholely-owned foreign companies. Domestic logistics firms were unable to break out of the low-value sector of the market.

The report suggested the Chinese government regulate the logistics industry so as to prevent the formation of monopolies and protect the interests of small and medium-sized firms.

Another report released by the Center for Forecasting Science of the China Academy of Sciences (CFSCAS) contended that the prospects for domestic players were good despite the severe competition.

CFSCAS Researcher Feng Gengzhong said traditional state-owned logistics companies like China Post, COSCO Logistics, Sinotrans Development had been active in mergers and acquisitions since 2000.

A number of private firms including Guangzhou-based P.G. Logistics and South Logistics and Beijing-based Zhaijisong had emerged and were expanding rapidly, Feng noted.

Some of the state-owned logistics firms report annual revenue of nearly 100 billion yuan while sales at private companies are as high as five billion yuan, according to figures from the China Federation of Logistics and Purchasing.

Feng Gengzhong said the arrival of heavyweight foreign competitors was a boost to the indigenous logistics industry.

"In an atmosphere of cooperation and competition, domestic players will have to specialize. The domestic logistics market will also expand quickly," he said.

Last year, China's logistics industry registered a total turnover of 6 trillion yuan, up 24 percent on a year earlier. The figure is expected to surge a further 24 percent to 7.4 trillion yuan this year, said the CFSCAS report.

Source: Xinhua