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FedEx China losing money to gain market share

By Nie Peng (chinadaily.com.cn)
Updated: 2008-09-28 17:11

Foreign-funded delivery companies would squeeze out Chinese rivals to dominate the country's domestic express delivery market, the executive warned, in an interview with the Economic Observer.

S.F. Express registered a 20 million yuan loss in the first half of this year for the first time in its 15-year history.

A source with the China International Freight Forwarders Association revealed to the newspaper that it had received complaints from many of its member enterprises criticizing the step taken by FedEx.

On July 25, the Ministry of Commerce's Bureau of Industry Injury Investigation and the China Federation of Logistics and Purchasing conducted a field study on key express delivery enterprises. At the meeting, some enterprises suggested the government launch an anti-dumping investigation into FedEx's behavior.

New market pattern in the pipeline

Many State-owned, foreign-funded and private delivery companies have dropped their plans for price hiking after FedEx's move. But they said they would not follow suit, either.

"We won't cut prices to woo customers, unless the market situation really requires us to do so," said Jerry Hsu, DHL Express' Greater China president. "If everyone cuts prices blindly, it will only lead to market chaos. Nobody will be the winner in such a battle."

EMS and some private express delivery companies said they will upgrade service quality to retain current customers.

Other foreign-funded express companies, on the other hand, are also accelerating their pace in tapping the Chinese market.

UPS of the United States announced in May that it would invest $180 million to build its Asia air freight transfer center in Shenzhen, southern China's Guangdong Province.

And Dutch express giant TNT is planning to provide time-definite service in China after acquiring a private logistics company in northeastern China's Heilongjiang Province in December 2005.

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