The Outlook of China Express Market in 2010

During the Economic Conference held at the end of 2009, Government has made a package of plans, hich aimed to keep the continuity and stability of macroeconomy policy, accelerate the transformation of the development mode of economy, optimize the economy structure, execute the promoting programme of important industries, insist on expanding in international market and domestic market, promote the recovery of exportation stably and strengthen the internal momentum for the development of economy and so on. It is expected that the groth speed of the national economy ill be maintained at above 8% in 2010. All these are positive signals for the sustainable and stable development of express market.

2010 is the first year after the ne Post La and the Regulation for the License of Express Service took effect. And it’s also the first year for express market to recover from the financial crisis. Express market ill enter a ne era of rapid expansion and features as follos:

China tends to encourage more domestic consumption so that the domestic express market ill keep the rapid groth rate. With the geographic expansion and the service promotion, express service provides a huge groth space for online shopping (including TV shopping and tele-shopping) and stimulates the transaction volume to increase rapidly. It’s expected to have around 800 million packages from B2C, C2C and B2B in the year of 2010. The groth rate of inter-city packages volume ill be kept over 30% and that of the revenue ill be kept around 25% thanks to the volume groth and the price increase. The groth rate of the revenue of international express is estimated to be around 5%. The annual volume of the hole market in 2010 is expected to rise over 25% to reach around 2.3 billion pieces, and the annual revenue is expected to rise over 20% to reach around RMB 57 billion yuan.

The statistic of State Post Bureau is based on the figure from medium and large size express enterprises. China Express Consulting Website predicted that the volume and revenue of the hole market in 2010 ill reach to around 3.5 billion pieces and RMB 78 billion yuan respectively.

State Post Bureau, local Post Bureau and Express Association are orking on inning the support from government in order to eliminate the unreasonable regulation that restrict the development of express market like lo efficiency Customs clearance, difficulties for financing and facilities purchase or renting, unfair tax policy and so on. They ill also ork ith government departments like tax, Customs, transportation, aviation and finance to e up ith more supportive policies and regulations to the benefit of express market. The ork ill be pushed forard from the point to the side based on the effort of 2009.

China Postal Express & Logistics Corporation is orking hard on further reformation and eliminating the bottleneck. It ill build a preliminary market-oriented and uniform operation system in 2010. The private franchise enterprises start to change its netorking structure into a Three-Layer System or Triangle System. Triangle System means that franchise headquarters on transit centers and branches of the first tier cities by mergers and acquisitions or joint stock, keep the franchisees in the second tier cities and change the franchisees in the third tier cities into agents. It’s expected that franchise headquarters ill accelerate to regain the transit centers and share the franchise panies in the important cities and take this as a cut-in point to achieve the goal of Triangle System.

The sno disaster in some regions in 2009 reflected the eakness of the service capability of express enterprises. For the lesson learnt from the sno disaster and the sustainable development, all petitors, especially private express enterprises, ill invest more in the IT application, mechanization and facilities and take it as the signal of petitiveness promotion. Private enterprises tend to consider the standardization, integration and mechanization as the direction to strengthen the operation capability. Wireless handset, sorting equipment, vehicles, courier uniform and normal behavior ill be idely introduced by petitors.

Cheap labor and lo price on’t be the advantage for petitors anymore. Lo price petition has been the bottleneck for the sustainable development of express market. Impacted by the cost rise and the difficulty of recruiting couriers and package handlers, express enterprises especially franchise one ill face the fierce challenge in 2010. Ho to change the extensive operation mode into intensive operation mode is hat express panies should think over and attempt in 2010. Hoever, some petitors may try to survive the market by other ay, raise price. It’s assumed that they ill raise the price by over 20%.

Express enterprises must get the license before September 30, 2010 because of the ne Post La and the Regulation of Express Service License (Regulation for short). Training, courier and package handler license, adding the registration capital and CI ill be the important ork for market players in the year of 2010. Mergers and acquisitions restructure and quitting from the market ill be the option for private SMEs. The amount of panies is expected be reduced over 30%. The ne Post La and Regulation actually provide the opportunity for franchise enterprises to on more branches and control the hole netork.

EMS and the Four Giant (DHL, FedEx, UPS and TNT) ill lead the international express market. EMS and SF ill lead the middle and high-end domestic express market, mainly about business express. Franchise enterprises ill lead the economy express market, mainly about online shopping packages. The middle and high-end market features the mitment for the transit time, service and value added service hile the lo-end market features the cost-effective service.

The amount of the express enterprises tends to be decreasing due to the fierce petition and the ne la and policies. Enterprises ill be assembled to operate in a certain area of a city. Moreover, enterprises tend to transform its extensive operation mode to intensive one. That is to say, they ill invest more on IT and mechanization to promote service instead of only recruiting more employees as the labor force cost keeps increasing.

The ne Post La defined the legal status of express industry. So far, there is not any listed pany among private express enterprises. Furthermore, ith the market groing so fast and more and more mature, the next to years is supposed to be the best time for investment. If they miss the best time, investors ill pay more to tap the market and take much longer time to recoup the investment. Therefore, ne panies ill enter the market in the folloing to years and the private enterprises ill be the important target for investors.

Four Districts means Development District, Industrial Park (district in Chinese), University District and Residential District. For online shopping packages, there is a huge potential market in the latter to districts. Ho to innovate on the delivery mode is the focus of the petition.

It is expected that more than 80% of the plaints are about delay, damage and loss in 2010. Over 80% of the plaints are about franchise panies and e from online shopping. The reason is that private franchise enterprise lack management talents, the management measure is too simple and fall behind, pay too much attention on market share and profit instead of service quality and sustainable development. This is also the bottleneck that restrains the private enterprises to gro larger, stronger and better. Loering don the three types of plaint rate ill be also one of the most important jobs for State Post Bureau.

The former draft about the definition of the letter monopoly, intra-city letters of feer than 50g and inter-city letters of feer than 100g, is idely disputable. Related government sectors have to ork hard on the research and the Regulation for Letter Monopoly is expected to be issued in the end of 2010. It is the focus of the disputation that hether the letter express should belong to the market-oriented business. There are three options for the definition of the letter monopoly. The first to is defined by eight and by the bination of freight and eight. The left one suggests that only the letters shipped by government sections and the universal service (letters) can be monopolized. There is no doubt that non-postal express enterprises ill be strongly impacted if the monopoly definition is pleted based on the eight. Private express enterprises are looking forard to a harmonious result.

Analyst of China Express Consulting Website