Express delivery firms veanture overseas

Along with rapid growth in e-commerce, the country's express delivery companies are expanding onto the turf of their international counterparts in cross-border services. What comes first is the battle for international talents.

Shanghai YTO Express (Logistics) Co Ltd, a major delivery service provider in China, confirmed in January the company had hired Zhong Zhanrong, former Asia-Pacific trans-shipment director of United Parcel Service of North America Inc, the international shipping giant, as the company's vice-president.

Zhong is expected to help expand YTO's businesses in Southeast Asia, according to the National Business Daily.

This is the second senior executive to have dumped an American express enterprise to embrace a Chinese company amid a reshuffle in China's express industry. In 2013, Xiang Feng, UPS vice-president, job-hopped to YTO as chief executive officer.

UPS declined to comment, but a person at Ogilvy Public Relations, which is charge of handling the company's media relation, said it was Zhong's private choice to leave the company.

As for the growing competition with Chinese delivery enterprises, she says, UPS' core clients are big companies while its Chinese rivals mostly serve individuals or small and medium-sized companies that engage in cross-border e-commerce.

YTO's intensified efforts to scramble for global management personnel and market shares spotlight the stiff competition among delivery service providers, as the emerging cross-border e-commerce sector presents both opportunities and challenges.

"As China's e-commerce market is maturing, an expanding pool of buyers are taking to the Internet to buy products from abroad, which poses challenges to express enterprises," said Wang Xiaoxing, an e-commerce analyst at Analysys International, a Beijing-based Internet consultancy.

China's cross-border online transactions hit 216 billion yuan ($34.83 billion) in 2014, involving more than 18 million buyers. The market is forecast to top 1 trillion yuan in 2018, according to a report by international market researcher Nielsen March Research Co Ltd.

"They have to grapple with the challenge of ensuring the quick delivery of cross-border goods with a fair price and good after-sales services," Wang said, noting this will help expedite a new round of reshuffle in the courier industry.

The first reshuffle among Chinese logistics companies occurred from 2006 to 2008 when China's e-commerce business had just taken off. Those who failed to take chances were squeezed out of the market, Yu Weijiao, president of YTO, said in an interview with 21st Century Business Herald earlier last month.

China's express industry is currently dominated by seven major players: State-owned China Postal Express & Logistics Co Ltd and six private competitors, which are mainly engaged in delivering e-commerce parcels.

But as the profit margin narrows down to less than 1 yuan per parcel, Chinese delivery enterprises are looking for new growth points. Seeing cross-border e-commerce as a new opportunity, they have accelerated their steps to lay out international delivery networks.

Last September, Yunda unveiled an English service website to facilitate delivering products from the United States to China.

STO is set to launch its US-version service this month to meet people's growing appetite for overseas products, and ZTO obtained approval to provide international delivery services last year

Ma Si contributed to this story.