The Outlook of China Express Market in 2010

Durg the Economic Conference held at the end of 2009, Government has made a package of plans, hich aimed to keep the contuity and stability of macroeconomy policy, aelerate the transformation of the development mode of economy, optimize the economy structure, execute the promotg programme of important dustries, sist on expandg ternational market and domestic market, promote the recovery of exportation stably and strengthen the ternal momentum for the development of economy and so on. It is expected that the groth speed of the national economy ill be mataed at above 8% 2010. All these are positive signals for the sustaable 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 fancial crisis. Express market ill enter a ne era of rapid expansion and features as follos:

Cha 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 onle shoppg (cludg TV shoppg and tele-shoppg) and stimulates the transaction volume to crease rapidly. It’s expected to have around 800 million packages from B2C, C2C and B2B the year of 2010. The groth rate of ter-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 crease. The groth rate of the revenue of ternational express is estimated to be around 5%. The annual volume of the hole market 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. Cha Express Consultg Website predicted that the volume and revenue of the hole market 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 orkg on ng the support from government order to elimate the unreasonable regulation that restrict the development of express market like lo efficiency Customs clearance, difficulties for fancg and facilities purchase or rentg, unfair tax policy and so on. They ill also ork ith government departments like tax, Customs, transportation, aviation and fance to e up ith more supportive policies and regulations to the benefit of express market. The ork ill be pushed forard from the pot to the side based on the effort of 2009.

Cha Postal Express & Logistics Corporation is orkg hard on further reformation and elimatg the bottleneck. It ill build a prelimary market-oriented and uniform operation system 2010. The private franchise enterprises start to change its orkg structure to 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 jot stock, keep the franchisees the second tier cities and change the franchisees the third tier cities to agents. It’s expected that franchise headquarters ill aelerate to rega the transit centers and share the franchise panies the important cities and take this as a cut- pot to achieve the goal of Triangle System.

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

Cheap labor and lo price on’t be the advantage for petitors anymore. Lo price petition has been the bottleneck for the sustaable development of express market. Impacted by the cost rise and the difficulty of recruitg couriers and package handlers, express enterprises especially franchise one ill face the fierce challenge 2010. Ho to change the extensive operation mode to tensive operation mode is hat express panies should thk over and attempt 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). Trag, courier and package handler license, addg the registration capital and CI ill be the important ork for market players the year of 2010. Mergers and acquisitions restructure and quittg 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 ork.

EMS and the Four Giant (DHL, FedEx, UPS and TNT) ill lead the ternational express market. EMS and SF ill lead the middle and high-end domestic express market, maly about busess express. Franchise enterprises ill lead the economy express market, maly about onle shoppg 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 decreasg due to the fierce petition and the ne la and policies. Enterprises ill be assembled to operate a certa area of a city. Moreover, enterprises tend to transform its extensive operation mode to tensive one. That is to say, they ill vest more on IT and mechanization to promote service stead of only recruitg more employees as the labor force cost keeps creasg.

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

Four Districts means Development District, Industrial Park (district Chese), University District and Residential District. For onle shoppg packages, there is a huge potential market the latter to districts. Ho to novate on the delivery mode is the focus of the petition.

It is expected that more than 80% of the plats are about delay, damage and loss 2010. Over 80% of the plats are about franchise panies and e from onle shoppg. The reason is that private franchise enterprise lack management talents, the management measure is too simple and fall behd, pay too much attention on market share and profit stead of service quality and sustaable development. This is also the bottleneck that restras the private enterprises to gro larger, stronger and better. Loerg don the three types of plat rate ill be also one of the most important jobs for State Post Bureau.

The former draft about the defition of the letter monopoly, tra-city letters of feer than 50g and ter-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 the end of 2010. It is the focus of the disputation that hether the letter express should belong to the market-oriented busess. There are three options for the defition of the letter monopoly. The first to is defed by eight and by the bation 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 defition is pleted based on the eight. Private express enterprises are lookg forard to a harmonious result.

Analyst of Cha Express Consultg Website