UPS Forms Venture With Chinese Giant -- WSJ
May 27 2017 - 3:02AM
Dow Jones News
By Trefor Moss
SHANGHAI -- United Parcel Service Inc. is teaming up with the
parent of China's biggest package-delivery company, S.F. Express,
in a bid to tap surging demand for deliveries from China to the
U.S.
With Chinese businesses increasingly targeting global markets,
chiefly through online sales, UPS aims to help them gain "access to
the world," said Ross McCullough, the company's president for Asia
Pacific.
Under the arrangement revealed by the U.S. company and S.F.
Holding Co. on Friday, the 50-50 joint venture will be formally
based in Hong Kong, near S.F. Express's base in Shenzhen. However,
their plans call for the business to operate in mainland China,
pending regulatory approval. Each partner will commit $5 million in
capital to establish the company, according to Mr. McCullough.
An e-commerce boom has fueled the rapid growth of China's
express delivery companies, none more so than S.F. Express, founded
by the country's third-richest man, Wang Wei. The company's revenue
increased by a fifth last year to $8.37 billion, and it recently
announced plans to build the world's biggest airfreight hub in
Ezhou in central China.
The Chinese government estimates that the country's
delivery-sector revenue will top $116 billion by 2020, up from $51
billion last year.
Linking UPS's global and S.F. Express's local networks will
offer Chinese businesses and individuals delivery options "they
couldn't get otherwise," said Mr. McCullough.
UPS's business in the country grew 30% in the first quarter,
said Mr. McCullough. Its Chinese customers are primarily
medium-to-large companies, while S.F. Express is plugged into a
vast network of smaller merchants scattered across the country, he
said.
"They have a footprint in China that's amazing; we have a global
network they don't have," Mr. McCullough said.
The partners would "collaborate to revolutionize the logistics
sector," said Alan Wong, group vice president at S.F. Express.
While UPS is aggressively expanding its own business in China,
the tie-up was necessary for the company to capitalize fully on the
country's delivery boom, Mr. McCullough said.
The joint venture will focus initially on China-U.S. deliveries,
then add those between the Asian country and Europe at a later
date, he said.
Write to Trefor Moss at trefor.moss@wsj.com
(END) Dow Jones Newswires
May 27, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
United Parcel Service (NYSE:UPS)
Historical Stock Chart
From Aug 2024 to Sep 2024
United Parcel Service (NYSE:UPS)
Historical Stock Chart
From Sep 2023 to Sep 2024