FedEx is said to acquire two express companies in China
The world’s largest express transportation company Federal Express Corporation (FedEx) is said to likely acquire DTW Express Co., Ltd. and Federal Express-DTW Co., Ltd. in China.
The Shanghai office of Baker & McKenzie, a leading global law firm in the US, has been invited to provide designs and law service for the express titan’s new round of acquisitions in the faster-growing market, where other international express companies including UPS, DHL, and TNT pile too.
These titans never want to expand here on the basis of only partnership with small-sized Chinese counterparts. They have by their nature been eager to operate wholly owned branch companies since their entry into the market. The Chinese government is set to fulfill its commitments to the WTO entry, signaling an upcoming end of the partnership.
The ambition is confirmed by an executive of DTW Express, a domestic express company under Tianjin DTW Group Co., Ltd., which formed a 50-50 joint venture Federal Express-DTW with FedEx in Beijing in 1999.
The venture, some DTW Group employees disclosed, is in fact under control of FedEx, and is independently running from operation, office site, recruitment, business development, accounting, and so on. All customers are demanded to put into the FedEx operation system, and payments have long been settled through their credit cards. As a result, the company can only use the system but cannot see the settlement, and customers constantly go into the system.
As early as in 1995, FedEx chose to collaborate with EAS International Transportation Ltd., which was appointed as its global service participant for China. Three years later, however, it turned to another cooperator DTW Group and terminated the cooperation with the former.
EAS International Transportation complained that the rift between both was attributed to the company’s slow expansion and customer resources nibbled by FedEx during the cooperation. For DTW Group’s part, although it is aware of the FedEx strategy, it has virtually become one of FedEx’s subsidiaries in China.
In view of FedEx’s actions in the past, the executive believed, the strategy is to make use of a cooperator’s service network and if the value is used up, it will turn to another one. At the same time, it never halts expansions.
One of the company’s plans is to expand service network in China in the coming several years, serve more cities, and open more branch companies, told reporters Eddy Chan, regional president for FedEx China. He said in an earlier interview that the company’s next chief focus is ground network in the country.
Also, FedEx is conscious of the value of its small partner DTW Group in the Chinese market, quite different from EAS International Transportation earlier. Five years ago, the unknown partner started weighing its own strategy. Today, it has already owned an admiring service network in China.
For the moment, DTW Group, founded in Tianjin in Northern China in 1992, stretches its services to a total of 502 cities nationwide, with 93 subsidiaries. Its total assets have tumbled to currently CNY 910 million from only CNY 60,000 at the founding time, according to data on its website. In addition, Federal Express-DTW can yearly bring it nearly CNY 100 million revenues.
