TNT accelerates its China business
TNT, a leading provider of express delivery services, logistics supply chain solutions and mail services, is to adopt a cooperation form to expand its service network in Mainland instead of a franchise form it announced at the end of 2004, a source said on September 4.
Indeed, its previous franchise development plan has been replaced by the alliance-based cooperation development plan, according to the TNT headquarters. In other words, the latter derives from the former.
The company changes the earlier plan because there has not yet been a franchise act in the mainland, an executive at the cooperation development division of TNT told reporters.
For the moment, scores of Chinese agents are responsible for TNT's China express business and its 25 branch companies for its international express business. In the cooperation form, its Chinese partners operate under the TNT brand and their sales rely on TNT, while its Chinese agents do not operate under brand in the franchise form and just take some fees.
TNT has started the cooperation development plan, seeking for cooperators in the mainland's some second-tier cities and third-tier cities next. Currently, its branch companies directly manage its business in over 30 province-level capitals.
The company plans to add an investment of EUR 200 million to China and send 150 senior regional managers to it in the future a few years. It will increase the number of its branch companies to more than 100 by 2010, Peter Bakker, chief executive officer of TNT, disclosed.
In addition, the director for the franchise division of TNT confirmed that the company would establish a wholly owned venture in the mainland in 2005, when the Chinese government would open the domestic express market to foreign investors.
After the venture is set up, its branch companies have built a nationwide network for the venture's mainland business. Hence, industry analysts believe that the mail and express giant's cooperation development plan speeds up its step toward building the venture.
TNT is a latecomer in the mainland, compared with three other express giants: UPS (NYSE: UPS), Federal Express Corp. (FedEx), and DHL. In recent six years, TNT has expanded its service network to the mainland's 500 cities and had 2,000 outlets, with a yearly about 23% growth in revenue and a yearly 30% growth in business.
However, TNT is still behind them. DHL, as the first express company entering the mainland among the four companies, has developed here for 16 years with annual growth being as much as 40% and turnover tumbling 60 times. Presently, it holds 36% of the mainland market.
UPS, the world's largest package delivery company and a leading global provider of specialized transportation and logistics services, has kept an over 35% business growth in the mainland for a few consecutive years.
These express giants have shown their ambitions to wholly running its operations in the mainland.
FedEx, the world's largest express transportation company, is recently said to likely reach an agreement to buy up Federal Express-DTW Co., Ltd., a Beijing-based express 50-50 joint venture, from its Chinese partner Tianjin DTW Group Co., Ltd.
After UPS paid up to USD 100 million to end an marriage with Sinotrans Ltd. (SEHK: 0598), a Chinese leading provider of logistics services, FedEx is estimated to also divorce from Tianjin DTW Group, a logistics company based in Tianjin, Northern China, sooner or later.
(USD 1 = CNY 8.0913 and USD 1 = EUR 0.8032)
From dycj.ynet.com, Page 1, Wednesday, September 07, 2005 [email protected]
