TNT to Complete Acquisition of HOAU by 2006

TNT, a global provider of mail, express and logistics services, is expected to complete acquisition of HOAU Logistics Group by the end of this year.

TNT buys HOAU Logistics, the biggest freight & parcels operator in mainland China, for USD 135 million, which is much higher than estimated CNY 900 million.

The acquisition price was disclosed by Tian Yu, director general of the Jiamusi Municipal Merchants Bureau, at Heilongjiang Provincial Merchants Promotion Conference.

However, TNT, one of the world's four express giants, keeps its mouth shut and just says any detail shouldn't be disclosed now that it is in the process of acquisition at present.

Ken McCall, CEO of TNT China, told journalists that TNT will increase its Chinese employees to 12,000-14,000 from existing 4,000-5,000 upon the completion of the acquisition.

Currently, TNT China is busy incorporating international express unit and domestic express unit and selling its contractual logistics business. Then TNT will spend three to five years bringing HOAU Logistics into its international express unit.

TNT announced its intention of acquiring HOAU Logistics before December 11, 2005, when the Chinese government fully opened the logistics industry according to its entry into WTO.

Hoau Logistics, set up in 1995, develops rapidly in recent years. The company's own road network serves more than 160,000 customers in components and parts, appliances, pharmaceutical and high technology sectors in China.

It has more than 1,100 hubs and transfer centers in all big and second-tier cities throughout the country. Hoau Logistics has a fleet of more than 3,000 trucks and 12,000 employees. It mainly provides 3-day to 10-day road transportation and 95% of its clients are local companies.

TNT has over 161,000 employees in 63 countries and serves more than 200 countries worldwide. Its annual report reveals that it obtained a turnover of EUR 12.6 billion for 2004.

Harry M. Koorstar, a top official of TNT, told journalists that the company planned to introduce direct marketing into Beijing, Guangzhou and Shenzhen at the beginning of this March.

TNT started direct marketing in Shanghai as early as by the end of March 2005 and collected data to build database there. It said last year that the company wanted to expand the direct marketing to Chinese ten cities in the following three years.

Harry M. Koorstar disclosed that the database in Shanghai had been erected and there were data of 500,000 families, accounting for about 10% of total families in Shanghai.

Currently, TNT keeps international express, logistics and direct mails in the Chinese market. Until now, TNT has kept direct marketing in European nine countries for 25 years with annual turnover of CNY 2.5 billion to CNY 3 billion.

Ken McCall said that the Chinese direct marketing market was now in the early stage and was estimated to have yearly value of USD 100 billion to USD 200 billion.

Industry analysts pointed out that multi-national logistics giants enlarged investments in construction of wholly-owned retailing networks in China after the country fully opened the market to outside world.

US United Parcel Service (UPS) has opened three retailing stores in Shanghai in the first quarter of this year. FedEx is also considering localization of retailing stores and is set to step into the Chinese retailing market.

(USD 1 = CNY 8.01202; EUR 1 = USD 1.21010)

From dycj.ynet.com, Page 1, Thursday, April 13, 2006 [email protected]

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