UPS targets China
China has to be a great opportunity for UPS, which now controls all its own operations in China, in what has become a major growth engine.
UPS , launched by Jim Casey in Seattle in 1906, initiated its Asia Pacific operations in 1986, and in 1988 linked up with Sinotrans as a joint venture partner. But in 2001, it was able to sever its ties with Sinotrans and now has grown its Chinese operations into a wholly owned business. UPS prides itself on offering synchronized services of a wide scale and great depth.
Today, UPS is expanding its number of flights to China, building more infrastructure and creating a stronger brand presence, calling itself a "technology company with trucks." Now, its business in Asia and China is leaping ahead.
Part of that China presence is because of the expansion of air services. UPS has, or is adding, new flights connecting Shanghai and the U.S. and is increasing its weekly flights to 18. It plans to establish an air hub in Shanghai in 2007. UPS serves the 23 largest Chinese markets, which account for 80% of China's global trade.
Forbes.com met with Richard Loi, the senior vice president of UPS China District, who boasts 18 years in the air express industry. He comes from Singapore but is now based in Shanghai and has been there for six years. Loi has seen China grow into a manufacturing and shipping giant. His responsibilities include overseeing UPS operations and strategic business planning in China.
"If you look at the growth engine in Asia and the growth engine in China, it is known as the world's factory, and many companies want to be there," says Loi. "UPS wants to penetrate into this market. It deals with over 200 countries worldwide in its network, and China is very important to the entire organization. If you look at the traffic flow and the number of negotiations between the U.S. and China, it is growing rapidly, as is the moving of goods."
Loi says UPS also finds a strong market in intra-Asia traffic. "We plan to be a top-tier package delivery and logistics provider to and from China, and in addition, [to expand our] wholly owned operation," Loi says.
When the World Trade Organization began and the air express and package-delivery industries became the subject of WTO guidelines, UPS was allowed to dispense with its local Chinese partner, Sinotrans, and go into a totally owned condition. The transition was a smooth one.
UPS now has 33 large, wholly owned branch offices that serve more than 200 cities in China. The offices are staffed by UPS's own employees, such as service providers and salespeople, and use the company's own technology. In China, the company has 500 salespeople–whereas in the U.S., it has several thousand.
"We also have our own planes in some of those locations," Loi says. "We are growing our business and expanding our service. We are this year opening up an express unit in Guangzhou, and that is where I am right now. We will be the first there with an express handling unit, and our own planes will be operating six times a week, flying out from this airport. We have more flights in Shanghai and Beijing, but this will open in the fourth quarter."
UPS also has the capability to load its own containers, and it can field its aircraft to meet the needs of customers outside of China. "We can now manage what we want to do and control our own fate," says Loi. "With 99 years of experience in this industry, I think it is right that we are continuing deploy technology and train our people. This way, we can create a future for UPS for many years to come."
UPS is using its sponsorship of the 2008 Olympic Games in China to extend its branding more aggressively. It still talks "Brown" as a good labeling device. The company plans to continue investing in training, having already completed some 102,000 hours of instruction for its Chinese workforce.
UPS also plans to expand its service to an additional 100 cities in China. To remain a top-tier logistics player in China, it will continue opening new branches, as well as 22 more offices to serve the new expansion cities. It is also building further connections between the ground and the air.
"We are very proud of the fact that we have built a very comprehensive network in China. We now have, for instance, nine flights a week connecting Shanghai and the U.S.," says Loi. "We also have other Asian flights from Shanghai to places like Japan and the Philippines, as well as to places like Cologne, Germany."
UPS has a large group of clients that need to link China and the United States. China manufactures large quantities of goods for the U.S., and Chinese manufacturers also distribute goods to Europe and the rest of Asia using UPS.
UPS is active in the air, the sea and the ground in China. The company is committed to large-scale growth, both intra-Asia and across continents–expecting the Asian region as a whole to be an economic leader.
