Chinese courier companies face FedEx threat
China’s express delivery market has been undergoing unprecedented change since FedEx began reducing its prices early this year.
Under its latest discounted rate in August, FedEx overnight service in the Yangtze River Delta starts at merely seven yuan (USD 1.02), the China Economic News reported on Tuesday (26th August).
The price reduction is a clear sign that FedEx is seeking to enlarge its share of China’s domestic express delivery market, which has seen growth rates rise by 30 percent this year with the increase in e-business and online shopping in the country.
Such low prices will take clients away from local express companies, and worsen what has already been a tough situation for them this year, the report said. In 2008, most domestic private-owned express companies have been reporting deficits due to the rising prices of fuel and labor. Some have even been forced to close.
FedEx applied the same strategy in countries such as Mexico and Egypt and successfully drove local express companies out of business. But after it took control of the market, FedEx raised prices back to their previous levels. Now China is facing the same threat, the article says.
But the local companies are fighting back, and they believe there is a considerable market space that international express giants cannot take away. For instance, they still provide cheaper services for shipments within a radius of 500 kilometers, and as long as they survive the current hard times, they will reclaim their share of the market – mainly in short-distance shipments with small business clients, Qianjiang Evening News reported in July.
FedEx began offering domestic delivery services in China in June 2007, targeting high-end clients.
