Nippon Express, Mitsubishi to merge Chineses distribution ops
Nippon Express Co. (TSE:9062) and Mitsubishi Corp. (TSE:8058) plan to integrate their distribution businesses in China to create a nationwide network catering to Japanese firms operating there, The Nihon Keizai Shimbun learned Tuesday.
The major transporter and the trading house intend to establish a joint holding company in Japan by June that will be capitalized at about 1.2 billion yen (US$11.5 million(. Nippon Express is to take a 51 per cent stake and Mitsubishi the remainder.
The firms are expected to sell their shareholdings in their combined six Chinese subsidiaries to the holding company, which will integrate the partners’ distribution operations in China. The new firm will control Nippon Express’ and Mitsubishi’s combined 106 sites in the country.
Nippon Express has locations in China’s coastal areas, including Shanghai, Guangzhou and Tianjin. Meanwhile, Mitsubishi has sites in the interior of the country as well, such as in Chengdu, Sichuan Province, and Xian, Shanxi Province. By integrating their operations, they will have locations in almost all major regions in China.
The total freight handled by the two companies combined is projected to reach 3.6 million tons in fiscal 2005, then double to 7.2 million tons in five years.
The partnership of Nippon Express, which has a large share of the distribution market between Japan and China, and Mitsubishi, which has a strong truck transport network in China, will allow the firms to offer a comprehensive distribution service that includes imports and exports.
Other European and U.S. transporters such as DHL have entered the Chinese market, but they mostly handle document deliveries and do not yet have product distribution networks.
According to the Finance Ministry, Japan’s exports to China, including Hong Kong, rose 17.2 per cent to 11.83 trillion yen in 2004, while imports increased 16.7 per cent to 10.37 trillion yen. This means that China has surpassed the U.S. to become Japan’s largest trading partner.
The amount of freight handled in China has been growing at 15-20 per cent each year, according to industry estimates.
(Nikkei)
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