TNT aims for home turf of China Post
Domestic express and direct mail advertising are two moneymakers critical to China Post, which has been eager to dominate them in the Chinese market through a new postal act under revision.
Ken McCall, chief executive officer of TNT China, announced in Shanghai on March 30 that the company would start a first step toward its direct marketing plan in China since April 2, sending 5 million questionnaires in Shanghai, the engine of the nation's economy. Its intention was to collect consumer information for products and services aimed at some industries.
China Post is now challenged whether to lose the vast DM market to TNT, a world leading provider of express delivery services, logistics supply chain solutions and mail services, after greatly exploring the document delivery market in the country.
The new move by TNT indicates that strategically, it takes an opportunity earlier, believed Yang Qian, vice dean of the Beijing Commerce Management Cadre Institute. Also, a TNT executive agreed with the view, saying that the company was a pioneer in China.
In 2004, the executive added, the company hoped to form a joint venture with China Post, but the hope does not come true. The new move is to collect information, an early effort to the buildup of a consumer information platform. The company's next step will be based on developments.
Dai Dingyi, secretary-general of the China Logistics Association, deemed that obviously the TNT move was to prepare for its direct marketing business in the country. After the release of the new postal act, it would have staked out territory of the market. It was a wow gambit.
For TNT's part, DM, express, and logistics are its three core businesses. Not all of them are marketed well in China, although the CEO reiterated that the company carried out an even strategy here.
It has been the No. 1 supplier in China's third-part auto logistics market, but it is still behind rival FedEx and DHL in terms of express network and express turnover in the country. With very strong DM capacity, it has been huntering for an opportunity to develop the Chinese DM market.
As early as in 2004, Mr. McCall said in an opening statement that the company wished to rely on the DM experience of its parent Royal TPG Post, which is the national postal operator in the Netherlands and active in Europe and worldwide, to fight for this DM market by direct marketing.
TNT shows a strong presence in direct marketing in Europe. The business brings it sales revenue of up to CNY 2.5 billion to CNY 3 billion a year. In China, this market is estimated at USD 100 billion to USD 200 billion. Mouthwateringly, it has not yet taken shape here.
In Europe, he said, a person yearly receives 88 mails on average, while the number is just 8 in China. By 2010, the number of the nation's middle-income group or above-middle- income group is expected to increase to 400 million. The nation is supposed to become a vast market to providers of direct marketing services.
In fact, China Post is not reluctant to be in cooperation with TNT. The divarication between both is focused on cooperation pattern, told reporters an insider.
In the Chinese DM market, the insider elaborated, there is not fair competition between China Post and foreign rivals. China Post, which is regarded as a legal monopolizer by these rivals, is a utility and has the duty of serving the hinterlands, while foreign rivals generally focus efforts on gripping those lucrative markets and businesses.
(USD 1 = CNY 8.28)
From China Business, Page 1, Wednesday, April 06, 2005 [email protected]
