Discovering that one of your main competitors also happens to be setting the rules in your industry is never going to be a pleasant experience.
And the message was reinforced last October in reforms to the Postal Law, which confirmed China Post’s exclusivity in intra-city express delivery of letters and parcels under 50 grammes and inter-city delivery of items under 100 grammes.
China Post reports to the State Post Bureau, making it the de facto regulator, as well as a leading postal enterprise. Its exclusive rights effectively bar private operators from domestic letter and smaller parcel delivery.
Unsurprisingly, it’s a situation that has the international logistics providers talking about unfair competition. But it has also prompted a redoubling of effort in other commercial areas, leading to situations in which the shoe can sometimes be on the other foot, in competitive terms.
That’s especially true in the fashion and luxury goods business. “State-owned and private logistics companies have either been reduced to being spectators or become agents for foreign companies,” explains the 21CN Business Herald.
China’s domestic apparel market spent an estimated $7.5 billion on logistics services last year, and multinational companies like DHL, Logwin and Yamato Transport grabbed a disproportionate share of the business. Primarily that’s because they are able to offer speed, global distribution and confidentiality that their Chinese counterparts can’t match.
Change is being driven by companies like DHL, which bought Shanghai Quanyi Express in 2008. “The move into the domestic arena was a logical step given the size and future of the market,” senior DHL executive Charles Dobbie told reporters recently.
DHL is also building a ‘Fashion Centre of Excellence’ in Shanghai. The facility, which uses advanced IT systems to shorten delivery times, plans to improve supply chain links between designers, retailers and garment suppliers. It taps into requirements for radically shortened supply chains and inventory cycles from retailers like H&M and Zara – which specialise in so-called ‘fast-fashion’.
Domestic express companies hope to establish more of a presence in a similar area. “We can spend money on equipment and technology, but our enterprises need to build a system, which is the most difficult part,” one industry expert told the China Times. The challenge is to learn from the big international players like DHL, he admitted. “What we must do is grasp their methods.”
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