Tonglu is the hometown for many of China’s courier services. Nearly 80% of the more than one million delivery staff across the country work for Tonglu businessmen.
YTO Express’ founder Yu Weijiao was not the first Tonglu native to get into the delivery business but he is emerging as the herd’s alpha horse.
Yu was born in 1966. Like many others in the industry, he doesn’t have a proud educational background. Instead he spent 15 years in the home renovation business, getting a lot of his projects in a part of Jiangxi that was a famous revolutionary base of the Chinese Communist Party. Yun is a Party member too.
His company was barely profitable and in 2000 Yu set up YTO, or Yuantong, with a small warehouse in Shanghai. At the time only state-owned China Post was allowed to operate delivery services. YTO, which operated in the grey market, was lossmaking for three years. “I got up at six in the morning and worked until midnight, everyday. From time to time I had to borrow some rice from the shopowner next door,” he told Zhejiang TV.
To stand out from its competitors, YTO became the first to provide services on Saturday and Sunday. “All my staff blamed me and the entire industry criticised me. But in the next year they were all delivering seven days a week,” Yu recalls.
Yu’s luck turned in 2003. What changed was the emergence of Alibaba’s Taobao marketplace. Driven by online retail sales, YTO’s orders picked up too.
In 2005 Yu made another pioneering move, going to see Alibaba’s founder Jack Ma. By offering fees up to 30% lower than its rivals, YTO became the first delivery firm to cooperate with the fast-growing e-commerce player. (Ma is also a Zhejiang native, which may help explain Alibaba’s close working relationship with Tonglu’s delivery firms.)
YTO’s revenue began a meteoric rise. In 2000 it was only delivering 80 packages a day but by 2012 it was making 4.5 million deliveries every 24 hours. During the Singles’ Day shopping festival last year, YTO fulfilled a record 53 million orders.
YTO is planning to become the first of the Tonglu ‘delivery gang’ to go public too. In March it filed a $2.7 billion backdoor listing deal using Shanghai-listed Dayang Trands (which makes Warren Buffett’s favourite suits).
New Fortune magazine estimates that Yu’s net worth now amounts to Rmb30 billion ($4.6 billion).
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.