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M&A Analysis and Research on Express Industry of China

Abstract:

•  Profile of express industry

China 's express industry has witnessed a fast growth over last two years. The market share has reached RMB 20 billion backed by sustainable development after China 's entry into WTO while the number exceeded 30% per year. Promising profit return from express industry, great market potential and low tariffs have drawn a great deal of attention from the express community and outsiders. Foreign express companies especially the top four- Fedex, DHL, TNT and UPS have swarmed in China to cooperate, acquire or run exclusives which put great threats to domestic express companies.

Scale trend of China's express market unit 100millionRMB

There has been a decentralized market in express industry with more than 30,000 firms at all level, in which 6000 companies locate in Shanghai alone. By contrast, there are 9000 companies in America while mere 1000 in Japan . M&A cast a tendency in this sector years to come as number of big companies will emerged on the scene.

At present, regional express belts clustered around many coastal cities in the Eastern China . As us believed development of express industry will stretch out its scale based upon big cities towards central and Western region. Among many ways of express such as air, railway, highway and water, air express strikes outstanding for its fast growth while railway show its advantage in price and network.

The market status quo is full of competition among state-owned company, private sector and foreign ones crossing a whole spectrum of transportation. We worked out its analysis of China 's express industry in four dimensions: foreign exclusive s involving Fedex, DHL, TNT and UPS that showcase competitiveness for richness in experiences, capital and network around the world. The second category is state-owned company including China Post, CAE, CRE and Sinotrans that enjoy advantages of background and network in China . The third one include big and medium size of private companies such as EAS, ZJS Express, Shentong Express, Shenzhen Shuntong that took local market and began penetrating into surrounding area. The last category lists number of small companies which though in chaotic situation in management they share chunk of local market as nimble player to market demand with low budget and small scale. They used to take way of express within same city and province.

China 's logistics and express industry have been fully opened to outside on Dec. 1 2005. We believed that the invasion taken by foreign companies will heat up competition in China 's express industry while pull threats on big firms and their future.

•  Motivation behind M&A in express industry

High profit in express industry leads market to ferocious competition. We believed that in order to keep brands the spotlight against foreign ones, China 's counterparts should consolidate domestic market and optimize resources. Over the past two years, China has experienced non-stoppable M&A in this sector.

We found that there exists a background for such frequent M&A to occur. They are:

A. M&A can increase density within market as to sharpen edge against foreign capital. The market is shared by many big and medium companies along with local ones in small scale. Under this circumstance, the express industry as whole will not improve its competitiveness while resources is consumed meaninglessly as companies struggling by their own to grab the market.

B. M&A within sector will gear up participation into China 's market as develop vertically for scoop out customer from second-tier and third-tier cities.

C. To get convergence of commodity, capital and information flow. We believes that express firms can ward off risks and expand at low cost through integration of capital and information .

D. With new postal regulation lay out; M&A in private sector has been accelerated. New regulation circumscribed parameter of targeted scope and function of post as quoted as postal company should focus on letters under 350g including commercial letter. Licence is required upon non postal companies from post supervisory body for their business on letter and parcels and registered capital for city level, Provincial level and inter-Provinces is set at RMB 500,000, RMB 500,000 and RMB 1,000,000 respectively. Therefore, the room for express companies has been squeezed out while number of companies has to survive by integration and M&A.

Market distribution of foreign capital express enterprises in China

•  M&A in express industry

It's self-justified to say M&A in this sector will intensify. Foreign participation will trigger number of dynamics in express industry as us identified:

A. The trend of diversification in express companies through M&A is come to meet the needs from booming export and import and express services following economic expansion, upgrading construction in economic development parks.

B. State-owned company will double its efforts to consolidate private one. With foreign capital flow in, pressure has been felt by state-owned company. We found that China's express companies, among others, China Post, CAE, CRE, will step up in M&A over small firms a to realize cooperation among strong players complimentary to each other as they have engaged on image-building campaign. Domestic companies are expected to be capable of competing in express industry home and broad by considering high-end industrial trait, price advantage of China Railway Express Co., Ltd and speed privilege in civil aviation industry.

C. There has been no obstacle for foreign exclusives to be up and run in China as logistic and express industry was fully open to outside. They carried out M&A and cooperation for grabbing express channel while inclined to put exclusives on the scene based on what they have learned from the Chinese market and acquisition cases done before following the China 's express market got widely open. With USD 0.4 billion, Fedex purchased 50% of stock in joint venture- Datian-Fedex Express Co., Ltd and domestic express network and express business of Datian-Fedex Express. This is the shining example for a foreign company to be eligible for exclusive one. What Fedex concerned most is 502 networks committed by Datian which pave the way to reaching out to the market in second and three-tier cities.

The scenario where host of domestic big companies or foreign ones competing together can be seen in the near future. A leapfrogging development, improved services and revamped information construction, all these points as us sorted out will be prerequisite for survival. It is paramount to grow stronger with advantage in resources in a new environment.

Catalogue: 

Chapter 1 Profile on Study
Section 1 Background for study
Section 2 Study contents
Section 3 Study methodology
Section 4 Study team
Section 5 Conclusion 
Chapter 2 The Status Quo of Current Express Industry 
Section 1 Industrial character in express worldwide
Section 2 Market analysis of express industry worldwide
1. Market scale in express industry between 2006 and 2007
2. Demand trend in express industry worldwide between 2007 and 2010 
Section 3 the Industrial pattern worldwide 
1. The Current competition in express industry between 2006 and 2007 
2. Competition trend in express industry between 2007 and 2010 
Chapter 3 Policy on China¨s Express Industry 
Section 1 Macro-economy on express industry 
Section 2 the Impact of industrial policy on express 
Section 3 the Development of express industry during the 11th Five Year Plan
Chapter 4 The Status Quo of China¨s Express Industry between 2007 to 2009 
Section 1 the Status quo of China¨s express industry 
1. Current express market in China
2. Competition in China¨s express industry 
Section 2 the Investment in China¨s express industry 
1. Investment and character in express industry 
2. Profit of express industry 
Section 3 Regional layout of China¨s express industry 
1. Varied requirement among localities 
2. Scope of business among localities 
3. Demand inclination among localities 
Chapter 5 China¨s Express Industry in Categories 
Section 1 Air express
1. Character in express industry 
2. the Market status quo and M&A in express industry 
3. Strategy for marketing development 
4. Investment profit and risk in air express 
Section 2 Railway express
1. Character in express industry 
2. The Market status quo and M&A in express industry 
3. Strategy for marketing development 
4. Investment profit and risk in railway express
Section 3 Highway express 
1. Character in express industry 
2. the Market status quo and M&A in express industry 
3. Strategy for marketing development 
4. Investment profit and risk in railway express
Chapter 6 Regional development and M&A in China¨s Express Industry 
Section 1 Bohai Sea area  
1. Regional express demand between 2007 and 2010 
2. Regional market performance and development trend 
3. Regional market competition pattern and major player 
4. Regional demand and M&A trend 
Section 2 Yangtze River Delta
1. Regional express demand between 2007 and 2010 
2. Regional market performance and development trend 
3. Regional market competition pattern and major player 
4. Regional demand and M&A trend
Section 3 Pearl River Delta 
1. Regional express demand between 2007 and 2010 
2. Regional market performance and development trend 
3. Regional market competition pattern and major player 
4. Regional demand and M&A trend
Section 4 Northeast region 
1. Regional express demand between 2007 and 2010 
2. Regional market performance and development trend 
3. Regional market competition pattern and major player 
4. Regional demand and M&A trend
Section 5 Central region 
1. Regional express demand between 2007 and 2010 
2. Regional market performance and development trend 
3. Regional market competition pattern and major player 
4. Regional demand and M&A trend
Section 6 Western region 
Regional express demand between 2007 and 2010 
2. Regional market performance and development trend 
3. Regional market competition pattern and major player 
4. Regional demand and M&A trend
Chapter 7 Factoring Exerting Influence on Express Industry 
Section 1 Risk on development of express industry 
1. Potential risk 
2. Dynamics in fluctuation of labour and transportation price
Section 2 Existing problem in China¨s express industry 
1. Problem for integrating customer basis 
2. Capacity of meeting the needs from market 
3. Reorganization and expansion in express industry 
Chapter 8 Current M&A in China¨s Express Industry 
Section 1 Background analysis in China¨s express industry 
Section 2 M&A trend in China¨s express industry
Section 3 Case study in China¨s express industry
1. China Railway Parcel Express Co.,Ltd and China Railway Express Co., Ltd
2. Fedex and Tianjin Datian W. Group Co.Ltd.,
3. Hannan Airlines, China Airlines and Yangzi River Express  
4. DHL and Shentong Express
5. TNT and HOAU
6. TNT and COSCO
7. Kerry Logistics and Kerry EAS
Chapter 9 Stumbling Stone in China¨s Express Industry 
Section 1 Capital 
Section 2 Business integration 
Section 3 Customer management 
Section 4 Entrepreneurial culture 
Chapter 10 Case Study in Express Industry Overseas
Section 1 Fedex purchasing ANC
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration of M&A 
Section 2 Fedex purchasing U.S. Air Cargo Company 
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration of M&A
Section 3 DHL purchasing BlueDart
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration of M&A
Section 4 DHL purchasing Exel
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration of M&A
Section 5 Fedex purchasing Watkins
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration of M&A
Section 6 La Poste purchasing DPD
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration of M&A
Section 7 TPGpurchasing TNT
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration of M&A
Section 8 BPCS purchasing DPD
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration of M&A
Section 9 Deutsche Post took more share of DHL
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration of M&A
Section 10 UPS purchasing LynxExpress
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration of M&A
Chapter 11 M&A Trend in Foreign Express Industry 
Section 1 Development of foreign company in China
1. Current development 
2. Development trend
3. Investment character 
4. Competition 
Section 2 Investment and M&A of FEDEX in China
1. Investment in China
2. Marketing strategy 
3. Core competitiveness 
Section 3 Investment and M&A of DHL in China
1. Investment in China
2. Marketing strategy 
3. Core competitiveness 
4. Investment and M&A feasibility
Section 4 Investment and M&A of UPS in China
1. Investment in China
2. Marketing strategy 
3. Core competitiveness 
4. Investment and M&A feasibility
Section 5 Investment and M&A of TNT in China
1. Investment in China
2. Marketing strategy 
3. Core competitiveness 
4. Investment and M&A feasibility
Chapter 12 Case Study of M&A in China¨s Express Industry 
Section 1 China Railway Parcel Express Co.,Ltd and China Railway Express Co., Ltd
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration 
Section 2 Fedex and Tianjin Datian W. Group Co.Ltd.,
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration
Section 3 TNT and HOAU
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration
Section 4 DHL and Shentong Express
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration
Section 5 Kerry Logistics and Kerry EAS
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration
Section 6  China Airlines  purchasing  Yangzi River Express  
1. Motives and value of M&A 
2. M&A procedure 
3. Solution and lesson of M&A 
4. Strategic integration
Chapter 13 Core Competitiveness among Major Players 
Section 1 Shunfeng Express 
1. Corporate performance 
2. Core competition 
3. Customer bases 
4. Corporate strategy 
5. M&A trend and feasibility 
Section 2 CNEX Express Co.Ltd.
1. Corporate performance 
2. Core competition
3. Corporate strategy 
4.	M&A trend and feasibility
Section 3 ZJS Express 
1. Corporate performance 
2. Core competition
3. Corporate strategy 
4.	M&A trend and feasibility
Section 4  Sinotrans Express 
1. Corporate performance 
2. Core competition
3. Corporate strategy 
4.	M&A trend and feasibility
Section 5 China Railway Express Co., Ltd
1. Corporate performance 
2. Core competition
3. Corporate strategy 
4. M&A trend and feasibility
Section 6 China Post Express 
1. Corporate performance 
2. Core competition
3. Corporate strategy 
4.	M&A trend and feasibility
Section 7  Yangzi Jiang Express
1. Corporate performance 
2. Core competition
3. Corporate strategy 
4.	M&A trend and feasibility
Chapter 14 M&A Possibility in China¨s Express Industry over Other Industry 
Section 1 Industrial chain of express industry 
Section 2 M&A possibility between express company and aviation company 
Section 3 M&A possibility between express company and logistics company
Section 4 M&A possibility between express company and post company
Chapter 15 M&A Possibility of China¨s Express Industry at Different Level 
Section 1 M&A possibility among big companies 
1. HOAU
1.1 Corporate strategy 
1.2 Capping upon corporate strategy 
1.3 M&A feasibility 
2.  TianTian Express
HOAU
2.1 Corporate strategy 
2.2 Capping upon corporate strategy 
2.3 M&A feasibility
3. Beijing Yangguang Express 
3.1 Corporate strategy 
3.2 Capping upon corporate strategy 
3.3 M&A feasibility
4. ZJS Express
4.1 Corporate strategy 
4.2 Capping upon corporate strategy 
4.4 M&A feasibility
5. Shentong Express 
5.1 Corporate strategy 
5.2 Capping upon corporate strategy 
5.3 M&A feasibility
6. Datian W. Group 
1.1 M&A feasibility 
1.2 M&A value 
Section 2 Possibility of M&A among medium and small companies 
1. Huitong Express
1.1 M&A feasibility 
1.2 M&A value
2. Eitong Air Express Co.,Ltd.
1.1 M&A feasibility 
1.2 M&A value
3. Shanghai ITO 
1.1 M&A feasibility 
1.2 M&A value
4. E-TIME Logistics
1.1 M&A feasibility 
1.2 M&A value
5. Shenzhen Hua Yuntong Logistics Co., Ltd
1.1 M&A feasibility 
1.2 M&A value
Chapter 16 M&A Risk in China¨s Express Industry 
Section 1 Asset reshuffle reorganization 
Section 2 Information reengineering 
Section 3 Channel reconfiguration
Section 4 Business procedure reorganization 
Section 5 Entrepreneurial culture integration 
Chapter 17 Recommendation of China¨s Express Industry 

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