China offers vast opportunity for UPS
China is a “top priority market” for United Parcel Service, the company’s chief executive said at an investor conference on Thursday.
CEO David Abney said the shipping company will expand more in China next year. UPS has a two-pronged strategy for the world’s second-largest economy.
“The first is to widen our footprint, expanding our presence in 20 new markets across China,” Abney told investors. “The second is to deepen our presence further into 33 markets we’re in today.” He said there would be an expanded focus on targeted industries, as well as large Asian multinationals and private companies.
Abney, who had just returned from the Asia-Pacific Economic Cooperation meeting in Beijing, said that President Xi Jinping made “very favorable comments” about reform in China that he and other international CEOs are eagerly anticipating.
Xi said that China is progressing on its supply chain “and that things need to be addressed”.
The APEC meeting also coincided with China’s annual Singles Day shopping event — also known as 11.11 — a day on which e-commerce companies set sales records, with Alibaba Group Holding Ltd reporting business worth $9.3 billion.
“I was already hearing all the excitement about Singles Day,” Abney said. “There’s
I was already hearing all the excitement about Singles Day. There’s huge opportunity just from a rampup of that scale.” DAVID ABNEY CHIEF EXECUTIVE OFFICER OF UPS
huge opportunity just from a ramp-up of that scale, especially in a country whose infrastructure maybe has not quite caught up; although they’re doing a lot.”
UPS is focusing on industries that “generate 90 percent of China’s GDP”, Abney said. Much of the company’s planned expansion will occur in 2015.
UPS received licenses to offer domestic express package services in Beijing and other cities earlier in August — as did competitor FedEx. The companies previously were limited to delivering packages from abroad.
“Economists said the majority of global growth in future decades will come from emerging economies, and we’re ready to cease this opportunity,” Abney said.
Kurt Kuehn, UOS’ chief financial officer, said that with expansion in China and across Europe, the company expects 6 to 9 percent growth in international revenue.
UPS, which started doing business in China in 1988, has 6,476 employees in the country and two hubs: one in Shanghai for global business and one in Shenzhen that provides intra-Asia services. UPS has 216 weekly flights connecting China to the US, Europe and the rest of Asia.
In June, UPS announced that it will begin offering rail service between China and Europe. The rail service connects Chengdu, China, with Lodz, Poland, and Zhengzhou, China, with Hamburg, Germany. The company said that the service is for customers “looking to balance supply chains.”