Ex­press de­liv­ery at peo­ple’s ser­vice

China Daily (Hong Kong) - - COMMENT - ZHANG HUI

China, ac­cord­ing to re­ports, may be­come the largest ex­press de­liv­ery ser­vice coun­try in 2014. But the fast grow­ing ex­press de­liv­ery sec­tor still has many loop­holes, as was ev­i­dent last month when pack­ages soaked in a deadly chem­i­cal killed one re­cip­i­ent in Shan­dong and left seven crit­i­cally ill.

The growth of China’s ex­press de­liv­ery in­dus­try has been amaz­ing. In the first 11 months of this year, the in­dus­try had de­liv­ered 8.12 bil­lion pack­ages, sec­ond only to the United States. The in­dus­try has grown at such a fast pace be­cause of the as­ton­ish­ing de­vel­op­ment of e-com­merce cou­pled with China’s gift-giv­ing tra­di­tion. The vol­ume of e-com­merce has grown from 10 bil­lion yuan ($1.65 bil­lion) in 2000 to about 10 tril­lion yuan in 2013, a 1,000 times in­crease.

Ac­cord­ing to data from Taobao and Tmall, on Nov 11 alone, more than 70 mil­lion pack­ages were wrapped for de­liv­ery. Alibaba Group’s fig­ure show that the about 7 mil­lion shops on Tmall and Taobao need to send 5 mil­lion new pack­ages ev­ery day. E-com­merce in­deed has been the great­est driv­ing force for the ex­press de­liv­ery in­dus­try.

China’s tra­di­tional gift-giv­ing cul­ture, too, has played a big role in the in­dus­try’s stun­ning growth. Since gifts, es­pe­cially dur­ing fes­ti­vals, carry great cul­tural value in China, peo­ple in cities quite nat­u­rally choose ex­press de­liv­ery agen­cies to send them to their loved ones. The changes in peo­ple’s liv­ing and work­ing styles, too, have helped the ex­press de­liv­ery busi­ness to boom.

The in­dus­try to­day is more com­pet­i­tive than ever, with courier agen­cies open­ing more branches in more cities across the coun­try to fight for a big­ger mar­ket share. Be­hind this boom­ing mar­ket, how­ever, lie po­ten­tial risks.

The lure of win­ning a larger mar­ket share — and con­versely the fear of los­ing cus­tomers — has pre­vented the de­liv­ery agen­cies from rais­ing their charges. The re­sult: ex­press de­liv­ery charges have not risen for years, a rare mar­ket phe­nom­e­non con­sid­er­ing that in­fla­tion and higher la­bor costs have pushed up prices of al­most all prod­ucts. That means the in­dus­try, ow­ing to in­creased op­er­a­tional and la­bor costs, is fac­ing a very tight cash flow.

To over­come the above con­straints, some de­liv­ery agen­cies have cho­sen to in­vest more funds into their busi­ness while oth­ers have in­tro­duced fran­chise op­er­a­tions or raised their busi­ness com­mis­sion.

The prob­lem is that, once the na­tional de­liv­ery de­mand slows down, such large-scale ex­pan­sion could cause a break in the cap­i­tal chain and cre­ate cri­sis in the in­dus­try.

Al­though China will over­take the US as the largest ex­press de­liv­ery coun­try, it is a late starter in the sec­tor. In fact, the net­works of most do­mes­tic ex­press en­ter­prises are not yet com­plete, and their em­ploy­ees are mainly men with rel­a­tively low ed­u­ca­tion lev­els. And since the in­dus­try is still un­der con­struc­tion, even se­nior work­ers are drawn to it just be­cause of the salary and sel­dom have a sense of be­long­ing.

The story is dif­fer­ent in the US, where man­age­rial-level em­ploy­ees in courier com­pa­nies en­sure that high-qual­ity em­ploy­ees are re­cruited to help pro­vide bet­ter ser­vices for cus­tomers. Take the FedEx as an ex­am­ple. It was founded in 1971, and within 40 years be­came a For­tune Global 500 com­pany. It em­ploys about 160,000 peo­ple world­wide, and uses 634 air­planes and 47,000 spe­cial freight cars to de­liver let­ters and pack­ages. FedEx also has won the World Best Em­ployer award for pro­vid­ing both ad­van­ta­geous salaries and good cor­po­rate cul­ture for its em­ploy­ees. Like many Western com­pa­nies that strike a bal­ance be­tween ser­vice and prof­its, FedEx also be­lieves that highly ed­u­cated em­ploy­ees con­trib­ute to the com­pany’s bet­ter de­vel­op­ment.

In con­trast, do­mes­tic com­pa­nies seem to pay more at­ten­tion to “prof­its”, which is likely to lead them to a de­vel­op­ment path where ser­vice and pre­ci­sion could take a back seat. Of course, few for­eign ex­press de­liv­ery com­pa­nies can com­pete with their do­mes­tic coun­ter­parts when it comes to pro­vid­ing ser­vices within the coun­try. But that is be­cause do­mes­tic com­pa­nies charge must lower rates and for­eign com­pa­nies, with their stronger cap­i­tal re­serves, fo­cus on in­ter­na­tional de­liv­er­ies. There­fore, China’s ex­press in­dus­try must work out a strat­egy for bet­ter, rather than faster, de­vel­op­ment.

First, the man­age­ments of do­mes­tic com­pa­nies should make se­ri­ous ef­forts to in­crease cus­tomers’ sat­is­fac­tion. The man­age­ments have to keep pace with the fever­ish speed at which the ex­press de­liv­ery in­dus­try is ex­pand­ing, or else cus­tomers’ dis­sat­is­fac­tion lev­els will in­crease, even­tu­ally lead­ing to a cri­sis.

Sec­ond, Chi­nese com­pa­nies, apart from re­cruit­ing qual­ity em­ploy­ees, should make ar­range­ments for staff train­ing to make ex­ist­ing em­ploy­ees more ef­fi­cient in or­der to win over po­ten­tial cus­tomers.

Third, ex­press de­liv­ery com­pa­nies should run pro­grams to in­still a sense of be­long­ing among em­ploy­ees and ex­pand their “profit-only” mo­tive to in­clude “peo­ple and ser­vices”. Only when em­ploy­ees have a sense of be­long­ing will they take on ex­tra re­spon­si­bil­ity and help the en­tire in­dus­try to grow healthily as well as prof­itably.

Fourth, ex­press de­liv­ery com­pa­nies need to share more so­cial re­spon­si­bil­i­ties. Since the ex­press de­liv­ery in­dus­try greatly de­pends on the trans­porta­tion sec­tor, it needs to pay at­ten­tion to en­vi­ron­men­tal pro­tec­tion and use ecofriendly meth­ods to de­liver pack­ages.

And last, do­mes­tic courier com­pa­nies need to reach some sort of agree­ment to avoid harm­ful com­pe­ti­tion in the in­dus­try. The au­thor is a se­nior an­a­lyst of Sootoo Re­search In­sti­tute.


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