Shuttling parcels delivering billions of wealth to Chinese
hong kong — Shuttling parcels around for Alibaba and other retailers is creating China’s latest wealth explosion, with a surge in shares of S.F. Express making Wang Wei the country’s third-richest man.
It’s a stark reversal for a company that got its start in what Wang has called the sneaky business of “black delivery,” back in the ’90s when only China’s post office was allowed to handle packages. The courier company he created navigated the shadows of the border between China and Hong Kong for 16 years until the government gave its sanction.
Last week’s official launch of S.F. Express’s so-called backdoor listing on the Shenzhen Stock Exchange, approved in December and pushed through rapidly with government support, helped produce a 59 per cent surge in shares of parent S.F. Holding Co, giving Wang a net worth $26.5 billion on the Bloomberg Billionaires Index at the close of trading in New York Tuesday. His fortune added another $1.2 billion during Wednesday trading in China.
The Friday launch coincided with a bonus awarded to S.F. employees by Wang himself the same day, which many used to buy company shares. These purchases contributed to the dramatic rise in the share price, in part due to the relatively small amount of outstanding shares being traded. S.F. Chairman Shares New Fortune Through App That Can Buy Stocks
Wang and five other package delivery billionaires, including the founder of ZTO Express which debuted on the New York Stock Exchange in October, have seen their fortunes swell based on listings in the past five months alone, amassing a combined wealth of about $47 billion, the Index shows. They’re all part of the online shopping boom led by Alibaba Group Holding, with Wang’s S.F. Express the leader by revenue ahead of hundreds
Not only the past decade, but the next few years will also be a golden age for Chinese couriers’ development John Song, Director of the logistics and transportation practice, Deloitte
of competitors. “There’s a history of rough competition in this industry in particular.” That they all sought money in capital markets in such a short period, most using the quicker route of so-called backdoor listings instead of initial public offerings, points to an underlying tension: With business surging, competitors are piling in, driving down profit margins and setting up the industry for consolidation to just two or three key players like FedEx, United Parcel Service Inc. and DHL Express elsewhere. The race to raise money and expand into China’s smaller cities will determine which companies survive the eventual shakeout. “The industry has passed the first phase of vigorous growth,” said Su Baoliang, a Beijing-based analyst at Sinolink Securities Co, who estimates revenue growth will slow to 15 per cent in the next two to three years from its current rate of 40 per cent. “Companies have to enhance operational efficiency. Otherwise they will be either marginalized or acquired by competitors.”
Yet Chinese companies are also counting on opportunity on Jack Ma of Alibaba and his promise to US President Donald Trump to create US jobs by linking 1 million American small businesses with Chinese buyers. That’s a lot of potential deliveries.
“Not only the past decade, but the next few years will also be a golden age for Chinese couriers’ development,” said John Song, a Shanghaibased director of the logistics and transportation practice in China at consultancy Deloitte. “There is huge potential in the development of these Chinese couriers.”
After not even permitting private delivery services until 2009, the Chinese government has since been encouraging competition and fostering consolidation. In the past decade, due to decreasing operational costs combined with more entrants piling in, the average price of delivering a package dropped 57 per cent to 12.8 yuan ($1.86), according to the State Post Bureau, which regulates postal services. In the US, the cost per package averages $10.—