On Thursday the United Parcel Service announced that it would acquire operations of a large Chinese firm, SinoTrans. This deal would bring the famous brown clad deliverymen to over 200 cities throughout what could soon be the largest cargo market in the world. Rocketing trade in the recently booming economy is what is driving the need for increased cargo business. UPS said it plans to establish a air hub at Shanghai International by 2007. With parcel traffic out of the company increasing 130%, UPS' increasing presence comes without a moment to spare.
United Parcel, as many other U.S. firms, has seen that as China's Iron Curtain becomes more transparent the need to be a first mover in the world's most populous nation is paramount. For UPS they may be little late as industry leader FedEx has had an established presence in China for some time, and UPS faces an uphill battle in that nation. Nevertheless UPS' move will no doubt prove a positive move for UPS shareholders.
This article was found at: http://money.cnn.com/2004/12/02/news/fortune500/ups_china.reut/index.htm
3 comments:
Brown will certainly increase their market share in China with this deal. I don't think that it matters that FedEx was in there first. The market is so big and growing that right now is a perfect time to enter it.
Being the first mover in a place like China will probably have little effect on the competition. U.S. has a number of delivery services and they all seem to be doing quite well. With China being much larger. That is so much more room for both of them to grow.
-1 for a misspelling in Pramahaphil's post.
I'm proud - I'm sitting here thinking that the group has covered all of the angles.
Here's a cute new one: who do you think they paid the $100M to? My guess would be to the Chinese government. Do you think they were engaging in monopoly pricing for this right? Do you think that they may have taken money from FedEx to boost the price for UPS? If so, I wonder if UPS can recover these costs.
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