Entry of UPS • 1996: Commenced operations through agent with China’s biggest freight forwarder – Sinotrans and JV with the company Formed alliances with airlines – Hong Kong Dragon Airlines ltd & China Eastern Airlines Corp • 1998: 2mn$ air hub facility at express handling centre at Hong Kong airport • 1999: Post Agreement with Sinotrans ops extended by 22 in 130 cities V/S FedEx’s 144 1999:Entered into Strategic Alliance with 7-eleven, a leading convenience store operating in Hong Kong round the clock
Entry of Fedex 1973 • Entry into China through acquisition (Gelco Express Intl.). • Focussed on Chinese entrepreneurs • Acquired airlines (Flying Tiger Inc & Evergreen International Airlines) 1996 • Receipt of permit from CAAC (Beijing & Shanghai 1998 • Launched Express Dist Centres in Beijing and Hong Kong 1999 • FedEx Internet Ship – prepare shipment documentation for consignment to more than 60 countries &online shipment status
Invested just a fraction of what FedEx Like FedEx, UPS can build around itshad put into Asia. multinational customer base with Chinese operations.creating an image “not American, butmore worldwide.” UPS can pass on cheap cargo to target the more lucrative document and smallSought to build relationships discreetly, package market, since they do not needon Chinese terms. to fill an aircraft. S OLacked its own air service in China, W T Like FedEx, shipping companies alreadymaking them less logistically versatile well established in China pose a threat.than FedEx. While UPS contends it will add its ownUPS does not have many of its own airplanes in China when it becomestrucks and drivers in China to build necessary, by that time FedEx mayfurther brand recognition. already be far ahead in this area
Aggressive advertising campaign Multinational corporations with Chinese operations that already use FedExHighly controlled distribution system elsewhere.with constant information about thestatus of shipments. Customers who particularly value or require constant information regardingFedEx has its own air service in and out shipment status.of China. S O W TLack of personal relationship buildingwithin China Shipping companies already well established in China.In order to fill their aircraft, FedEx isforced to take on many cheaper Very large investment in China basedpackages with very low profit margins. infrastructure including acquisition of Flying Tiger Line Inc. to establish its own air routes in Asia.
Advertising & PromotionHeavily Advertise Less emphasis on AdvertisementPublicizing its services offering Preferred to project itself asin China local Chinese companyHired popular media company Sponsor Chinese New Yearto create brand awareness celebration and Olympic games
Action Plan of UPS• Year 1 – Continue focus on building relationships with large China-based businesses, as FedEx is more focused on its existing multinational base. Add more “brown” UPS trucks in Chinese cities to boost brand awareness.• Year 2 - Add more trucks in smaller Chinese cities as necessary. Evaluate air service needs.• Year 3 – By this time UPS should consider adding its own air service to China in order to keep up with FedEx.
Action Plan of FEDEX• Year 1 – Continue to call on multinational customers in China.• Year 2 – Expand advertising focus to large China-based businesses in order grab some of this business from UPS and other local companies. Send representative to China to talk to these companies.• Year 3 – Evaluate possible need for more air service to the Chinese region.• Year 4- Sponsor the 2004 Olympic games.
UPS post 2003• UPS took an ownership position in Sinotrans and also became the first foreign carrier to form a partnership with a domestic Chinese air carrier, Yangtze River Express, cutting a day off delivery times.” UPS Press Release June 18, 2004• In 2004, the United States signed a new aviation agreement which allowed a five fold increase in air cargo capacity between the two countries over the next six years.
FedEx post 2003• On September 2, 2003, FedEx launched its first direct flight from Shenzhen to its hub in Anchorage, Alaska to keep up with increasing demand in South China region.• "For China to sustain the kind of growth we have seen in the last five years, it is essential that it establishes stronger links to the economies of Europe and the United States." FedEx Express Asia Pacific Division President David L. Cunningham Jr., 2003• FedEx plans to move hub to China after 2007.