Following the lead of the U.S. and Japan, China has evolved as the third largest package delivery market in the world. In the year 2011 more than 7,500 package delivery companies were operating in China. Every day, approximately 130 million packages were delivered in the last year.

Multinational delivery companies like UPS, DHL and FedEx have already started developing and implementing their strategies to tap the Chinese package delivery market. Along with these international players, domestic Chinese giants are also in the rat race to occupy the maximum market share and are also giving a tough competition to the former.

Such is the dominance of local players like YTO Express Co Ltd, SF Express and Shentong Express that they are being viewed as a potential threat by the existing players in China i.e. China Postal Express and Logistics Limited. Once China Postal Express and Logistics Ltd occupied the majority share in the local postal market. However in less than a decade the Company has cascaded down to barely 30% of the total market occupancy.

The international players like FedEx and UPS have already begun acquiring permits from the local authorities like the State Post Bureau to begin their operations in the domestic delivery system. Among them FedEx intends to begin its intercity operations in eight major Chinese cities. Also the Company’s subsidiary, FedEx Express is expecting further business in delivery via air routes.

The European Union had earlier mentioned that China is one of the largest trading partners with the EU. First quarter of 2012 experienced a foreign trade worth 105 billion Euros with China. Another major factor driving the Chinese package delivery market is the apparent boom in the e-commerce market. A sudden up rise in online shopping and resultant need of package delivery service has indeed given a boost to the delivery business worldwide. Also outsourced manufacturing units in Chinese shores need delivery systems to other parts of the world.

Despite of prevalence of short term profit bookers in the market, large international private companies like DHL of Germany are eyeing for long term profits. DHL recently set up its largest hub at Shanghai Airport which can process almost 20,000 packages or documents every hour. The Company also recently announced that it shall invest USD 132 million and add further eight flights in its fleet to enhance transport from China to Europe, U.S. and North Asia. The project shall be accomplished by 2014. In 2011, DHL registered sales worth 4.2 billion Euros which is almost 10% of its global income and half of its Asia Pacific income. 

UPS has been driving the e-commerce business in China. It had created tie-ups with several large and small e-commerce businesses in China and Asia. UPS already has established two hubs in China.

China’s economy is developing by leaps and bounds as well as the purchasing power of the locals is also increasing; thus Chinese economy is being driven by consumption these days. Thus with further anticipation of more online orders, cooperative government policies and stabilizing world economy; China indeed holds a strong potential in the overall Package delivery market.