Major logistics companies seek listings to lift competitiveness

By Xie Jun Source:Global Times Published: 2016/10/12 22:48:39

Move will put further pressure on small delivery firms


An SF Express courier delivers packages in Qingdao, East China's Shandong Province. Photo: IC

China's major express delivery companies are moving to seek listings, both on domestic and overseas stock markets.

This is a strategy to increase their competitiveness as well as to combat competition from major e-commerce companies' logistics operations, experts noted on Wednesday.

But they also argued that such moves might make things harder for the smaller logistics companies, which have relatively low market shares.

The China Securities Regulatory Commission (CSRC) conditionally approved the backdoor listing plan of express delivery giant SF Express via a shell corporation, according to a statement the CSRC issued on Tuesday.

South China's Guangdong Province-based SF Express has joined several other express delivery giants in China in seeking a backdoor listing. On September 14, Shanghai-based YT Express gained approval from the CSRC to go public via a shell company. Another Shanghai-based express delivery company, STO Express, pursued a similar backdoor listing strategy in December 2015.

Xu Yong, chief advisor with the logistics portal cecss.com, told the Global Times on Wednesday that it's not a good time to go public, but most of the domestic express giants are still choosing to follow the herd, as none of them wants to lag behind in the market.

"The fact that most of the delivery companies chose backdoor listings shows their eagerness, as these listings are a lot faster than normal IPOs," Xu said.

The Shanghai-based ZTO Express, however, has blazed a new trail by filing for an IPO on the NASDAQ, according to a filing on the exchange's website on September 30.

"ZTO might want to arrange its business more in the global context, and that's why they chose to get listed abroad," Xu commented.

He also said that on the whole, going public will help the express delivery companies become more standardized, as most of them are still family businesses.

"Getting listed will largely increase the companies' market competitiveness," Xu noted.

An expert in the delivery industry who declined to be identified told the Global Times on Wednesday that delivery companies' listing efforts are also meant to combat the competition from Alibaba Group Holding-related logistics company Cainiao as well as the logistics services provided by e-commerce giant JD.com Inc.

"The delivery industry is one that needs to burn cash on such activities as building warehouses and buying vehicles. Going public would lend great financial support to those delivery companies," the expert said.

However, he also mentioned that the delivery giants' listing moves will further put pressure on the smaller players in the market.

"In the longer term, the express delivery industry will become highly concentrated with only several companies splitting the market. But in the short term, smaller players still have chances as the e-commerce trend is still on the rise in China, causing delivery demand to surge," he remarked.

According to a report by the 21st Century Business Herald newspaper on Wednesday, the majority of the delivery market is dominated by a few big players that have revealed their listing plans.

"The small companies are likely to be weeded out, and they should take measures to shift their business to a more professional and personalized type," Xu noted.

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