China's ZTO to expand delivery service overseas

ZTO

ZTO Express will seek strategic partners globally to serve the rapidly growing cross-border e-commerce segment, and the United States will be its entry point, said a senior company executive.

"We chose the US because the market there is huge, and there is a lot of cross-border trade and overseas procurement between China and the US," said Guo Jianmin, chief financial officer of the US-listed company.

He said global expansion has become necessary because the gross merchandise volume of Chinese e-commerce is growing at a slower pace.

The overall delivery service business will continue to develop quickly though, he said.

Alibaba Group's AliResearch estimates that China's cross-border e-commerce transaction volume will total 12 trillion yuan (S$2.4 trillion) in 2020.

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"New opportunities, such as cross-border e-commerce and online micro businesses, are emerging from the rapid development of the Chinese courier market," he said.

Guo also said ZTO will pay attention to customs clearance services, "the first kilometer" and "the last kilometer", and rely on global strategic partners to achieve transoceanic transport.

The Chinese courier market will ship 70 billion parcels in 2020, benefiting from cross-border e-commerce and the advent of online micro businesses.

Data from the State Post Bureau showed that courier deliveries in China totaled 31.3 billion in 2016. In 2011, the figure was only 3.7 billion.

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Hong Kong-based Essence International, a globally focused securities company, said in a report that cross-border trade and online micro businesses would drive the delivery service market.

Essence expressed confidence that the market has a bright future in the near to medium term.

ZTO Express' 2016 financial results showed total revenue of 9.8 billion yuan, an increase of 60.8 per cent year-on-year. The company's net profit hit 2.2 billion yuan, an increase of 76.8 per cent year-on-year.

Guo said ZTO Express' market share in China was about 14 per cent in 2016 and that the company aims to increase this to 20 per cent in 2020.