Its vans and staff in gray uniforms with red and black stripes are a familiar sight around Hong Kong.
SF Express, the largest private courier firm in China, with 310,000 employees, has just announced plans for an initial public offering in the mainland stock market.
The decision has surprised the market.
Since Wang Wei founded the company in Shunde, Guangdong province — it is still headquartered there – in 1993, he has kept a low profile, shunning the media and declining many offers of outside investment so as to retain personal control of his creation.
Starting in the Pearl River Delta, the company expanded into Hong Kong, then the rest of southern China and now nationwide.
By September, it had 12,260 service centers around the world, 15,000 vehicles and 20 aircraft of its own, while leasing more.
It has a market share of 30 per cent of China’s private courier market.
It also has subsidiaries in e-commerce and finance.
With the boom in e-commerce, the market for courier services has boomed.
Last year, parcel consignment volume in China reached 20 billion, the highest in the world.
The State Council forecasts that this will reach 50 billion packages in 2020, when the revenue of China’s logistics industry will reach 800 billion yuan (US$123 billion).
The government considers e-commerce a priority sector because of its rapid growth and the enormous employment it creates.
Like the other delivery companies, SF Express relies on tens of thousands of couriers who deliver parcels to the customer in person by motorcycle, three-wheeler, van or truck.
They are paid by the number of items they deliver.
It was only in August 2013 that SF Express accepted its first injection of outside capital, selling 25 per cent of itself to three investors – China Merchants Group, CITIC Capital Holdings Ltd. and Yuanhe Holdings.
For the IPO, it has taken as advisers CITIC Securities, China Merchants Securities and Huatai United Securities.
What is behind its desire to list?
Competition in the courier market is intense, and SF’s leading position is far from guaranteed.
The companies compete fiercely against each other on the time needed to accept and deliver a parcel.
SF is also facing rising labor costs in an industry that needs thousands of workers.
Its main competitors include US giants DHL, FedEx and UPS; they have hundreds of their own aircraft.
There is also the Express Mail Service (EMS), owned by China Post, which has 43 aircraft.
Private rivals include Shentong Express, YTO Express, Yunda Express, ZTO Express and TTK Express.
In December Shentong became the first express delivery company to list on a stock exchange.
YTO Express and ZTO Express also plan to list.
In May last year, Alibaba Group Holding Ltd. and Yunfeng Capital, a fund created by Alibaba chairman Jack Ma Yun, accounced they had taken a stake in YTO Express; analysts believe it is about 20 per cent.
Like SF Express and China Post, it has a license to operate cargo airlines.
Cainiao Logistics, set up in May 2013, is the logistics affiliate of Alibaba Group.
It said that, during the November 11 sales event last year, its partners used more than 1.7 million personnel, 400,000 vehicles, 5,000 warehouses and 200 planes to deliver parcels to its customers.
Ma has said his target is to deliver the majority of items nationwide within eight hours.
SF owns a 1 per cent stake in Cainiao.
While Cainiao is not a direct competitor of SF, its arrival in the market means SF will not be able to acquire its smaller rivals.
Another major rival is Beijing-based JD.com, the second largest e-commerce company in China.
Unlike Alibaba’s Taobao and Tmall, it operates its own network of couriers and warehouses.
These companies compete fiercely for market share and the limited pool of skilled managers available in this sector.
All this has left SF Express with no choice but to seek a listing to raise the capital needed to buy more aircraft and make the other capital investments needed to stay ahead of the competition.
It will mean a drastic change of lifestyle for Wang, who was born in Shanghai in 1971 to a translator of Russian in the People’s Liberation Army airforce.
Wang, who travels with several bodyguards, will become the chief executive of a listed company and be forced to submit to widespread scrutiny by investors, the media and the public.
It is the price to pay for his success.
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