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UPS moves to China

UPS moves to China. By Bryan Hartman. Why China?. 2004 GDP Growth of 9.5% 8.2% in India, 4.6% in S. Korea 94 Million Internet Users in China All potential customers US export to China increasing 1999 = 45,000 tons 2001 = 73,700 tons Increase of 28,700 tons or 57 Million Pounds.

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UPS moves to China

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  1. UPS moves to China By Bryan Hartman

  2. Why China? • 2004 GDP Growth of 9.5% • 8.2% in India, 4.6% in S. Korea • 94 Million Internet Users in China • All potential customers • US export to China increasing • 1999 = 45,000 tons • 2001 = 73,700 tons • Increase of 28,700 tons or 57 Million Pounds

  3. Chinese Growth • SME = Small or Medium Enterprise • Survey of 1,200 Asian SMEs • Chinese SMEs • 62% will increase employment • 71% expect higher growth in 2005 • 86% see transport/logistics as important • 74% see consumer goods as important • 62% think Supply Chain Efficiency is lacking

  4. Mainland China Shipping • Partnership with Yangtze River Express • Goal – “reach every address in China” • Government is building 26,000 miles of new highway. Every city of 200,000+ will be connected • SMEs not entering China • 65% do not trust Chinese government

  5. UPS Offers • What Chinese employees seek… • Education • Health Insurance • Overtime • Less meetings • Brand Name SMEs can trust

  6. Air and Freight Shipping • Typical Air Shipment • High value to weight ratio • Short Lifespan items • Legal, Medical documents • Computer Disks • Spare Production Parts • Luxury Goods • Shipment spends ½ of its time in warehouses

  7. Opportunity • Opportunity in China’s Emerging Economy • Chinese Discretionary Spending Increases (luxury items) • Market Reform (legal docs) • Increased technology manufacturing • Spare Parts and computer disks

  8. UPS Solution

  9. Population and Airports

  10. Mainland China

  11. Planes, Flights, and Hubs: • Currently 48 weekly flights • 24 Shanghai • 12 Beijing • 12 Hong Kong • The Future is now (expansion in 2005) • International Hub in China (2007) • 23 regular hubs • 1,400 UPS Trucks • 3,500 Chinese Employees

  12. Competition • Fed Ex, DHL, and China Post Office • Fed Ex moving Asia Hub to China • Fed Ex has been shipping in China for longer • In 2001 China Post Airlines had only intra-China express delivery service. (head start)

  13. Political Risk • Chinese Government • Legislation to make China Post Office regulatory body of express shipping. • Forced by WTO to allow private express shipping • 81% of SMEs view gov’t instability as reason to stay away from China.

  14. Obstacles and Answers • Demand for UPS Services • Market Maturing increases demand • Chinese Infrastructure • Gov’t highways • Fierce Competition • Establish more Hubs and faster transport • Government Issues • Pressure from outside

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