Courier YTO Express on fast route to riches
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E-mail China Daily, November 30, 2015
Yu Weijiao has turned Shanghai YTO Express (Logistics) Co Ltd into a powerhouse group generating billions of yuan in revenue. From a small courier company in 2000, it is now the largest express delivery business by market share in China after cashing in on the booming e-commerce industry.
In Beijing alone, YTO has 84 centers and 20,000 country-wide as the group takes advantage of the government's decision to realign the economy from cheap, mass-produced exports toward more sustainable consumer-fuelled domestic growth.
Last year, companies such as YTO delivered 14 billion packages as China raced ahead of the United States in the sector for the first time, Ma Junsheng, chief of the State Post Bureau, revealed.
Revenue topped 204 billion yuan ($37.79 billion), up 42 percent compared to the same period in 2013, an "amazing achievement" during a time of slowing economic activity.
"We have become the No 1 express delivery service in the country and provide more opportunities for other businesses involved in the sector," Yu, chairman at YTO, said.
"In 2014, up to 19 billion yuan was indirectly generated by express delivery services, and that figure is expected to reach 60 billion yuan by 2020."
Yu, 49, who was born in Tonglu county, Zhejiang province, has been the driving force in turning a small firm into an express delivery empire in just 15 years.
The data charting YTO's growth illustrates the group's rapid rise.
During Singles Day this year, the country's biggest online sales festival on Nov 11, the company received a record-breaking 53.28 million orders across China.
Up to 30.59 million packages were handled, or roughly 21 percent of the industry's total.
Expansion has been the key to YTO's success. Last month, the company rolled out new headquarters in Shanghai, costing 600 million yuan.
But then the glitzy headquarters is a far cry from YTO's humble beginnings in 2000 when it was launched with an investment of just 50,000 yuan and employed only 17 staff.
Fifteen years later, the group now employs 220,000 staff and operates a network that covers about 93 percent of the counties across the country. In 2014, YTO delivered 2.1 billion packages, generating revenue of 24.6 billion yuan. The maximum number of parcels handled in a single day last year hit 25 million.
"We still see huge growth potential for the fast delivery industry," Yu said. "There is a great deal of demand out there for express services from food to toys and from clothes to electronic goods.
"There are so many urban areas that are waiting to be developed. Then, of course, there is the much broader rural market."
Still, the sector is highly competitive and only the strongest and the fittest groups will survive. Many of the smaller players are likely to go under or link up with one of the industry's leading companies.
A new age is dawning for the business, Yu pointed out, as it matures and expands.
"Competition can be cruel and only the best will survive," he said. "The rising cost in human resources requires us to set up a solid management system and an experienced team.
"We are also looking for opportunities in setting up cross-border (country-to-country) e-commerce industrial parks by cooperating with local governments."
Already the State Council has approved a proposal to promote the development of the express delivery sector, which is projected to be worth 800 billion yuan by 2020. Key to that is to increase international competitiveness and expand air delivery capacity.
"The big question is how companies can benefit from the government's support policies and grasp the opportunities in urban areas," Yu said.
"There are also opportunities to develop business in free trade zones as well as (other overseas) initiatives."
YTO plans to expand its air cargo operations. Back in September, the company's first aircraft completed its maiden flight, making it the third Chinese delivery firm behind EMS and SF Express (Group) Co to own a jet.
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