Business / Policy Watch

Premier's visits highlight role of private capital

By ZHAO YINAN in Xi'an, MENG JING and LI FANGFANG in Beijing (China Daily) Updated: 2014-01-28 02:16

Li continues mission to Shaanxi province with trips to car and courier companies

In the run-up to the Year of the Horse, Premier Li Keqiang led inspection tours on Monday to two institutions he hopes will help China develop at a gallop.

In Xi'an, capital of Shaanxi province, he visited the distribution center at SF Express — a leading domestic courier company — and a production complex owned by BYD, a domestic manufacturer of regular and electric vehicles.

Both companies were founded by private investors, and Li's visits to them are being viewed as highlighting Beijing's support for the role of private capital in China's next stage of reform and development.

Earlier, Li visited Shangluo and Ankang in the same province.

The premier encouraged SF Express workers to work hard to be globally competitive.

"You should not only make yourselves the best in the domestic market, but you should also dare to compete on the international market. I hope your business can expand good services to your customers both within and outside China," he said.

Describing express delivery and e-commerce as "twin brothers", Li praised the role of logistics, saying it was a "dark horse" in emerging industries.

SF Express, headquartered in Shenzhen, Guangdong province, has provided domestic and international express deliveries for business customers and the public since 1993.

The Hong Kong-listed company covers most of China, including Hong Kong, Macao and Taiwan, as well as international destinations including South Korea, Singapore, Japan and the United States.

During his tour, Li pledged to provide a fair platform for private companies like SF Express to compete with State-owned enterprises.

Xu Yi, head of the company's public relations department, said SF Express owns 14 aircraft and is planning to add 11 more by 2015.

At a worker's invitation, the premier helped to push a button to complete a delivery order through an electronic handset terminal and then pasted the shipping bill to the parcel.

The distribution center in Shaanxi province handles air packages from outside the province and sends parcels to other destinations. It handles at least 70,000 packages a day, with this workload increasing to 100,000 packages as Spring Festival approaches.

The number of packages delivered by major courier companies grew by 61.6 percent year-on-year to 9.19 billion in 2013, according to the National Bureau of Statistics.

The strong growth of the express delivery market is in line with the growth of the service sector, which accounted for 46.1 percent of the country's gross domestic product in 2013, outperforming the industrial sector for the first time.

However, as a major part of the service sector, express deliveries, which accounted for about 0.25 percent of China's total GDP in 2013, still face many challenges, said Xu Yong, an analyst with China Express and Logistics Consulting.

Gu Qian, a public relations officer at SF Express, said she hopes the government can further reduce unnecessary supervision of the logistics industry, which used to be monopolized by the State-owned EMS Express Service.

Gu said EMS Express still has a substantial influence on the industry but said she would welcome private-sector companies playing a bigger role.

Wang Xin, a partner at Roland Berger Strategy Consultants, said in an earlier interview that unlike companies such as FedEx and UPS, which hold a combined market share of 80 percent in the United States, most of China's leading express delivery companies are expanding via smaller franchises.

"The core problem is how to manage those franchises and provide services that are equally good," she said.

During his visit to the BYD plant on Monday, Premier Li Keqiang stepped onto an electric bus and said China is determined to promote clean-energy vehicles to curb pollution and reduce noise in urban areas.

The 12-meter-long emission-free BYD buses are in service in many European cities, including London, Paris and Amsterdam. They take four to five hours to recharge and can be driven for about 300 km.

Wang Liusheng, an auto analyst at China Merchants Securities, said alternative-energy vehicles are inevitable for China to ease its traffic and environmental challenges.

Zhang Zhiyong, an auto analyst in Beijing, said slow sales of new-energy vehicles in China are the result of insufficient recharging facilities. "But the central government has made policies to subsidize the building of this infrastructure and this will be a great help in promoting their use."

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