Post Office: A Good E-Commerce Play 中国邮政分拆速递物流可谓电子商务”妙招

By newsdoug on December 23, 2011

I’ve written lots on China’s e-commerce boom and the huge opportunity it provides, but the less visible courier business is a sideline that is quietly zooming to riches as well on the nation’s growing fondness for buying things online. I haven’t written about this lower-profile part of the e-commerce story before now, mostly because the vast majority of courier firms are small local outfits, often operating with a few bikes, some mopeds and perhaps a van or 2. But now local media are saying that China’s postal service wants to spin off its courier and logistics unit into a separate business, which would then be publicly listed. (Chinese article) Of course this kind of plan must still receive many government approvals and would probably require some major internal restructuring, meaning any such spin-off is still likely a year or more away and an IPO would be even further off. But if and when it happens, such an offering would provide an attractive opportunity for investors looking to cash in on China’s e-commerce craze that has seen nearly all major retailers open online shops and has given rise to major online giants like 360Buy, Dangdang (NYSE: DANG), Alibaba’s Taobao Mall and Wal-Mart (NYSE: WMT) invested Yihaodian. Then of course there’s global giant Amazon (Nasdaq: AMZN), which recently launched a massive new warehouse near Shanghai that will no doubt need thousands of couriers to make sure items get from the facility to their final buyers. Such a postal spin off would also free the new company of many of the burdensome regulations and bureaucracy it now faces, potentially laying the foundation for an eventual Chinese version of a global shipping and logistics company to rival names like UPS (NYSE: UPS) and FedEx. All that said, competition in the courier space is also becoming rampant, similar to the overheated competition among e-commerce companies themselves. Still, this new company, if it takes shape, will have the obvious advantage of huge scale and strong government ties, meaning it could be perfectly placed to cash in on the e-commerce craze for the next 5-10 years.

Bottom line: The China post office’s plan to spin off its courier and logistics service into a separate company for an IPO looks like a great way for investors to cash in on the e-commerce craze.

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