ZTO Express and the Size of the Chinese Market

ZTO Express

Tech in Asia on ZTO Express, the Chinese delivery service that gets most of its business from Alibaba:

“The growth in overall parcel volume in China has mainly been driven by the ecommerce boom over the past few years,” says Guo Jianmin, the chief financial officer of ZTO Express, a huge logistics company with sorting warehouses all over China and a fleet of well over 3,000 trucks. Last year, it handled 2.9 billion packages.

The firm has seen its number of carried parcels go up an average 80 percent each year from 2011 to 2015 as China’s consumers adopted online shopping in their everyday lives.

“We can’t precisely say how much of our growth has been due to ecommerce, but currently 75 percent of our parcel volume is ecommerce-related, so it’s obviously a huge part of our business,” explains Jianmin to Tech in Asia.

ZTO Express, of course, had the largest IPO of this year. TechCrunch:

China’s ZTO Express, the company that provides shipping and delivery services to Alibaba among others, scored both a hit and a miss in its first day of trading as a public company. First, the company raised $1.4 billion in its IPO — making it the largest IPO of the year. Then, the company made its public debut on the NYSE: and that’s where the problems started.

The size of the Chinese market means a local ecosystem can grow companies which can rival any of their international peers on size.

This doesn’t mean those companies will rule the world. They have a huge home market to take care of. A market huge enough for most companies, occupying their focus.

Alibaba is investing in startups worldwide and is working to bring brands from other markets faster and easier to China. In due time, we can expect to see similar things from ZTO Express or, for example, Didi Chuxing, China’s largest ride-sharing company, and other rising Chinese companies.

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