Transportation & Logistics: SF Express: A Case Study of an Expanding Logistics Company in China

Since its establishment in 1993, Shenzhen-based SF Express has become one of China’s leading courier services companies, with some 340,000 employees, 16,000 vehicles, 18 aircraft and 12,000 service centers across the local and overseas markets. In a recent visit, AmCham delegates are reminded of the exponential growth of commerce in China and how Chinese companies are moving quickly to capture business opportunities domestically and internationally.

By Blessing Waung


In the Chinese language, the phrase “shunfeng” is meant as bon voyage, used for sending off travelers safely and wishing them a smooth journey, with a tail wind behind them. SF Express, a Shenzhen-based delivery services company, has capitalized upon that saying, using it as their guiding mantra in establishing one of the leading courier services within the world’s largest market.

Since the company’s establishment in 1993, SF Express has grown astronomically, now generating more than US$4 billion in revenue per year and employing nearly 340,000 people. In January, an AmCham delegation comprising business executives coming from various service industries paid a visit and sat down for a candid Q&A session with SF Express leaders to talk about the company’s success story.

“As for the express delivery industry here in China, I think the core competitiveness of our company is timeliness, safety and our quality services,” says Wang Rong, Deputy General Manager of SF Express’ operations in Shenzhen.

Market Penetration

“Compared with other international express courier companies operating in the local market of Mainland China, and even across Greater China, SF Express’ advantage and strength lies in our network density,” Wang notes. “Currently, we have over 5,000 hubs located in the domestic market.”

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Altogether, the company has nearly 10,000 service centers providing support to its customers, with tens of thousands of sleek, black trucks shuttling forth wares for B2B and B2C customers. SF Express famously owns its own aircraft fleet as well.

“The second advantage of Shunfeng is our transportation capacity,” Wang says. “As you know we have a very strong capacity in terms of our main line and the use of distribution. We have our own airline, meaning we take a high proportion of the air transportation in China.”

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“Moreover, we have a very dense network for our truck centers, so we have more efficient distribution at different locations inside the city with our fleet of trucks,” he adds. “This is another advantage compared with foreign companies like FedEx or DHL.”

In Shenzhen alone, SF Express has a market share of over 10 percent of the total air cargo transportation sector, Wang further points out. Currently, the company owns a dozen of its own cargo aircraft under the subsidiary SF Airlines, and it looks to expand rapidly by buying more aircraft.

“We mainly deliver B2C goods,” he says. “To expand our fleet, we will definitely buy more planes and we will also expand cooperation with other air transportation resources.”

“The third part of our secret is our staff,” Wang says. “And we employ a lot of local staff for our operation. While other delivery companies also employ local staff in Mainland China, interactions and relations between our staff and our customers are much closer as far as I can tell.”

Going Global

The company is not just looking at the domestic market but is also aiming high to become a well-known brand across the globe, according to Simon Yang, Deputy Strategic Management Director in the corporate development office for SF Express. In order to do so, they will further develop on their human capital and stay true to their core values – which have been a beacon guiding the company through years of tremendous expansion and success.

“Currently, we are looking for several types of professionals,” Yang reveals. “The first are professionals knowledgeable in operations, including planners and engineers for our entire network and operation systems – those with a background of industrial or systems engineering.”

E-commerce is a large part of the logistics industry and is poised to remain a critical pillar across China, Yang notes. “In the past, e-commerce mainly focused on B2B business. With the emergence of Taobao and other platforms, there came a structural change in the local market for the entire logistics industry. The transformation from B2B to B2C caught our attention.”

Having captured blue-chip clients such as Alibaba for its Taobao e-commerce platform, Shunfeng has achieved tremendous success within the domestic market of China, and is now looking to expand into the international market going forward.

Already, with booming operations in Hong Kong, Macau, and most major markets in Southeast Asia, Yang believes it is only a matter of time before the company can call itself a truly global enterprise.

“In terms of the international markets, we are now running businesses in Southeast Asia and in East Asia including Japan and South Korea,” he says. “We have also launched our services in the US and Australia. As for expansion to the European market, we are still in the planning stages.”

22“For the strategy in our international business, I think the most important thing we need to keep in mind is the differences across markets,” Yang says. “We can compete with other international couriers in the local market partly because we are a domestic brand and people are more familiar or more willing to use our service.”

“The business environment could be very different in a foreign country,” he adds. “According to our plan, we still want to set up, start small, and then grow our business in other areas around the world.”

Diversification

SF Express is also looking beyond its delivery business to diversify into other sectors as well, catering to the growing demand of consumers in Mainland China and reaching a broader spectrum of population.

Warehousing is a new section of business started several years ago, Yang notes. “Only at Shunfeng do we design our warehouses based on the requirements of our customers. They include Huawei and Foxconn – electronics manufacturers who need to store their products under specific conditions. Others include those in the fresh food business for whom we also design warehouses according to their requirements.”

In the meantime, Shunfeng is developing multiple e-commerce platforms of its own, Yang points out. “As you might notice we have introduced one for fresh goods. In China, we have been listed the number one e-commerce platform for such goods, and now we are also developing another one which is an overseas purchasing platform for our customers to find goods from oversea countries.”

“So we hope there could be more foreign suppliers from the garment industry or other kinds of industries to sell their goods on our e-commerce platform,” he says, highlighting an opportunity for collaboration with overseas suppliers and sources.

During the trip to SF Express’ headquarters in Shenzhen, delegates were on site to see firsthand the chain of operational elements within a courier company, including a visit to one of its call centers based in Bantian Hi-tech Industrial Park, where hundreds of employees provide support to customers on a daily basis and are recognized for their outstanding service with branded teddy bears.

The trip culminated in a site inspection of the SF Express sorting center in Shenzhen’s Baoan District, where a large fleet of the instantly recognizable trucks painted in black were loading and unloading documents, mail items, packages and wrapped products of countless types. It is a stark reminder of the exponential growth of commerce in China and how Chinese companies are moving quickly to capture a business and becoming a force to be reckoned with globally.

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