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Kerry Logistics sets its sights on riding China’s e-commerce boom

PUBLISHED : Wednesday, 23 March, 2016, 6:36pm
UPDATED : Wednesday, 23 March, 2016, 6:40pm

Kerry Logistics Network has set its sights on riding China’s e-commerce boom to boost growth this year, as the company reported a 9 per cent increase in net profit to HK$1.8 billion in 2015.

The logistics and freight forwarding company, after its successful launch of their first cross-border e-commerce fulfilment centre in Ningbo, in the eastern Zhejiang province last April, said it would open up similar models in Shanghai and Chongqing this year.

“E-commerce is still growing in China and the Asean [region]...It’s an area with good potential to us, and also creates a lot of cross border traffic to us,” said William Ma Wing-kai, the group’s managing director.

At the Ningbo warehouse centre, Kerry Logistics is one of three companies that handled e-commerce giant Alibaba’s operations, which include the process of receiving, packaging and shipping orders across the country and worldwide.

We’ve changed our focus from an export-oriented to an import-oriented business
 Kerry Logistics’ group managing director, William Ma Wing-kai

Ma added that the company has chartered planes delivering goods ordered from China’s eBay equivalent, Taobao, from China to Malaysia, Vietnam and Thailand on a daily basis. E-commerce orders make up for over half of the courier deliveries in Vietnam and Thailand alone.

Revenue from China’s e-commerce businesses accounts for 11 per cent of its total revenue, and with the addition of the Shanghai and Chongqing operations, would help boost revenue to account for 15 per cent of the total in the coming three years.

On a global level, Ma predicted the e-commerce business revenue, which accounts for 12 per cent of its total, could surge to 20 per cent by 2019.

Even as the company posted a net profit increase of 9 per cent to HK$1.8 billion, and maintained an overall turnover of HK$21 billion, China’s turnover dropped 9 per cent to HK$8 billion.

China remains the company’s largest market, making up for 38 per cent of its turnover.

Ma noted China’s cooling economy as the main reason for the slowdown, but said that it managed to maintain a net profit increase due to a change in business restructuring strategy following China’s weak export figures.

“We’ve changed our focus from an export-oriented to an import-oriented business. We used to import raw materials, machinery, but now we focus on importing consumer products,” said Ma.

“As China continues to change in the next three to five years, we will keep on adjusting our business restructuring strategy.”

Kerry Logistics said it holds a positive outlook for 2016 despite expected headwinds with China’s continuous lacklustre growth.

Last year, the company signed a strategic cooperation agreement with state-owned China Railway

The company said it would continue to seek out mergers and acquisitions, as well as increase investments in India, Africa and the Middle East to bolster growth.