Federal Express (FedEx) completed an about-face yesterday when the Memphis-based carrier agreed to buy out its joint-venture partner in China for US$400 million to improve direct access to the country's hinterland cities. The company, No2 among foreign express operators in China behind DHL, agreed with Tianjin Datian W. Group to acquire the Chinese firm's 50 per cent stake in FedEx-DTW International Priority Express, a 50-50 joint venture formed in 1999, ostensibly for 10 years. The announcement came only six months after FedEx pledged to maintain its relationship with DTW. Asked in July about the decision to invest US$150 million in a new regional hub at Guangzhou Baiyun International Airport, FedEx Express president (Asia-Pacific) David Cunningham told the South China Morning Post it was unlikely to alter its partnership with DTW, even when World Trade Organisation rules allowed foreign firms to wholly own their businesses in China. 'Our relationship with [DTW] is great and we're very happy with it,' Mr Cunningham said in July. 'No change.' Yesterday, however, he said shifting market dynamics required a change of tack. 'The joint venture has been successful, but the business opportunity is sizeable and the market is changing rapidly,' he said. 'This acquisition gives [FedEx] complete control over its operations in China and will greatly improve flexibility and speed to market.' The deal compares with the US$100 million rival United Parcel Service (UPS) paid to end its international trade partnership with mainland firm Sinotrans in 2004. FedEx will, however, receive DTW's domestic express network as part of the deal, giving it wholly-owned international and domestic express businesses in China for the first time. 'As the Chinese economy grows and transitions from an export-oriented economy and becomes a more domestic-growth-oriented economy, you're going to see the domestic market expand very rapidly and this acquisition allows us a greater opportunity to tap that growth,' Mr Cunningham said. FedEx is thought to be on the verge of signing another agreement to boost its domestic coverage in China - with Tanjin-based Okay Airways, the mainland's first private carrier. According to US-based aviation sources, executives from FedEx's Memphis headquarters have been urgently trying to find a firm to convert five B737 passenger aircraft into freighters by September for a new mainland venture with Okay. FedEx did not respond to queries on that development yesterday. Okay recently abandoned plans to create a low-cost carrier in favour of focusing on freight. The opening of the mainland's regulatory environment was a key factor in the timing of yesterday's deal with DTW, Mr Cunningham said. Rules governing China's accession to the WTO enabled foreign firms to wholly own freight-forwarding and express businesses in the mainland as of last month.