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.'
