Reporter | White sails
Edit | Shen Xiaoge
"I'm talking to my family to see if I can bring them all here." The person in charge of the Saudi regional branch of Jitu Express told Interface News. In April last year, Jitu launched the Middle East expansion plan, as the first batch of employees to enter the Middle East market, he came to Saudi Arabia alone, stayed for nearly a year, and may stay longer in the future.
The Middle East is the third stop of Jitu's expansion of the global logistics territory, which has been secretive before, but after the official announcement in January this year, the global market layout action accelerated, followed by the announcement of Mexico entering the Latin American market. So far, Jitu has a layout in ten countries in Southeast Asia, the Middle East, Latin America and other places.
Around the digital economy of emerging markets, Jitu has found a good development opportunity for global logistics. However, since its establishment in 2015, in addition to opening up its territory, the young Jitu must also set the goal of achieving in these markets and solve the different problems faced by each market, which is the test that Jitu has to face.
Strike globally
Jitu, which was once prosperous in Southeast Asia, officially entered the Chinese market in March 2020, during which Pinduoduo grew rapidly, jitu "walked on the ground", quickly achieved scale with price advantages, and after more than a year, won the express delivery business of Best in China.
Just as everyone is focusing on how Jitu integrates The Hundred Worlds, the pace of Jitu's expansion into overseas markets has accelerated rapidly. Up to now, Jitu has established a number of self-operated outlets in the Middle East, mainly distributed in Saudi Arabia and the United Arab Emirates. Interface News learned that this year, the number of jitu's outlets in the Middle East market will increase by 5 times, and the number of employees will also expand by 4 times.
Jitu has also signed cooperation agreements with partners such as the Saudi government and eWTP Arabia Capital, a venture capital institution in the Middle East and North Africa, and plans to jointly build the largest intelligent logistics industrial park in the Middle East and North Africa region in Saudi Arabia.
According to the official information of Jitu, at present, the Latin American market has also established 12 transshipment centers and 26 distribution points in Mexico, and the distribution network basically covers the core area of all 32 states in Mexico, and the Mexican version of the Jitu Express APP is also about to be launched.
At this time, it was only 7 years since the establishment of Jitu. It is not difficult to find that Jitu's expansion of overseas markets mainly follows the logic of the development of the digital economy in emerging markets, and on this development track, the e-commerce market is rising, and the logistics demand is also coming.
According to the report of Zhongtai Securities Research Institute, the e-commerce market size and penetration rate in Southeast Asia, the Middle East Africa and Latin America are low, but the growth rate is at the forefront. Among them, the growth rate of the e-commerce market in the six Southeast Asian countries has reached 63% in 2020, ranking first, followed by Latin America, the Middle East and Africa also reached 19.8%. The Chinese market not only has a steady growth rate, but also a market size that is difficult to surpass in other regions.
A financing rumor in September last year also pointed out the future development route of Jitu. At that time, the news showed that Jitu raised $250 million and was ready to move to the overseas market to benchmark UPS. The target of overseas markets is mainly Latin America and the Middle East, and the key countries include Egypt, Brazil and Mexico, three populous countries, as well as the United Arab Emirates and Saudi Arabia, two countries with high per capita incomes, with a total population of nearly 500 million people.
The "gold absorption" ability of Jitu has built the foundation for Jitu to continuously expand the market. Since the beginning of 2021, rumors of Jitu financing have continued to circulate, and well-known investment institutions such as Sequoia China and Hillhouse Capital have been introduced.
Replication is not easy to succeed
Jitu hopes to bring the experience of Southeast Asia and the Chinese market to the world. The industry view is that the situation in the Southeast Asian market is very different, but after nibbling on this market, the experience of Southeast Asia has formed a "Petri dish" that can help Jitu to exert its strength in emerging markets around the world.
However, the differentiation of the new market also makes Jitu have to give up some established advantages and re-explore.
Looking back at the expansion of Jitu in Southeast Asia and China, the OPPO system is an important factor to help Jitu succeed. In Southeast Asia, with the help of OPPO's network foundation, Jitu has worked closely with Southeast Asian e-commerce giant Shopee and quickly ranked among the first echelon of Southeast Asian express delivery companies. After arriving in China, Jitu continued to rely on OPPO's grid system and joined hands with Pinduoduo to successfully pry open the e-commerce express delivery market, which was already very competitive.
In addition to the OPPO system, in the Chinese market, Jitu has rapidly laid out in the mode of agent joining, fission in a very short period of time, and torn a corner in strong competition.
However, in the Middle East, with reference to local relevant employee protection and taxation and other policies, the above-mentioned Saudi regional leaders believe that like other express delivery companies in the Middle East, self-operated layout outlets are the most stable development methods of Jitu at present, and the franchise model is not yet mature.
In addition, the advantages of fighting the price war in the Chinese market are also difficult to play a role in the Middle East market.
The average unit price of e-commerce in the Middle East is as high as $150. This also means that users have higher requirements for product quality and service, and logistics, as an important part of the service link, also needs high service quality to match high customer unit prices, which is quite different from China's e-commerce express market. Terminal delivery services, parcel damage rates, etc., are important indicators of service quality.
Therefore, in the Middle East, the adoption of self-operated outlets and vertical management can better ensure that service standards run from top to bottom.
However, the degree of electronic informatization in the Middle East and North Africa express delivery market is still very low, and the IT system is generally backward, unable to provide customers with timely tracking information on goods, so the local delivery time is also low, and there are very few courier service providers that can provide same-day delivery and next-day delivery services. This has given more opportunities for new entrants such as JiTu.
The geographical environment of the Middle East and Latin America is also very different from that of Southeast Asia and China. For example, Indonesia, which started with a rabbit, belongs to a multi-island country, and express delivery in different regions depends on air transportation. Distribution in remote rural areas of China is a challenge to the end-of-life express delivery service. In the Middle East, delivery sometimes has to cross the desert, and even because of the lack of gas stations, they have to bring their own oil barrels. These problems need to be solved one by one when Jitu is laying out the global market.
Competition followed
Optimistic about the potential of global emerging markets, of course, far more than a courier company.
Shortly after Jitu announced its Middle East strategy, SF's layout in the Middle East was also announced through partners. In January this year, AJEX International Logistics (hereinafter referred to as "AJEX"), a joint venture between SF International and Saudi Arabia's Ajlan Brothers Holding Group in Riyadh, Saudi Arabia, was officially put into operation.
Ajlan Brothers Holding Group revealed that AJEX has obtained logistics-related operational qualifications and has the ability to provide logistics services in Saudi Arabia and even the Middle East, and the current operational capabilities can cover three major modes of transportation: land, air and sea.
SF is not a newbie to the sea, and has previously had layouts in Southeast Asia, Europe and other places. In addition, China's express logistics enterprises such as JD Logistics, Cainiao, Baishi, Zhongtong, and Yuantong have also explored several years of overseas market experience.
According to the "Research Report on the Development of China's Express Delivery Industry (2019-2020)" released by the Development Research Center of the China National Post Administration, Southeast Asia has become the first stop for Chinese express delivery companies to "go to sea", and the competition in Indonesia, Malaysia, Myanmar, Thailand and Vietnam is the most intense. At the same time, the Southeast Asian market has become a bright spot in the business growth of many of the above companies.
In September last year, with the completion of SF's acquisition of Kerry Logistics, the largest third-party logistics company in Southeast Asia, SF's layout in the Southeast Asian market was further consolidated. Kerry Express, an indirect non-wholly-owned subsidiary of Kerry Logistics, is currently thailand's largest courier company, handling an average of 1.2 million pieces per day.
After Baishi sold the domestic express delivery business to Jitu, it also increased its layout in Southeast Asia. As of the end of September 2021, Best has 30 self-operated express distribution centers and more than 1,400 stations in Southeast Asia. The latest financial report of Best shows that in 2021, the total annual parcel volume of Best International in Southeast Asia increased by 104.4% year-on-year, of which the volume of Malaysia increased by 609.2%.
On the one hand, the competition in China's express delivery market has not stopped. Although Jitu is among the first-line express delivery markets in the Chinese market, Zhao Xiaomin, an expert in the field of express logistics, told Interface News that Jitu is also facing the threshold of integration with Best and improving service quality in the Chinese market.
On the other hand, expanding the global market brings both opportunities and competition to Jitu, and quickly opening up new markets is also a step ahead of Jitu in time. Zhao Xiaomin believes that domestic express delivery companies are backed by the mainland's strong production and manufacturing capabilities and huge demand market, and have unique advantages on the road to the sea, and if they go all out to achieve "going to sea in groups", the prospect is worth looking forward to.
In addition, in the process of "going global", express delivery companies also need to pay more attention to the coordination with domestic production enterprises and cross-border e-commerce channels. "Hugging the group" should not only stay between express delivery companies, but also empower China's express delivery industry and connect the world by deepening industrial synergy.