economy - UPS confident it can beat local competition


UPS, the world's largest courier firm, will by out for US$100 million its Chinese partner and operate its logistical operation in 200 cities by itself, the Standard reports. Its competitors DHL and Fedex are also beefing up their operation in China, now restrictions have disappeared last month as China complies with the WTO-agreement.
UPS uses the landmark decision with some firm talk, we should remember for later, when things go more difficult that they now expect. "Contrary to industries like manufacturing," writes The Standard, "where increasing competition never ceases to squeeze profit margins, foreign firms are confident they can defeat their Chinese rivals on the distribution front. Multinationals, in particular, excel at logistics. The prospect of freer distribution has also emboldened a number of major foreign companies that had previously steered clear of China."
Now, I wonder where that optimism is based on. One of UPS's competitors TNT even withdrew from China at the end of the 1990s because it would not face the ongoing price wars any longer. TNT is back, and others display confidents, but I do not see whether companies nowadays are willing to pay the price for international services.