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The critical role of 'Family'

The legend of delivery industry in China comes from a small county.

Photo of Yibo Dai
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Story of Xianju - My Father's Birth Place

Xianju in 21st Century

My father was born in a remote village in China, called Xianju. Back to his childhood, he had to climb 13 mountains to go to the nearest school. It used to take him 3 hours one way. With handwork and willpower, he managed to be the first college student in his village. However, he cannot afford the 50RMB tuition fee. What does 50RMB mean? It's equivalent to 250 bowls’ of noodles in those day's term. As the first college student in that remote town, he attracted envy from lots of people, and nobody was about to help. Thankfully, there was an old couple who had no children, they sold their chickens and eggs, and sponsored my father.

I went to visit this old couple in this remote village back in 1999. It was almost 20 years after my father stepping out of the village. However, everything I saw was still so isolated from the rest part of the world. Of course, there was no such a thing called bank. Last night, I asked my father about what things look like in Xianju. He said that few people are still living there; most of them had moved out.

“How?”, I asked.

“Young people go out and work. They earn some money and build house in small towns outside of the mountain. Then they take parents to town and live there together.”

“How did younger generation manage to find a job in town?”

“Oftentime they have a relative already living there. He/she will help settle these thing up."

“Oh, I see..."

This short story is just a beginning. As a industrial engineering student, I intuitively connected this with the legend of China’s logistics industry, where “Relative” or “Family” played a critical role. Since the first decade of 21st century, 5 private express delivery firms has taken up China’s huge delivery market and directly accelerated development in e-commerce. Surprisingly, all 5 founders come from the same county - Tonglu. Nowadays, almost every family in Tonglu is in delivery industry, and people say that kids in Tonglu know delivery since birth. These 5 companies' branches have reached all over China. Together, their volume of business exceeds million, and annual total revenue is over billion. This is also a story that one people walked out of town, discovered business opportunity, and gradually brought up the whole community.

Tonglu in 1990's

Here’s a glance of Tonglu story from Want China Times:

Keeping it in the family: China's express delivery industry

China's major express delivery firms mostly originated in Tonglu County in Zhejiang province, and most were established by the same family, according to the Southern Weekly.

The companies are Shentong Express, YTO Express, Yunda Express and ZTO Express, as well as Best Express and Tian Tian Express.

When the Pudong district in Shanghai was established, trade companies whose goods needed to travel back and forth between Shanghai and Hangzhou faced obstacles, as their customs declaration forms often did not arrive on time and shipping might take three days.

In 1993, Nie Tengfei, who worked in a dyeing mill, along with his colleague Zhan Jisheng, began to help companies deliver declarations and later founded Shentong Express.

After one year in business, Nie allowed his wife's brother, Chen Dejun, to take over Zhan's Shanghai business and Zhan left Shentong to start Tian Tian.

Five years later, Nie Tengyun left Shentong, after his brother Nie Tengfei died in a car accident, and created Yunda. Shentong was then taken over by Chen Xiaoying, who was Nie Tengfei's wife and her brother Chen Dejun.

In 2012, Shentong acquired Tian Tian and Chen Xiaoying's second husband, Xi Chunyang, served as chairman.

Later, Zhang Xiaojuan, Chen Dejun's classmate from high school, asked her husband, who had been suffering losses in the timber business, to create YTO in 2000. Two years later, their friend Lai Meisong founded ZTO.

Statistics show that Shentong, YTO, Yunda and ZTO controlled 55% of the nationwide market in 2012.

Their similarities were not only that they began operating in the same county, but that the four companies made the same business decisions at around the same time and same place.

In and around 2010, the four companies moved their headquarters to Shanghai's Qingpu district.

On Singles' Day, China's equivalent of Cyber Monday, this year, Alibaba's Taobao and Tmall ecommerce marketplaces set a record with total transactions reaching 35 billion yuan (US$5.74 billion), as the number of orders was estimated at more than 150 million.

Nearly 80% of Alibaba packages prepared that day were delivered by four express delivery companies — Shentong, YTO, Yunda and ZTO.

The online shopping business has been a boon to the express delivery industry in China.

In May 2005, Taobao and YTO signed an agreement on May 1, 2006 for 386 deliveries, but that number surged to nearly 40,000 in the second half of the year.

The weekly reported that Taobao did not only provide an increasing number of packages, but also created growing demand in the delivery sector.

Express deliveries were mainly performed using business mail in the past, but Taobao accounts for 60%-80% of business for Shentong, YTO, Yunda and ZTO.

Taobao's large contribution led to price competition among express delivery firms. Therefore, their income did not grow as substantially as their business volume.

According to statistics compiled by the State Post Bureau, business volume among major delivery companies soared by 60% during the first three quarters of 2013, though income only rose by 30%.


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Photo of Shane Zhao

I resonated with this story Yibo! Likewise, my family has had a similar journey. From my grandparents leaving their village for Beijing, to my parents leaving Beijing for the US – the focus has always been on connecting back to bring up the community where you came from. Although times are slowly changing with more and more families moving into the larger cities. I wonder how the critical role of family play in financially empowering the next generation. Thanks for the share!