FedEx, UPS Cautiously Welcome Relaxed China Invest Rules



Excertped from Dow Jones Newswires

January 16, 2003: 1:37 a.m. EST

BEIJING (Dow Jones)--Express delivery companies FedEx Corp. (FDX) and United Parcel Service Inc. (UPS) gave a cautious welcome this week to China's new regulations allowing them to take majority ownership of their operations in the country.

However, neither company said it has any immediate plan to take advantage of the rules issued by China's Ministry of Foreign Trade and Economic Cooperation, which permit them to own up to 75% of their China-based joint ventures.

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FedEx now operates in China through a joint venture with the Tianjin-based logistics firm Da Tian W. Air Service Corp., though FedEx declined to reveal exactly how much of the joint venture it now owns.

"FedEx has no immediate plans to make changes in the light of these regulations but we will continue to assess opportunities such as these as our business and market conditions develop," Cunningham said.

Similarly, UPS operates in China through a 50-50 joint venture with China National Foreign Trade Transportation (Group) Co., the state-owned logistics company better known as Sinotrans.

"UPS is currently evaluating this latest MOFTEC ruling and it would be premature to comment. However, the company always supports the easing of industry restrictions," UPS said in a written statement in response to a request for comment.

The MOFTEC rules allowing majority ownership, which took effect last week, are actually just an interim measure.

Under its market-opening commitments to the World Trade Organization, by December 2005 China must issue rules allowing foreign freight-forwarding and courier companies like FedEx and UPS to set up wholly owned operations.