This year marks the fourth year that Xie Qingyu has been doing express delivery business in Malaysia.
Xie Qingyu is a Malaysian Chinese. In 2020, due to the pandemic, he was unable to return to China to continue his freight forwarding business. He decided to become a regional franchisee of Best Group in Kedah, Malaysia, in search of new business opportunities on this land.
Buying a car, hiring people, and building a network all started from scratch, but unexpectedly went smoothly. It only took about half a year for Xie Qingyu to recoup his initial investment and start making money in the new business.
In recent years, with Southeast Asia becoming an important destination for China's industrial transfer and the online shopping habits formed by the accelerated epidemic, more and more domestic express logistics giants have begun to consider Southeast Asia as their first choice for going global. Recruiting franchisees locally is an effective way to quickly and cost effectively expand the network.
Not only Chinese people like Xie Qingyu, but also many people from Southeast Adam have joined this end of pipe delivery business. Of course, not all franchisees are as lucky as Xie Qingyu. The differences in employment culture, consumer habits, geographical environment, and other aspects among Southeast Asian countries also make it difficult for overseas express logistics giants to fully replicate their management and service models in the Chinese market.
Local express delivery: the secret to making money in six months
Relying on the funds accumulated from doing business in China, Xie Qingyu invested in three sites in one fell swoop when he entered the express delivery business in early 2020.
The franchise fee is cheaper than in China. One site is equivalent to over 20000 RMB, and buying a car costs about 100000 Malaysian Ringgit, "Xie Qingyu recalled. Initially, his branch recruited 10 couriers, who usually use their own private cars to deliver packages. Xie Qingyu only invested in 2 small trucks and subsidized the fuel costs for the couriers.
Xie Qingyu can be considered as one of the first franchisees of Best Express to enter the Malaysian express delivery market. Best Group, which established its first local express delivery network in Thailand in 2018, is considered one of the earliest domestic companies to enter the Southeast Asian express delivery market. It has now established express logistics networks in six Southeast Asian countries: the Vietnamese company was founded in 2019, expanded its business in Malaysia and Singapore during the COVID-19 pandemic in 2020, and opened cross-border networks in the Philippines and Indonesia in 2023 and 2024, respectively.
At that time, it was not easy for Best to recruit franchisees due to its initial entry into the Malaysian market. Compared to China, Malaysians value brands more, and there are not many locals like Xie Qingyu who dare to bet and invest in an unfamiliar brand.
However, given his familiarity with both China and Malaysia, it is relatively easier for Xie Qingyu to develop second tier franchisees. That year, I developed five or six secondary sites, and I paid for their dispatch fees. The dispatch fees for my level were uniformly priced by Best, "said Xie Qingyu. The rapidly developing secondary sites were also an important reason why he was able to recoup his investment and start making money within six months.
Not only did the site make money quickly, but working as a courier in Malaysia was also considered a decent paying job at the time. Xie Qingyu revealed to reporters that at the sites he invested in, couriers can earn at least 2000 Malaysian Ringgit (equivalent to 3325 RMB) per month by earning delivery commissions, and some can earn five to six thousand Malaysian Ringgit, which is already a middle-income level in Malaysia.
Most of the couriers recruited by Xie Qingyu's site are Chinese, who are more likely to accept irregular pick-up and delivery times, flexible adjustment of working hours, and a business model of "more work, more pay". However, for some sites operated by locals, working hours are relatively fixed and not as flexible.
Employees in many regions of Southeast Asia are different from Chinese employees. Many people work by the hour and do not have bank cards, savings, or loans. They feel less stressed, so their working hours are not like in China where they often have to leave work on time at 6 pm. Unlike in China where employees or Chinese people used to be able to flexibly adjust their time according to business needs, "said Wang Xiaoqing, Vice President of Best Group and General Manager of Best International. In addition, local employees find it difficult to understand complex and vague things and need clear steps and requirements.
After taking over Best International in 2021, Wang Xiaoqing quickly realized these differences. "To achieve this, we divided our personnel into full-time, part-time, half day, temporary, and full day positions, drew a matrix, and gradually adjusted the personnel structure. At the same time, we tried to break down the work as finely as possible to reduce dependence on people and communication costs. This is the work that we spend the most energy on
In order to gradually make the local people understand and accept the working mode of express delivery companies, Best has also adopted a series of localization strategies. In addition to sending teams domestically, it also extensively recruits local outstanding talents to join the management team and regularly conducts tea party style training.
Local people love to gather, and sometimes after a tea party, they can dance from 9pm to 11pm. To make them accept your work style, you need to first integrate into their culture and lifestyle, such as gathering with them in a relaxed atmosphere to let them understand the benefits of more work, and then making the daily work tasks of frontline employees more manageable. "Wang Xiaoqing said," To some extent, franchisees in Southeast Asia still have a strong sense of contract spirit. As long as we break down everything as much as possible and make the scene rules public, franchisees will have expectations for the company and be willing to work with you
In the city of Bavi in Hanoi, Vietnam, Kieu Viet Dong, a Vietnamese who joined Best Vietnam in October 2020, is a local who has adapted to the Chinese express delivery operation model.
His strategy for operating express delivery stations is simple but also effective: providing flexible pick-up times, stations are willing to dispatch vehicles to pick up goods between 20:00 and 22:00 at night, ensuring that customers can receive service at any time; Provide free packaging materials, and during peak periods, he even personally leads a team to assist in packaging, ensuring that the goods can be shipped out in a timely manner.
This service gradually attracted more than 200 online stores to become its customers, and the order volume has steadily increased, from a few thousand orders per month at first, to tens of thousands of orders later, and now to nearly 300000 orders per month. Qiao Yuedong's team has grown from just over 20 people to over 70 people now.
Cross border e-commerce: greater opportunities and challenges
Among the clients of Xie Qingyu and Qiao Yuedong, e-commerce platforms and online stores are important components. In recent years, the surge in online consumption in Southeast Asia has led to a demand for package delivery, which is the main guarantee for the initial order volume of express delivery service providers.
Statistics show that the e-commerce market in Southeast Asia has grown rapidly in the past four years, with only 38 billion US dollars in 2019, growing to 120 billion US dollars in 2021, and expected to reach 234 billion US dollars by 2025, with a compound annual growth rate of 18%. The e-commerce market size in Indonesia is the largest in Southeast Asia, while the fastest growing is in the Philippines, and the most promising growth is in Vietnam.
It is precisely the booming online consumption that has given birth to multiple e-commerce platforms such as Shopee and Lazada that are thriving in Southeast Asia. As these platforms also began to build their own logistics teams, Xie Qingyu found that the delivery fees offered by the platforms to third-party courier service providers became increasingly low.
Four years ago, for a 5kg e-commerce package, the delivery fee could be 3 Malaysian Ringgit. Now that oil prices have risen, the delivery fee has dropped to 1.5 Malaysian Ringgit (equivalent to 2.5 RMB), "said Xie Qingyu." However, I heard that doing express delivery business in China is more difficult and the competition is more intense. After the price war, the delivery fee is even lower than here
Jitu, which also has a presence in seven Southeast Asian markets, revealed in its financial report that its single ticket revenue in 2023 was $0.81, while its single ticket revenue in 2022 was $0.95. Nevertheless, the single ticket gross profit of Jitu in Southeast Asia is still higher than that in the Chinese market.
In China, the price war dominated by "three links and one delivery" has been going on for many years. After Jitu joined the competition, the delivery fee has not been the lowest, only lower: in some cities, the delivery fee has been as low as 0.5 yuan or 0.6 yuan, and in 2022 it was still above 1 yuan. The average ticket revenue disclosed in the financial reports of major express delivery companies in the first half of the year also decreased.
In recent years, there have been more and more express delivery companies in Malaysia. Although there are not many nationwide ones, there are more than 100 regional and directly operated ones, "said Xie Qingyu." The business of simply delivering express delivery is becoming increasingly difficult. Four years ago, I developed several secondary stations, but now there are only two left
In 2022, Xie Qingyu decided to expand his business scope by purchasing 5 3-meter-long trucks and joining the express delivery network of Best Express.
Unlike express delivery services, express delivery services mainly serve large goods for cross-border e-commerce, including door-to-door pickup, domestic and international trunk transportation, customs clearance, overseas warehousing, and local delivery.
In recent years, cross-border e-commerce has continued to increase in business volume with the support of multiple national policies. According to data from the General Administration of Customs, in 2023, the total import and export volume of cross-border e-commerce in China will be 2.38 trillion yuan, an increase of 15.6%, of which exports will be 1.83 trillion yuan, an increase of 19.6%. In the first quarter of 2024, China's cross-border e-commerce imports and exports reached 577.6 billion yuan, an increase of 9.6%. This has also brought more opportunities for cross-border e-commerce delivery.
Xie Qingyu told reporters that in Malaysia, the transportation of large goods previously relied mainly on point-to-point dedicated lines, which may require transferring several lines from one place to another. Moreover, if the quantity of goods is insufficient, the shipment will not be made, and the delivery time cannot be guaranteed. There are not many suppliers who can achieve door-to-door pickup, limited time transportation, and full tracking. Relying on the transit and distribution express network established by Best Express throughout Malaysia, 70% of Xie Qingyu's current business volume is express delivery of large items, with customers mainly being furniture and kitchenware manufacturers.
Wang Xiaoqing also told reporters that in the early stages of business development, the company's customers in Southeast Asia were mainly in the home appliance, new energy, and footwear industries. Now, the number of customers in the leisure food and food industries is gradually increasing. There are currently three main types of cross-border e-commerce going global in Southeast Asia: small and micro sellers who are entrepreneurs, traditional sellers who are trying overseas channels, and medium-sized enterprises, especially multinational corporations. In order to meet their needs, we have been establishing a fast delivery network since last year. Now, the development speed of the fast delivery network is faster than that of express delivery because its demand is greater
According to the financial report of Best Group, the cross-border business volume in the first quarter increased by 256.4% year-on-year, and the package volume in Southeast Asia increased by 39.4% year-on-year. Similarly, the data disclosed by Jitu in its financial report also shows that from 2020 to 2023, the company's cross-border service revenue has grown by more than 60 times.
However, although the Southeast Asian market is often seen as a whole, there are still significant differences in economic levels and infrastructure construction among different countries. For example, Malaysia and Thailand have relatively complete infrastructure, while Vietnam and Indonesia are relatively lagging behind. The development of transportation networks and the completeness of logistics and warehousing facilities directly affect the efficiency and cost of logistics distribution.
Wang Xiaoqing recalled his first visit to the Vietnamese market, a 200 kilometer road that ran from 8am to 1pm because it was all rural roads. The economic level of Ho Chi Minh City and Hanoi in Vietnam is relatively developed, while there is a large gap in other regions, and even basic asphalt roads may not be available. This means that we cannot completely copy the information system used for route planning in China to Southeast Asian countries for use. For example, Vietnam has many mountains and extensive rural areas, and planning routes according to domestic standardized technology will not be accurate. Electronic fences and manual intervention are needed to allow the system to learn again, and in terms of technology application, we can carry out localized transformation of the system independently developed by Best according to local conditions
In addition, the popularity of electronic payments varies in different countries. For example, Vietnamese consumers tend to prefer cash on delivery. When purchasing goods online, consumers do not need to pay in advance like in China, but pay after the goods are delivered. If they are not satisfied with the delivery, they can return the goods directly. This also poses additional requirements for cash management in logistics delivery.
Warehouse and Distribution Supply Chain: Going Global with Chinese Enterprises
At the beginning of this year, Best Group transferred its supply chain business, which originally belonged to the international sector, to the company's supply chain sector. The company found that the customer base it undertakes in terms of overseas business has begun to change, from small businesses going global to more and more big brands going global.
SF Holding has also noticed a trend where the internationalization of Chinese enterprises and products is gradually shifting from traditional trade exports and cross-border e-commerce models to new models such as capacity and brand expansion. In terms of the scale of production capacity and brand export, the six Southeast Asian countries (Singapore, Malaysia, Thailand, Vietnam, Philippines, Indonesia) have the largest proportion.
The focus of 'capacity expansion overseas' is mainly on industries such as 3C electronics/communication, automotive, garment manufacturing, lithium batteries, photovoltaics, and furniture, with Chinese companies building factories overseas; Brand going global "refers to the strong growth of industries such as coffee and tea drinks, food and beverage, beauty and skincare, accelerating the establishment of direct stores or self owned sales channels overseas.
Since last year, some local Chinese brands have truly put their overseas strategy on the agenda. A large number of clothing, food, snack food, and new tea beverage brands have entered the Southeast Asian market. Unlike the previous way of selling white label goods, opening an overseas store requires complex supply chain services, including order management, inventory control, and warehouse distribution and transportation, "Wei Yongqiang, Vice President of Best Group and Deputy General Manager of Best Supply Chain, told reporters." It seems that we are going global with our customers, but in fact, Chinese logistics companies have made great progress in the supply chain in the past 5-10 years. Now we can bring our experience, technology, processes, and standards abroad
Taking a well-known sports brand in China as an example, when it first entered Malaysia, it chose a locally influential supply chain service provider. However, after working for three months, it was found that its services did not meet expectations because the domestic supply chain standards, speed, timeliness, and other requirements were very different from the standards that could be provided locally.
In China, logistics companies have strict management standards for delivery time and user experience. For example, when delivering goods to shopping malls, they can only enter through designated channels at designated times, and even need to separate goods into different small rooms in the mall and provide additional services such as placing goods and cleaning shelves. This has become a standard process for logistics services in China. For example, in China, return services are usually combined with forward delivery, but in Malaysia, local logistics providers consider forward and return as two different operations that cannot be combined, which will seriously affect costs and efficiency.
Later, this sports brand still handed over its warehouse and distribution business in Malaysia to Best Operating, which completed the establishment of their overseas warehouse in just 15 days, while the previous supplier took nearly three months.
SF Holding also pointed out that building supporting cross-border and overseas supply chain systems is a key success factor for Chinese companies in their process of going global. More and more companies hope to replicate their efficient domestic supply chain models overseas, and Chinese logistics companies have advantages such as cultural consistency, cost-effectiveness, and safety and reliability compared to their overseas counterparts.
However, Wei Yongqiang also admitted to reporters that in the Southeast Asian market, although hard costs (such as personnel, equipment, and venue costs) are easy to calculate, some seemingly simple businesses in China may require more costs to achieve in Southeast Asia.
For example, when providing services for the aforementioned sports brands in Malaysia and Thailand, the company encountered personnel efficiency issues. There are significant differences in work efficiency and working hours between domestic and foreign staff, especially when it comes to warehouse management. Domestic employees can flexibly adjust their working hours to meet business needs and also accept flexible scheduling, but foreign employees cannot do so. They can only accept the agreed upon commuting time during recruitment. Therefore, in order to meet some temporary requirements of customers, it is sometimes necessary to add temporary workers, resulting in uncontrollable costs
Wei Yongqiang believes that to change this situation, a transition of one to three years is needed. "With the increase in market demand, more Chinese people will join, which is already evident in the US market. Many local trailer companies and warehouse managers are already Chinese, and finding local Chinese people is our priority choice
In addition, Baishi also collaborates with some vocational colleges in China to attract students from countries such as Malaysia and Vietnam to study and receive targeted training. After graduation, students can return to their home countries to work.
For Chinese express logistics giants, the huge potential of the Southeast Asian market is still in the exploratory stage, and cultural integration and adaptability are still on the way.