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Fedex's acquisition of DTW Express and TNT's acquisition of HOAU Logistics has triggered a wave of mergers in the Chinese logistics industry, Fedex's China vice president Eddy Chan told the Shanghai Security News recently.
Mr Chan said this is because of China's fast economic growth and greater market freedom, adding that mergers and acquisitions are a way local companies can survive, grow stronger and build up a more mature industry through the elimination of smaller firms.
Companies looking to merge should do four things, Mr Chan advised.
The first course of action would be to figure out if the merger target has a complementary business to your own. For example, a company with an extensive network in east China should consider acquiring one with a vast network in the southern market.
In addition, the two companies should share a common corporate culture, he said. FedEx thoroughly considered DTW's corporate culture before the acquisition, said Mr Chan, adding that they share the same long-term development targets and both emphasise service quality.
Negotiations, meanwhile, should be detailed as possible, and pre-merger investigations are also essential.
After the merger agreement is signed, Mr Chan said, integration should be carried out as efficiently as possible.
Mr Chan added that local companies, which aim to grow stronger should concentrate on their core business and never give up their long term goal for short term benefits. He said that FedEx didn't sell its operation facilities when Hong Kong's real estate market was thriving in the 80s and 90s because it insisted on focusing on its core business of transport.
A final piece of advise Mr Chan offered was that local companies should establish their dominance in their domestic market before considering going global.
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