106435 Resource 94086 93210 94146 1130907814001 1201213347765 Controlled WTO Impact on China Logistics Business

Many Multinational Logistics Firms Seek to Gain Full Control in China

By December 2005, under WTO, key transportation sectors including freight fowarding, courier express, road transportation, shipping agency, and warehousing will be opened to 100% foreign ownership. M&A activity in China in on the rise. As overviewd in the China Logistics M&A Update by Latitude Capital Group, factors driving the increased activity include: <ul><li>Industry Consolidation</li><li>WTO Impact</li><li>Increased Valuation Multiples for Logistics Deals</li><li>Middle-Market Businesses Exit through M&A Market</li><li>Aggressive Strategic Buyers</li></ul> China Logisitcs Business Lines Overview and WTO Impact <table border="1" style="width: 100%;"><tbody><tr><td style="font-weight: bold;">Business </td><td style="font-weight: bold;">No. of Firms </td><td style="font-weight: bold;">Competitive Landscape </td><td style="font-weight: bold;">Current Foreign Stake Limit </td><td style="vertical-align: top; font-weight: bold;">Foreign  Stake Limit 12/05 </td></tr><tr><td>Storage & Warehousing </td><td>500,000 </td><td>Basic transport & warehousing -  highly fragmented Price competitive with thin margins </td><td>Majority </td><td style="vertical-align: top;"> 100% </td></tr><tr><td style="vertical-align: top;"> Freight Forwarding </td><td style="vertical-align: top;">3,000 licensed  for international business </td><td style="vertical-align: top;">Major sea FF: COSCO & China Shipping. Major air FF: EAS Sinotrans (has 10% share of both) </td><td style="vertical-align: top;"> 75% </td><td style="vertical-align: top;"> 100% </td></tr><tr><td style="vertical-align: top;">Domestic Express </td><td style="vertical-align: top;"> Fragmented </td><td style="vertical-align: top;">Low barriers. Key Firms: China Post EMS, China Air Express, China Railway Express and Datian </td><td style="vertical-align: top;"> 0% </td><td style="vertical-align: top;"> 100%</td></tr><tr><td style="vertical-align: top;"> Int'l Express </td><td style="vertical-align: top;"> Concentrated </td><td style="vertical-align: top;">RMB 8B in 2003 5 firms have 95% of market: -DHL Sinotrans (38%) -EMS (30%) -FedEx Datian (16%) -UPS-Sinotrans (10%) -TNT-Marchplus (6%) </td><td style="vertical-align: top;"> Minority </td><td style="vertical-align: top;"> 100%</td></tr></tbody></table><div style="text-align: right;"> </div> 10 application/xml false China logistics China M&A China mergers china shipping china sourcing china supply chain china transportation global supply chain M&A China supply chain Mozilla/5.0 (Windows; U; Windows NT 6.0; en-US; rv:1.8.1.11) Gecko/20071127 Firefox/2.0.0.11 127.0.0.1 127.0.0.1 Establish 208.105.4.154 false true false false true 187565 false false true false false false true 94086 blog blogsite/ChinaSupplyChain/web