Scooters Rule as E-Commerce Grows in China; Couriers at office buildings in China’s large cities can earn several times more than factory workers

Updated March 4, 2013, 11:37 p.m. ET

Scooters Rule as E-Commerce Grows in China


Couriers at office buildings in China’s large cities can earn several times more than factory workers. Above, a deliveryman in Shanghai

BEIJING—David Li possesses a can-do work ethic and a willingness to zip around Beijing’s harrowing traffic on an electric scooter. That makes him highly valuable to a multibillion-dollar Chinese electronic-commerce industry struggling with how to deliver goods to demanding customers.

In 2011 Mr. Li left behind a wife, infant son and a job teaching middle-school math in the eastern city of Handan to became a courier for Chinese Internet retailer Beijing Jingdong Century Trading Co., which runs the shopping site.

Delivery companies say couriers who work the most profitable office buildings in large cities—where order flow is high and delivery is quick and easy—can earn more than $950 a month, well above the $200 to $650 brought in by factory workers.

Booming internet sales in China have the world’s largest manufacturing country racing to create new infrastructure systems to deliver goods to its own population. WSJ’s Paul Mozur reports via #WorldStream.

“It’s hard, but I’m ambitious,” Mr. Li says of the separation from his family. Early last year, after only five months on the job, he was promoted to manager of a distribution center that has 20 deliverymen.

E-commerce has exploded here in recent years as increasingly affluent consumers have learned to love online deals. China’s total online sales are expected to eclipse those of the U.S. in coming years, rising to $356.1 billion in 2016 from $169.4 billion last year, according to Forrester Research. U.S. online retail sales are forecast to reach $327 billion from $226 billion over the same period. That leaves Internet retailers and logistics companies attempting to build from scratch a complex distribution system to send goods purchased online to the distant corners of China.Jack Ma, the founder of e-commerce company Alibaba Group Holding Ltd., has said “terrible” logistics are slowing the growth of Internet retailing in China. Alibaba, which runs the Taobao and Tmall shopping sites, plans to join with banks, delivery companies and industry players to invest 100 billion yuan, or roughly $15 billion, to strengthen China’s logistics industry over the next decade, a person familiar with the matter said.

Recent incidents underscore the challenge the industry faces.

China last year stripped 116 delivery companies of their permits following customer complaints, with postal authorities citing lost mail, “barbaric sorting” and other offenses. A parcel containing wind-resistant matches started a fire in October on aChina Southern Airlines

Co. 600029.SH +1.92% plane after it landed. State media reported that two other forbidden goods shipped by separate delivery companies also were found on the airliner. And in November, authorities seized empty artillery shells that a delivery company was attempting to ship on a civil aircraft, according to the Hefei Airport police and official media.

China ranked 26th in the World Bank ranking of logistics infrastructure last year, five notches below South Korea and just above Turkey. Singapore led the list, and the U.S. was No. 9.

Logistics experts say China lacks warehouses with the sophistication to service its large flow of goods and say many Chinese cities are loath to sell land to delivery or e-commerce companies for warehouses since such operations don’t generate as much tax revenue as, say, shopping malls or office buildings.

At a warehouse run by delivery firm Zhongtong Express on the eastern outskirts of Beijing, workers recently handled packages by hand—sometimes tossing them in piles. Employees were bundled against the cold as freezing gusts blew through open loading docks and doors. Manager Yu Meina says fast growth has outstripped the capacity of the facility. The company plans to move to a bigger location soon, she says.

Retaining workers is a challenge. “There’s not enough graduates here, and they’re hard to attract,” Ms. Yu says. Many of the jobs are complicated, involving coordination of the ebb and flow of packages into northern China, she says, but “not many educated people want to do this sort of work.”

Companies are ramping up spending to compensate. Jingdong Century, where Mr. Li was promoted recently from courier, has been expanding its delivery system since 2009. It employs about 10,000 couriers and 5,000 warehouse employees but doesn’t disclose its spending. Chief Executive Liu Qiangdong has complained of China’s “terrible logistics management.”

Much of the industry expansion comes at the end of the line, with the scooters, motorcycles and motorized carts that clog the roads of major Chinese cities daily.

Xu Rongliang, a 30-year-old from the costal city of Hangzhou, made a little more than $160 a month when he came to Beijing in 2009 to ride an electric scooter as a courier.

He since has switched companies four times, eventually becoming a customer-service representative for a distribution center outside of Beijing and substantially increasing his pay. “I’ve invested energy and time, and I’ve been rewarded,” he says. “That’s a very happy situation.”

More than 100 of his friends from the eastern province of Zhejiang—where many of China’s largest delivery companies sprouted to be near Alibaba—now work as couriers in Beijing. While many have been promoted, some still face the rain and the snow on China’s roads. “Most people think the job is harsh,” he says. “It’s true, it is.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: