FedEx Corporation was instituted in 1971 By Fredrick W. Smith. It extended its operations in China in 1995 where it invested in aircrafts, express logistics and ground transportation. FedEx has been providing class leading services to its customers in China. Unfortunately, their endeavors were cut short by severe competition from their competitors. FedEx got access to a popular air route between China and Japan which improved its markets both in Japan and China. This made FedEx become the first international express logistics company which offered direct flight services from China to Japan. However, the high cost of transport around the cities due to poor infrastructure made FedEx record losses during the first year but they had first class leading express services in China. Furthermore, they increased their markets through Hong Kong and the Philippines.
FedEx was the only provider in China that may possibly ship parcels directly to the United States within three days until its competitors DHL, UPS, EMS and TNT came into the market. FedEx China has been trying to expand its markets but unfortunately, DHL has gotten hold of major cities and this has stirred a fierce competition between them.
FedEx China is facing problems like poor infrastructure, high cost of transport and imbalances between the regions. In addition, China has outdated information technology and this affects FedEx when they want to market their services and also in communicating with their clients. China has a poor distribution system and the bureaucratic regulations are affecting the express logistic company. The other problem being faced by FedEx China is tight competition from their competitors especially DHL which has expanded its markets around China. These problems are because of the emergence of many express logistic companies in China. Competition is their main problem.
Justification
FedEx is receiving a fierce competition from its competitors and this is making their clients think that their supply is inefficient. They should outperform their competitors in order to remain on top of the game by providing quality services to their clients in order to maintain them.
Recommendation
Initially, FedEx China should refocus on their strategy to outrun their existing customers so as to satisfy their needs. This can be done by betting big on technology and build up a sustainable position in the market. They should become innovative before their competitors in order to outperform them on the new rules and technology. Once FedEx has outperformed their competitors by not only depending on their competitors’ dependability but by meeting the needs of their clients satisfactorily, this way, they will be able to sustain a competitive advantage. This way, they will be on top of their competitors and their customers will be satisfied with their services and by meeting their customers demands, they will be able to serve more cities in China.
Furthermore, FedEx should expand its local distribution network in order to serve more cities as bureaucratic regulatory bodies of the government has set laws to stop foreign companies to handle certain express parcels. Moreover, by increasing its flight frequencies, FedEx will also be able to outperform their competitors and maintain their clients. They can do this by extending its network to more cities and this will expand their market.
Justification
FedEx China is facing poor infrastructure and an increase in the demand of logistics. They should increase their services and work with the government on the infrastructure.
Implementation
FedEx China should work with the government of China on how to improve the infrastructure. This way, transportation costs will be reduced and this will decrease their costs of transport. Furthermore, due to the growth of foreign trade, economic growth and the increase in demand of logistic services, FedEx China should increase their services so as to satisfy their customers and meet the high demand of express logistic services. FedEx China should ensure full market coverage in and outside China to maintain its competence in the market and also to meet the demand. They have to ensure quality services by maintaining transportation tools by improving the infrastructure since they will need them while delivering their services.
Even though the Chinese government has put a lot of effort in improving the infrastructure, logistic infrastructure is missing and FedEx can help the government in improving this sector through their support. Improvement in infrastructure will help FedEx save much on the high costs of transport and this will work on their advantage as transportation will me very much easier.
FedEx China should work on the outdated information technology. By doing this, it will be easier to communicate with their clients and the delivery process will be made easier. This can be done by improving their communication system with the current technology. If the communication system is improved and extended to more local cities, FedEx China will be able to get hold of the cities and maintain its customers since their communication with their clients will be efficient. FedEx China should adopt and develop its IT systems. Once FedEx has done all these, it will be able to maintain a competitive advantage against its competitors as it initially was the number one express delivery service in China.
