China Post currently has unparalleled advantages in its nationwide network, commented Liu, and it will take time for foreign companies to catch up and secure their networks.

Liu Yang, an online merchant who mails about 20 to 30 packages every week to clients nationwide, told Beijing Review that he is familiar with the global giants thanks to the overwhelming ads, but has never tried their services because they have "fewer outlets." China Post, however, has post offices on almost every street in Beijing.

Yet private companies with the most competitive prices now dominate China's major cities. "Shanghai, for instance, has entrusted small private companies with over 95 percent of the express services in urban areas, including over 90 percent of customs-related import and export declaration documents, and over 50 percent of the banking documents," said Liu Heping.

Life or death

On average, since 2005 the express delivery market in China has enjoyed an annual growth of over 26 percent, according to statistics released by the National Bureau of Statistics of China. An annual growth of at least 33 percent will be sustained over the next three years, according to forecasts from the U.S.-based Coalition of Service Industries.

Ren Haoxiang, Chairman of the China Federation of Logistics and Purchasing, is even more optimistic about the market. He believes global express delivery services will increase an average of 12-14 percent over the next few decades, while growth of the Chinese market will double that of the current global market, making China the most promising place to provide these services.

"It is a must for the big four to launch their China domestic services, sooner or later," said Liu Jianxin, Secretary-General of China International Freight Forwarders Association (CIFFA). Currently, the big four control the global express services market and serve a vast number of clients worldwide, a fact that would help them tackle new markets if they decide to launch domestic services in China, said Liu.

While expanding their business, the big four are competing over the buyout of local private companies and divvying up their delivery networks. FedEx spent $400 million last January to buy out its 50-50 delivery partner in China, Tianjin-based Datian W. Group. On March 14, TNT announced the completed acquisition of Hoau, a major freight and parcel delivery company, in a $135 million deal started in 2006.

Beside these private enterprises, some large state-owned enterprises have also sought partnerships with foreign companies. Before China's accession to the WTO, foreign parcel companies had asked to partner with a Chinese company in order to enter the local market. In 1986, DHL partnered with local logistics giant Sinotrans Group to provide parcel delivery in China. Later UPS, FedEx and TNT all created joint ventures with Sinotrans Group.

"Small private companies with several vehicles can't survive in this bitter competition," said CIFFA Secretary-General Liu. "Many of them are suffering from bad management, complaints about poor service, as well as razor-thin profit margins due to price slashing competition," he said.

Foreign companies have their own headaches, said Liu. They have to deal with high costs, incomplete networks and low localization rates. Yet they also have the advantages of abundant funds, new business ideas and mature operating networks.

The pressing needs for private companies are to position their services, target customers, and make the most from the edge they possess with their far-reaching delivery networks, suggested Liu. At the same time, he suggested that both EMS and domestic private companies should learn from foreign companies, viewing the quality service as "a matter of life or death."