Analysis: What challenges do China’s leading logistics companies face when expanding overseas?

Release date:

2024-11-11

Author:

Jinhua Logistics

Large enterprises find it difficult to keep pace with the rapid evolution of the cross-border e‑commerce sector, and there is often a lag between product innovation and service iterations on the one hand, and market demand on the other.

In an environment of intensifying competition, China’s domestic logistics sector is shifting toward the existing‑customer market, while cross‑border e‑commerce and overseas expansion remain growth‑driven segments. Against this backdrop, an increasing number of Chinese logistics companies are seeking to expand internationally; leading players such as STO, YTO, ZJS, Debon, SF Express, and JD Logistics are all accelerating their global outreach. Yet, as they venture abroad, these companies encounter a range of challenges—many of which share several common characteristics:

First: Team DNA.

Domestic logistics companies have achieved remarkable success in China’s e‑commerce, express‑delivery, and courier sectors, with some even reaching the scale required for an IPO. However, as domestic logistics companies now choose to expand overseas, their biggest weakness is a lack of deep insight into foreign markets. They often rely on the same mental frameworks used for their domestic operations, which can lead to… Cognitive bias 。

Second: Cultural differences.

Logistics and labor costs overseas are significantly higher than in China, and communication and operational efficiency tend to lag behind domestic standards. Moreover, cultural norms, consumer preferences, and work habits vary widely across countries, making cross‑border team collaboration, coordination, and integration particularly challenging for Chinese logistics firms expanding internationally. While communication within China may be twice as efficient, once operations move abroad, that efficiency can plummet. Five times 0.5 results in very low efficiency. Under such circumstances, logistics companies face significant challenges in integrating and communicating to achieve team synergy.

Third: Product scarcity.

Many large enterprises possess abundant resources, but their overly complex organizational structures have distanced mid‑ and senior‑level managers, marketing strategists, and product managers from the front lines and end customers. As a result, these companies often remain stuck at the stage of simply selling resources, failing to truly develop products—or, when they do, producing offerings that lack genuine market competitiveness and fail to meet customers’ real needs. This disconnect between product design and market demand leaves the company’s customer‑acquisition capabilities with little competitive edge.

Fourth: Inefficiency.

This is a common problem among many large enterprises. The larger the company, the more it relies on group decision-making, with many issues requiring resolution through meetings. The overall organizational decision-making process is inefficient, making it difficult for companies to keep pace with the rapidly evolving dynamics of the cross-border e‑commerce sector. That said, Shenzhen‑based cross‑border e‑commerce firms tend to operate with relatively high efficiency. For example, at one Shenzhen‑based e‑commerce company, frontline marketing staff, upon identifying customer needs, report them to the company on the same day. The following day, the company convenes a meeting to determine how to adjust its product offerings or refine existing processes to meet those needs, while also communicating with the overseas team about how to align with and support the optimization of international operations and resource coordination. Once a concrete plan is agreed upon, the company updates its price list and can then proceed directly to negotiating partnerships with customers. This collaborative workflow enables rapid product iteration and innovation driven by user demand, while fostering seamless communication between domestic and international teams—allowing the company to adapt swiftly to market changes. However, such an agile process is much harder to implement in large enterprises, particularly among many… For global enterprises seeking to adjust pricing or channel strategies, communication often relies on email exchanges between regional offices and headquarters. This back-and-forth can stretch over dozens of days just to reach a consensus, with actual implementation frequently taking another one to two months. As a result, large corporations struggle to keep pace with the rapid evolution of the cross-border e‑commerce sector, leading to a noticeable lag between product innovation, service iterations, and evolving market demands.

Fifth, strategic ambiguity. Many domestic logistics companies lack a firm commitment to their overseas expansion strategies. While each firm touts its intention to go global, when confronted with the uncertainties of foreign markets, most merely engage in tentative, low‑cost experiments or trial-and‑error approaches. They fail to articulate a clear strategic vision and do not allocate sufficient capital, budgets, or human resources for sustained, long‑term investments. Influenced by the franchise model and light‑asset integration prevalent in the domestic market, many logistics players on the cross‑border logistics playing field focus on whether they can acquire or partner with other firms, rather than considering what they themselves should invest in. Consequently, from this perspective, these companies fall short in committing adequate resources—whether financial, managerial, time, or broader corporate assets—to their international ventures. Without such investment, achieving meaningful results in the global arena remains a significant challenge.

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