It was hard to miss UPS at last year’s Beijing Olympics. Life-size cut-outs of brown-garbed UPS deliverymen greeted visitors arriving at China’s airports for the Games. The displays showed them pulling large sporting equipment from improbably small packages, while the slogan read ‘Nothing is impossible - UPS delivered everything and anything to the Beijing Olympics’.
As the event’s sponsor and official courier service, UPS used every opportunity to display its logo. Nielsen data shows UPS spent Rmb 404 million (US$58.6 million), or 61.4 per cent of the Rmb 655 million that courier services spent on TV and print last year. Its global rivals DHL and FedEx spent Rmb 128.5 million and Rmb 90.7 million, respectively, while TNT was, in terms of adspend, nowhere in sight. Besieged incumbent EMS, a subsidiary of China Post and officially named China Courier Service Corporation, spent a more modest Rmb 24.3 million.
A year later, things have changed. UPS has cut back so severely that it is no longer the top advertiser. During the first eight months of 2009, UPS spent just Rmb 74 million. The sector’s overall ad investment totalled only Rmb 253.8 million in those months.
One might suspect a post-Olympics hangover or the global economic downturn, especially since the latter resulted in a sharp drop in air cargo leaving China for the US and Europe.
Both certainly have influenced promotion budgets, but the decline in adspend actually began before the Olympics or the September collapse of Lehman Brothers. DHL slashed its budget from Rmb 367.2 million in 2007 to Rmb 128.5 million in 2008, and in September of that year announced a pitch involving no TV work. FedEx, which spent Rmb 260.6 million in 2007, cut its budget to Rmb 90.7 million in 2008, though interestingly FedEx is spending again this year.
The lull in advertising does not signal a change of heart for DHL, UPS, FedEx and TNT, all in their third decade in China.
China’s first courier express was EMS, founded in 1980 and in service by 1984, relying on the Universal Postal Union for overseas delivery. DHL, UPS, FedEx and TNT arrived in the mid-80s, establishing joint ventures as required by law, all of them choosing the largest logistics player, Sinotrans Group.
Today the ‘big four’ dominate the international express business. By 2006, EMS had seen its share shrink to around 20 per cent, while DHL claimed 30 to 34 per cent, FedEx 19 to 21 per cent, UPS 18 to 20 per cent and TNT seven to eight per cent, according to a 2007 study by Booz Allen Hamilton.
DHL has retained its partnership with Sinotrans until today, while UPS, FedEx and TNT realigned themselves with local players, through acquisition or partnerships, to build their domestic networks - a new opportunity since China’s entry into the World Trade Organisation in December 2001.
That is where the future lies. Domestic coverage of China is still limited to the coastal tier-one cities, but it is rapidly expanding inland, and the big four are pouring billions of dollars into the construction of logistics hubs and ground fleets. Already, the domestic courier, express and parcel (CEP) business is twice the size of the international business.
This is likely to lead to renewed marketing activity. UPS recently hired Ogilvy & Mather to handle its global ad account, with China earmarked as a key Asian market. What’s more, Malcolm Sullivan, VP marketing for Asia-Pacific at FedEx, says that the company will resume spending on ads to back its investment in lower tiers. “As the economy expands beyond the coastal areas, we are investing in infrastructure in tier-two, three and four cities,” he says. “Our marketing communications will follow, and potential users will see more advertising in these areas.”
Sullivan adds that FedEx’s activity extends beyond advertising. It sponsors the China Badminton Team, and renewed its contract in August. He adds: “By activating this sponsorship through events, we extend our brand presence and broaden our community relations in the country.”
Got a view?
Email [email protected]
This article was originally published in 5 November 2009 issue of Media.
As the event’s sponsor and official courier service, UPS used every opportunity to display its logo. Nielsen data shows UPS spent Rmb 404 million (US$58.6 million), or 61.4 per cent of the Rmb 655 million that courier services spent on TV and print last year. Its global rivals DHL and FedEx spent Rmb 128.5 million and Rmb 90.7 million, respectively, while TNT was, in terms of adspend, nowhere in sight. Besieged incumbent EMS, a subsidiary of China Post and officially named China Courier Service Corporation, spent a more modest Rmb 24.3 million.
A year later, things have changed. UPS has cut back so severely that it is no longer the top advertiser. During the first eight months of 2009, UPS spent just Rmb 74 million. The sector’s overall ad investment totalled only Rmb 253.8 million in those months.
One might suspect a post-Olympics hangover or the global economic downturn, especially since the latter resulted in a sharp drop in air cargo leaving China for the US and Europe.
Both certainly have influenced promotion budgets, but the decline in adspend actually began before the Olympics or the September collapse of Lehman Brothers. DHL slashed its budget from Rmb 367.2 million in 2007 to Rmb 128.5 million in 2008, and in September of that year announced a pitch involving no TV work. FedEx, which spent Rmb 260.6 million in 2007, cut its budget to Rmb 90.7 million in 2008, though interestingly FedEx is spending again this year.
The lull in advertising does not signal a change of heart for DHL, UPS, FedEx and TNT, all in their third decade in China.
China’s first courier express was EMS, founded in 1980 and in service by 1984, relying on the Universal Postal Union for overseas delivery. DHL, UPS, FedEx and TNT arrived in the mid-80s, establishing joint ventures as required by law, all of them choosing the largest logistics player, Sinotrans Group.
Today the ‘big four’ dominate the international express business. By 2006, EMS had seen its share shrink to around 20 per cent, while DHL claimed 30 to 34 per cent, FedEx 19 to 21 per cent, UPS 18 to 20 per cent and TNT seven to eight per cent, according to a 2007 study by Booz Allen Hamilton.
DHL has retained its partnership with Sinotrans until today, while UPS, FedEx and TNT realigned themselves with local players, through acquisition or partnerships, to build their domestic networks - a new opportunity since China’s entry into the World Trade Organisation in December 2001.
That is where the future lies. Domestic coverage of China is still limited to the coastal tier-one cities, but it is rapidly expanding inland, and the big four are pouring billions of dollars into the construction of logistics hubs and ground fleets. Already, the domestic courier, express and parcel (CEP) business is twice the size of the international business.
This is likely to lead to renewed marketing activity. UPS recently hired Ogilvy & Mather to handle its global ad account, with China earmarked as a key Asian market. What’s more, Malcolm Sullivan, VP marketing for Asia-Pacific at FedEx, says that the company will resume spending on ads to back its investment in lower tiers. “As the economy expands beyond the coastal areas, we are investing in infrastructure in tier-two, three and four cities,” he says. “Our marketing communications will follow, and potential users will see more advertising in these areas.”
Sullivan adds that FedEx’s activity extends beyond advertising. It sponsors the China Badminton Team, and renewed its contract in August. He adds: “By activating this sponsorship through events, we extend our brand presence and broaden our community relations in the country.”
Got a view?
Email [email protected]
This article was originally published in 5 November 2009 issue of Media.
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