1. UPS moves to China By Bryan Hartman

2. Why China? 2004 GDP Growth of 9.5% –8.2% in India, 4.6% in S. Korea 94 Million Internet Users in China –All potential customers US export to China increasing –1999 = 45,000 tons –2001 = 73,700 tons –Increase of 28,700 tons or 57 Million Pounds

3. Chinese Growth SME = Small or Medium Enterprise Survey of 1,200 Asian SMEs Chinese SMEs –62% will increase employment –71% expect higher growth in 2005 –86% see transport/logistics as important –74% see consumer goods as important –62% think Supply Chain Efficiency is lacking

4. Mainland China Shipping Partnership with Yangtze River Express Goal – reach every address in China Government is building 26,000 miles of new highway. Every city of 200,000+ will be connected SMEs not entering China –65% do not trust Chinese government

5. UPS Offers What Chinese employees seek… –Education –Health Insurance –Overtime –Less meetings Brand Name SMEs can trust

6. Air and Freight Shipping Typical Air Shipment –High value to weight ratio –Short Lifespan items –Legal, Medical documents –Computer Disks –Spare Production Parts –Luxury Goods Shipment spends ½ of its time in warehouses

7. Opportunity Opportunity in Chinas Emerging Economy –Chinese Discretionary Spending Increases (luxury items) –Market Reform (legal docs) –Increased technology manufacturing Spare Parts and computer disks

8. UPS Solution

9. Population and Airports

10. Mainland China

11. Planes, Flights, and Hubs: Currently 48 weekly flights –24 Shanghai –12 Beijing –12 Hong Kong The Future is now (expansion in 2005) –International Hub in China (2007) –23 regular hubs –1,400 UPS Trucks –3,500 Chinese Employees

12. Competition Fed Ex, DHL, and China Post Office –Fed Ex moving Asia Hub to China –Fed Ex has been shipping in China for longer –In 2001 China Post Airlines had only intra- China express delivery service. (head start)

13. Political Risk Chinese Government –Legislation to make China Post Office regulatory body of express shipping. –Forced by WTO to allow private express shipping –81% of SMEs view govt instability as reason to stay away from China.

14. Obstacles and Answers Demand for UPS Services –Market Maturing increases demand Chinese Infrastructure –Govt highways Fierce Competition –Establish more Hubs and faster transport Government Issues –Pressure from outside