Memphis-based FedEx Corp. said its FedEx Express unit plans to buy out shares in a Chinese freight carrier owned by Tianjin Datian W. Group Co., Ltd. (DTW Group) for $400 million. This would give FedEx sole ownership of the FedEx-DTW International Priority express joint venture originally formed in 1999.
The deal gives FedEx control of all 89 DTW Group locations in mainland China, along with 6,000 employees, said Frederick Smith, chairman, president & CEO. "China is changing the world's economic landscape," he explained. "This strategic investment in the long-term growth of China will broaden and deepen our relationship by improving access to important markets, fueling economic development for years to come."
The DTW Group will continue offering international freight forwarding, general cargo transport and merchandise distribution services, noted David Cunningham Jr., president-Asia Pacific for FedEx Express.
"This acquisition deepens our engagement with the China market ... with seamless access to key areas worldwide, including China's second and third tier cities," he said. "Cities outside the Eastern seaboard, like Wuhan, which is itself twice the population of Los Angeles, are a crucial part of growing China's economy and vital to the long-term growth of FedEx in this region."
At stake is a share in the enormous amount of global trade volume. China reported that exports in 2005 reached a record $762 billion, a year-over-year increase of 28%, with imports rising to $660 billion, an increase of nearly 18%.