When it goes to China, local companies rush to deliver

Hyundai Logistics employees sort packages bound for China using PDA devices at its logistics center near Gimpo International Airport. Provided by the company

A consumer in Shanghai logs on to T-mall, China’s largest shopping site run by Alibaba.com via smartphone to buy Korean herb shampoo. Payment is made on Alipay about 8 a.m.

The discount store that receives the order in Korea places the shampoo on a truck that delivers it to a center owned by Hyundai Logistics at Gimpo International Airport, southwest of Seoul, at 4 p.m.

On May 27, a little more than a week after it opened May 18, the 1,150-square-meter (12,379-square-foot) center had more than 3,000 boxes stacked 10 meters (33 feet) high awaiting delivery to China.

“Every day 2,000 to 6,000 boxes pass through the logistics center,” said Kim Do-hyung, who is in charge of the facility. “Ninety percent of the items are everyday goods like cosmetics, shampoo and mask packs.”

When an employee touched a PDA device to one box, it emitted a loud beep with a message that read, “1.36 kilograms no problem.”

“The people who made the order can receive information about the delivery on their smartphones as the PDA sends the information to T-Mall,” said Kim.

The packages are trucked to Gimpo airport and loaded on a plane that takes off at 12:40 p.m. for Hangzhou, China. They are then delivered to Cainiao logistics center, operated by Alibaba.com. It takes three days for the shampoo to be delivered to the doorstep of the customer in Shanghai.

“When delivering a package through express mail service, it takes seven to 10 days,” said Kim Seong-cheol of the Hyundai Logistics international delivery team. “But we were able to cut the delivery time by three to four days because of our strategic alliance with a local Chinese company.

“We are planning to expand our logistics center at Incheon International Airport by the end of this year so it will be able to handle 1.5 million packages a month.”

Competition by Korean delivery companies to secure Chinese consumers purchasing Korean products online has been heating up. The industry estimates that purchases by Chinese consumers will total 54 trillion won ($48.5 billion) this year. Chinese purchases have been doubling annually in recent years thanks to the wide popularity of Korean pop culture ranging from K-pop to movies and TV shows.

“More than half of foreign consumers using local shopping malls are Chinese,” said Kang Seo-jin, research analyst at KB Financial Group. “Considering that Internet penetration in China is only 45 percent, direct purchases of Korean products by Chinese consumers are likely to continue growing steadily.”

Like Hyundai Logistics and Alibaba.com, other Korean companies are joining hands with Chinese companies to get in on the trend.

CJ Korea Express in March partnered with China’s second-largest parcel delivery company, Shanghai YTO Express Logistics. Pantos Logistics, an international cargo company acquired by LG International in January, last month signed a business agreement with Chinese e-commerce company 4PX. An affiliate of Alibaba.com, Ali Express, is expected to jump into the competition in July.

BY KIM KI-HWAN [lee.hojeong@joongang.co.kr]