Are UPS, FedEx Tough Enough for China’s Competitive Courier Chaos?

(Updates to include comment from FedEx in the fifth paragraph and information about its Chinese subsidiary in the 14th paragraph.)

BEIJING (TheStreet) -- Online retailing has turned China’s city streets, alleys and sometimes sidewalks into freeways for frantic package couriers zipping around on electric bikes and three-wheel carts.

Rarely seen in China are the familiar mainstays of America’s package delivery business: the chocolate vans of United Parcel Service (UPS), and FedEx's (FDX) white vehicles.

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That could change, however, because UPS and FedEx have reportedly won government permission to operate relatively independently in Beijing, Wuhan and scores of other Chinese cities. Reuters said Thursday that UPS has been licensed to deliver packages in 33 cities, while FedEx can serve 58.

Contacted by TheStreet Thursday, here's what FedEx said about the report:

FedEx domestic services in China help transform businesses and create opportunities through a reliable, flexible transportation network. After having received an investment certificate from the Ministry of Commerce on December 8, 2006, and a business license for domestic services from the State Administration of Industry and Commerce on Dec. 20, 2006, FedEx started operating a domestic delivery business in China in May 2007. Since China’s new postal law came into effect in October 2009 with the institution of a permitting system for the express business, we have been working closely with the relevant authorities to obtain the express delivery services permits for our business. FedEx complies with all laws and regulations. We are and will be operating the domestic business as usual in China.

A UPS representative was unavailable for comment.

If in fact UPS and FedEx drivers start muscling vans into crowded Shanghai alleys, investors may have a new way to capitalize on the Chinese consumer’s swing toward online shopping. UPS and FedEx stock in a portfolio could supplement – or even replace – shares in the lesser-known Chinese Internet companies that are relative newcomers to New York’s exchanges.

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