UPS and FedEx Just Got a Major Boost in the Chinese Market

BEIJING (TheStreet) -- The Chinese government's cabinet has pledged to move toward internationalizing the country's package delivery industry, signaling new profit potential for United Parcel Service (UPS) and FedEx (FDX) as China's retail sector shifts to online shopping.

The parcel delivery business will be "fully opened up" to "create a fair and competitive business environment in which domestic and foreign-financed enterprises receive equal treatment," according to a summary of the State Council decision posted late Wednesday on a government Web site.

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The decision bodes well for UPS and FedEx, which are currently licensed to deliver parcels in several dozen cities but not nationwide, as well as for e-commerce businesses such as Dangdang (DANG) , an onlline shopping site run by Walmart (WMT) , (JD) and Alibaba (BABA) -- all of which rely on so-called "kuaidi" couriers to move products from warehouses to buyers.

Also in line to benefit are investors in stocks linked to China's growing e-commerce sector and listed in New York, where Alibaba scored a blockbuster initial public offering last week.

The government is promoting online shopping as a key way to expand the economy's consumer sector and cut China's dependency on exports. The latest decision shows the government also wants to fuel competition and streamline the courier services that online retailers can't do without.

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