China starts probe of FedEx for rerouting Huawei parcels

The international courier may even be blacklisted.

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China starts probe of FedEx for rerouting Huawei parcels

The Chinese government has decided to investigate FedEx for failing to deliver parcels to their designated addresses in the country, China’s state television broadcaster CCTV reported, triggering widespread speculation that the US courier might be added to a planned Chinese blacklist of foreign firms.

FedEx said in a statement posted Saturday on its website that the courier values its business in China, claiming that its relationship with Huawei and other customers in China are important to the company. It added that the courier will fully cooperate with any regulatory investigation into how it serves customers.

FedEx originally denied that it had diverted its client’s parcels in a post on its official Sina Weibo feed, but then apologized on the same platform last Tuesday for mistakenly rerouting “several Huawei parcels.”

After the US Department of Commerce placed Huawei on its Entity List, essentially preventing the Chinese tech giant from utilizing US tech, FedEx rerouted two parcels sent from Japan to a Chinese address of Huawei, landing the packages in the United States. Additionally, two packages sent from Vietnam to Huawei’s representatives in Hong Kong and Singapore were also flown to the US.

China’s Ministry of Commerce announced on Friday that it will roll out an “unreliable entity list” to single out foreign entities, individuals, and companies that “do not obey market rules, violate the spirit of contract, and block or cut off supplies to Chinese companies for non-commercial reasons, which severely hurt the legitimate rights and interest of Chinese companies.”

Ma Junsheng, head of State Post Bureau of China, said in an interview with CCTV that couriers operating in the country must obey Chinese law and should not violate its Chinese clients’ legitimate rights.

Researchers at Sinolink Securities predicted that Fedex’s revenue from China fell between RMB 18 billion and 20 billion in 2018, making it the largest player in China’s international courier business with a 31% market share, exceeding that of DHL and UPS.

If FedEx were sanctioned by the Chinese government, China’s domestic couriers, including SF Express, would only able to absorb “part of the business” as their international presence is still not established enough, according to Sinolink. Its researchers expect that sanctions on FedEx may bring a 5% rise in revenue for SF Express.

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