Yamato teams up with JD.com to send goods across China

Yamato Holdings will partner with Chinese e-commerce giant JD.com to ship products from Japanese retailers throughout China starting in 2018, likely boosting Japanese online sales there.

JD.com is China’s second-largest internet retailer, after Alibaba Group Holding, and operates a nationwide delivery network.

Yamato will handle international shipping from Japan to China and use JD.com’s network for home delivery under an agreement concluded Monday. Responsibility for clearing customs will be decided later.

The alliance will enable Chinese consumers buying items on Japanese websites to have purchases delivered to where they live. With cosmetics and food products from Japan popular in China, sales of Japanese companies are growing as they offer goods on internet marketplaces there. Yamato’s service will offer a way into China for small and midsize Japanese business that have yet to enter the country’s online retail market.

JD.com will receive shipping service support from Yamato as well. The parcel courier is already consulting JD.com on its cold-chain network and other delivery methods to maintain product quality in transit. This will help JD.com better handle fresh Japanese foods and other perishables, expanding its online retail business.

China-bound online sales from Japan grew some 30% in 2016 to 1.03 trillion yen ($9.08 billion), according to the Ministry of Economy, Trade and Industry. The market is estimated to nearly double to 1.9 trillion yen in 2020.

New strategy

The profitability of home delivery services in Japan has been squeezed amid a personnel shortage that has pushed up labor costs. Yamato sees international delivery, which carries high rates, as a growth field.

Yamato had been able to offer home deliveries from Japan to only those areas where it has a transport network, such as Shanghai and Hong Kong in China. But it is abandoning this model and partnering with other companies to accelerate expansion abroad. Yamato launched a home delivery service in Thailand with Siam Cement in January.

But the competition is intense. Japan Post already has Japan-China transport infrastructure and holds a large share of such shipments. It partnered with China’s STO Express to launch a low-cost delivery service in October. Nippon Express is also cooperating with Alibaba in China-bound shipping, handling international transport of goods and customs.