Indonesia’s J&T Express enters China’s red ocean of last mile logistics

J&T Express, the ecommerce delivery company which started in Indonesia, is now attacking a definite red ocean: China. 

Jet Lee, the Founder of J&T, has been in Shanghai for about a year, building agent networks and major clients. J&T also took control of a company which owns a nationwide courier licence to expedite its launch in March this year. 

It would have been launched earlier if not for the coronavirus.

J&T’s Chinese Name, 极兔, literally means ‘extreme rabbit’. 

Lee’s background as Oppo distributor in China and later on in Indonesia gave him not only the experience in leading teams and building networks, but also the culture of fighting and perseverance. 

Oppo’s senior ranks also supported Lee on funding, which explained why many VCs tried and failed to buy some shares of J&T. 

Prior to entering China, J&T already operates in seven Southeast Asian countries: Indonesia, the Philippines, Malaysia, Thailand, Vietnam, Cambodia and Singapore. 

One reason for J&T’s entry into China, in addition to the massive market, seems to be defending itself. We have translated the open letter of Jet Lee below, where he mentioned that if J&T stayed in Southeast Asia, sooner or later others will come and attack. 

Gigantic red ocean

According to various securities firms, China occupies almost half of the global parcel delivery market, and is still growing at 20%-20% per year (all these reports were done before the coronavirus outbreak). 

The market is bloody – aside from the leading player S&F Express, there are more than five national players and a bunch of regional players. The margins are razor thin. A few disruptors tried to change the landscape, but could not sustain in the fierce competition. 

Pinduoduo?

Lee seems to be very confident – and he has the support of the whole Oppo ecosystem, one of the most spectacular distribution networks in China. 

By the way, Oppo, Vivo, Realme and OnePlus all originated from a company called BBK Electronics. 

Duan Yongping, the founder of BBK, famously mentored (and angel invested in) Colin Huang, the founder of Pinduoduo. He even brought Huang to lunch with Warren Buffett: 

Interesting, very interesting. 

— — —

Below is the open letter to J&T’s channel partners in China that Jet Lee just published: 

A letter to agents of J&T Express China: 

[A poem from Chairman Mao which is very difficult to translate]

I sent this poem as a gift to our Indonesian agents on 1 September 2015, when J&T delivered its first parcel in Jakarta. 

To be honest, 

I never thought about doing parcel delivery in Indonesia; 

I never thought about doing parcel delivery in Southeast Asia;

I never thought about doing parcel delivery in China. 

As a Chinese national, there are some emotions involved when I come back to build a new business. However, parcel delivery market in China is tough, and competition is fierce, why would we do that? 

1. Marco trend: express deliver is a basic service to the consumers, and the demand is only growing. In 2019 more than 60 billion parcels were delivered in China – it is a huge market.
2. Long term: many are saying that competition is brutal in this market. However, which market is not fiercely competitive here? Smartphones, ecommerce, food delivery, ride hailing – which one is not fiercely competitive? Even if you open a small dumpling shop, you face competition for all other breakfast places. If we stay in Southeast Asia, competitors will come – how can we stay out of competition?
3. Enabling: The other side of competition is – we are able to attract some top talent in China, to work together and grow the company and the team; in future, we might even be able to enter more countries. 

In a short amount of time, we have recruited hundreds of best talent in the industry, as well as those from the smartphone industry. Some of them invested to become our agent – if not for them, how would you and I be so confident? 

As I mentioned above, when a new brand enters a red ocean, I am very grateful that we have you to follow us. More importantly, the business leaders of Oppo, Vivo and their whole distribution system contributed huge amount of funding for us to fight on. I will never forget in my life. 

Chairman Mao wrote this poem after Zunyi meeting, part of the Long March. He basically sent a message: we are optimistic about the future, and we will not be defeated by any difficulty. The worse the situation is, the greater the leadership. 

So, as part of the team, I hope everyone puts out the best determination and courage. Some might quit, others will jump in to keep on fighting. No matter how big we become, we shall always remember that efficiency and service is our core! This is not a task, this is the meaning of our life. 

Today, J&T enters China. This is not only my choice, but that of everyone on the team and every partner, agent. You can only fight on if you made the choice yourself. 

I used to tell a story: a farmer is working on the field with a dog, a wild rabbit came. The farmer asked the dog to chase. A few minutes later, the dog came back demotivated. The farmer asked “you such a big dog, why can’t you catch a rabbit”. Dog said “I ran for a meal, the rabbit ran for its life. He was too fast.” 

Entering China, we need this spirit of running for life. Only then we can make miracle happen. 

If one day, we become top 3 in the industry in China, your names will all be on the leaderboard – what a pride!

My vision is: as long as the express delivery industry is alive, we are alive; if the industry dies, we are still alive. 

No matter how big the dream is, we need brothers and sisters to work hard to make it happen. We are nothing now, so we need to be aware and start from zero. We need to be result driven. When we make others succeed, we succeed too. 

Brothers and sisters, together we create the future!

Jet Lee [signed]