In China's fiercely competitive express delivery market, where price wars have become the norm, a recent policy adjustment in Yiwu city has introduced an unexpected change. Effective July 18, the Yiwu Postal Administration raised the minimum delivery price to 1.2 yuan (about $0.17), marking a significant intervention in a market long plagued by unsustainable competition.
The move follows a July 8 meeting convened by China's State Post Bureau that addressed industry-wide issues of excessive competition and service quality deterioration. Market analysts view this as a direct response to what many describe as the courier sector's "involution" problem—a term referring to intense competition that yields diminishing returns.
Market Reactions and Immediate Effects
Bank of America's recent market survey indicates that Zhongtong Express, one of China's largest courier firms, has already adjusted its average service price in Yiwu upward following the policy announcement. Industry observers expect other franchise-based delivery companies to follow suit.
"This price floor adjustment should provide temporary relief to third-quarter earnings pressure and improve overall industry sentiment," noted a Bank of America research report. The bank's analysts observed that previous price wars had driven some regional delivery rates below operational costs, particularly in Yiwu—a global hub for small commodity trade that processes millions of packages daily.
Structural Challenges Remain
However, financial analysts caution that without deeper industry consolidation, the price recovery may prove temporary. "The fundamental issues of overcapacity and service homogenization remain unresolved," the Bank of America report emphasized. The courier sector continues to grapple with redundant networks and nearly identical service offerings among major players.
The Yiwu experiment represents more than a short-term market correction—it offers a potential blueprint for balancing healthy competition with sustainable operations in China's $150 billion express delivery industry. As regulators and companies navigate this transition, the world will be watching whether price discipline can coexist with innovation in the planet's most dynamic logistics market.