Shanghai-based CCES, one of the top 10 express courier companies in China, will go bankrupt in 10 days if no one steps forward to rescue the ailing business, reports Guangzhou-based 21st Century Business Herald. It would be the second major courier company to close this year, after Star Express.
CCES chairman Fang Liyuan told the Herald that the company signed a deal last month with buyer Jiang Xiaogen, the manager of a Guangdong-based courier company. Under the arrangement, Jiang was to invest 200 million yuan (US$31.5 million) to purchase a controlling stake in CCES, but backed out after putting in just 20 million yuan (US3.15 million).
Jiang reportedly leaked to Chinese media that he regretted the decision after discovering that CCES was 170 million yuan (US$26.8 million) in debt. While Fang admits that CCES has recently suspended operations due to financial difficulties, he has angrily disputed the extent of the company's troubles, saying that the debt is only in the 40-million-yuan (US$6.3 million) range. Fang added that the company's main stockholder, Zhejiang-based Yuantai Group, has been struggling in the real estate market and can no longer salvage the company.
Fang said the company needs to deliver 350,000 items a day to turn a profit, but currently only manages around 200,000 items.
Xu Yong, the principal consultant of the China Express Consulting, told the Herald that CCES would go bust in the next 10 days if no one injects more funds into the company.
Originally named Dongcheng Express, CCES was established in 2003 and performed well, with gross profits reportedly as high as 20%. The company began to struggle, however, as the market became saturated with competitors. Margins shrank significantly due to rising oil prices and labor costs. The failing company was purchased by Yuntai Group in 2010, when its name was changed to CCES.