PostMart model means better days on the horizon

By Wang Zhuoqiong (China Daily) Updated: 2015-03-12 08:03

"They have no reliable supply chain," explained Luo.

Rapid urbanization, continuous migration to the cities, and farmers' leasing out their land to the major farming operators have increased farmers' incomes in recent years.

"The villagers have the money to spend," said Luo. "The challenge is how we can get commodities to them."

Long distances between stores in rural areas can mean high distribution costs.

In Henan, there are around 45,000 village stations of China Post and thousands more independent stores.

But distribution to rural villages in China is also proving a major challenge for regional and national manufacturers, and brand owners.

PostMart has already held wide-ranging talks with major brands about how to distribute their products more efficiently, and cheaply to more remote provinces.

Major fast-moving consumer goods brands, especially, are eager to gain a firmer foothold in the countrysides and in lower-tier cities.

"What this is doing is actually disrupting the old-fashioned supply industry in China.

"Now the distribution system is like a bowl of noodles, and we hope the bigger brands will use our system to help them build a more effective supply chain," said Luo.

China Horizon first signed its 50-50 joint venture agreement with China Post in June 2013.

By the end of August, PostMart had 98 directly operated stores and 6,000 franchise stores in China. The State-owned China Post specializes mostly in postal finance, delivery and logistics services.

In a 25-year cooperation with China Post, China Horizon said it would invest 1 billion yuan ($162 million) to develop 10,000 retail stores. The partners also decided to build 111 terminal distribution centers (one in each county in Henan) and seven regional distribution centers to support large-scale distribution to the village stores.