Hopefully transportation improvements will be made along with the distribution network improvements. Retailers and e-retailers alike, rely on small parcel. However, small parcel remains inefficient in China due in part to regional protectionism which the government wants to do away with as part of this new initiative. Newegg, a consumer electronics e-retailer, operates 8 distribution centers throughout China. However, it has noted third party parcel delivery services in China are not capable of meeting its parcel delivery needs. Therefore, in metropolitan areas where the company operates a facility, the company delivers a large amount of products through a local delivery system developed, owned and operated by the company. For deliveries outside these networks, the company relies on China Post.
As the government attempts to move China from being the "manufacturer to the world" to one of a more balanced economy of exports and imports, encouragement of growth sectors such as ecommerce is important. As ecommerce continues to grow however, the need for distribution and transportation networks connecting the entire country will be needed. This may be a tipping point for such companies as FedEx and UPS to enter the domestic market.