In 1980s, due to the fact that the competitiveness and productivity of national enterprises were low, the set up of wholly foreign-owned enterprises (WFOE) were not permitted in the Mainland in order to protect national interest. This applies to the logistics industry. Due to such policy restrictions, UPS, FedEx, DHL and other logistics multinationals entered the China market by the means of joint ventures (JVs) or agency services teaming up with local enterprises, with the latter controlling the JVs. For example, DHL entered the market via an agency agreement with Sinotrans in 1980 and FedEx signed a reciprocal agency agreement with Sinotrans in 1984.
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