The express delivery industry in China does not need "small courtyards and high walls."

As a former practitioner with over 10 years of intellectual property experience, it must be said that the complexity of legal issues related to trademarks is not easily understood by the general public. There is a basic consensus in the industry: lawyers who have achieved success in the field of trademark law are considered "S-level" figures in the entire legal industry.

For example, the recent settled case between Cainiao and Pinduoduo regarding the trademark infringement and unfair competition issues related to the use of the "Cainiao" word mark, solely from a "legal" perspective, is enough to confuse most people. However, if the public only focuses on the outcome, they may fall into the "narrow-minded" cognitive trap, thereby ignoring the real fate of the grassroots figures in the logistics industry.

This is very contradictory: the propositions resolved within the legal dispute framework are cold, but the real business propositions are vivid tragicomedies.

Without touching the soul, change cannot occur. Looking back after many years, we may suddenly discover that it is this unexpected entanglement of legal and business issues that inadvertently touched upon the underlying industry problems, triggering a new round of express delivery industry transformation.

01 On the Surface

On the surface, two Chinese internet star companies engaged in a dispute over the reasonable use of the names of express delivery points: Pinduoduo was sued by Cainiao for trademark infringement and unfair competition due to listing Cainiao stations as one of the pickup points for consumers in its self-pickup point list.

Cainiao argued that the rights and interests of Cainiao stations are critical resources for end-to-end logistics companies, and Pinduoduo's actions have caused confusion among the public, improperly enhancing its own competitive advantage, and causing damage to Cainiao's competitive advantage.

Pinduoduo argued that in fact, the names "Cainiao" and "Cainiao station" are only used as identifiers in the self-pickup point list, with specific addresses and geographical location markings, making it easy for consumers to find the pickup points without causing confusion. In practice, Taocai Cai under the Alibaba Group and Meituan's Meituan Selection also use a similar display method.

The court ultimately partially supported Cainiao's claims. Pinduoduo lost the lawsuit, and Cainiao successfully defended its rights. This means that from now on, some consumers will find it difficult to pick up their parcels and fresh produce at Cainiao stations.

The facts are not complicated, but the legal provisions and evidence involved in the arguments are detailed enough to make the final judgment document a total of 77 pages.

02 It's Both Legal and Business

However, even with 77 pages of text, it cannot cover the various internal situations of the current state of the end-to-end logistics business, nor can it reveal the changing commercial logic behind the dispute—

Because this involves not only legal issues but also business issues.

Once upon a time, under the call of Jack Ma's mission statement "Let the world have no difficult business," Cainiao Alliance emerged in its infancy. It greatly promoted the far-reaching influence of Alibaba's Taobao e-commerce platform and drove the overall digital management process of China's logistics and express delivery system. Although it also experienced a disruption in its partnership with SF Express, it ultimately made a significant contribution in the process of integrating the "last mile" of express delivery through the establishment of Cainiao stations.

"Good companies should solve social problems with business methods," as Jack Ma said, and Cainiao did just that. As a commercial return, today's Cainiao has become one of the hottest Chinese TOP-level unicorns, covering markets in more than 200 countries.

However, the rotation of commercial logic is not subject to individual will. When the flourishing era of e-commerce incrementality irreversibly entered the "fourth consumption era" with rational consumption as the primary focus, the rise of Pinduoduo, Luckin Coffee, and HEYTEA made the ancient giants of the internet realize the meaning of "the situation is stronger than the individual."

Friction between the old and new generations is therefore everywhere. The so-called case of a certain trademark and unfair competition is just a small part of it. Essentially, the background of this commercial era is the backdrop against which specific cases occur.

Therefore, returning to the essence of business logic, we cannot help but ask, can the occasional and frequent conflicts ultimately influence the direction of the times? This question does not need to be debated; everything is self-evident.

However, beyond a question that does not need to be debated, there is another question that requires a broader spectrum of humanistic, legal, and business care to be applied:

The business of large companies naturally comes with the aura of flowers and applause; what about the warmth and coldness of the business of ordinary people?

Even though the compensation amount for this trademark and unfair competition lawsuit reaches hundreds of thousands of yuan, it is far from being a bone of contention for either Cainiao or Pinduoduo. However, for the grassroots operators of the express delivery network who are caught in the middle, the impact on their future income expectations may not be as subtle as "gaining or losing a few bucks."

Operating an express delivery point is the foundation for a family's livelihood, encompassing living, education, healthcare, and retirement. This small business, based on a core business model of per-package fees, where every penny ultimately contributes to realizing future life aspirations.

Conversely, it is these aspirations that, at the grassroots level, support the achievement of the credit for the "last mile" of China's express delivery industry. They do not even pay attention to the hottest topics in the industry, such as AI models and logistics robots, let alone the complex and incomprehensible issues of trademarks and competition law. But it is very likely that all these things they have no time to focus on will ultimately determine the fate of their small business.

After all, due to an unexpected legal dispute, some of them are about to lose a batch of "hope packages".

03 is business, and it is also survival

According to the statistics as of the end of 2023, the number of logistics and express delivery personnel, mainly consisting of couriers and food delivery drivers, exceeds 84 million, making it one of the largest employment clusters.

For terminal network operators, it can still be considered a small business; but for the majority of employees, it is a way of making a living.

In our previous report, it was pointed out that in the business logic of express delivery and food delivery, when users choose this service, they are essentially paying for the time and energy of couriers, express station operators, and delivery drivers; through such payment behavior, users save their own time and energy.

For this payment behavior to continue, an important prerequisite is that the value of the user's time must be higher than that of the couriers and delivery drivers. Obviously, the higher the hourly wage of the former compared to the latter, the stronger the user's payment tendency and the less sensitive to costs.

In the era of incremental social and economic development, development can overshadow the contradictions within it, providing strong support for the development of the logistics and express delivery industry. This is also an important macro factor for the strong rise of the express delivery and food delivery industry in the past economic cycle.

However, in the current global era of daily life goods and services consumption, the accumulation and concurrency of some contradictions are profoundly changing the competitive logic of the entire logistics and express delivery industry: when payment expectations decrease, the survival pressure of employees increases sharply. How to reduce rather than significantly increase the friction costs within it has become a key strategy for the competition of the new cycle industry.

Especially, the battles in the terminal network of logistics and express delivery will ultimately affect the most extensive households. Their tolerance for life is being troubled by the objectively declining economic cycle. The most recent industrial mission for all important industry participants is to vigorously confront this trend, rather than the other way around.

This is a battle for survival, but it is not just a battle for survival unique to grassroots express delivery practitioners, but a battle for survival for the entire logistics and express delivery industry. Obviously, not all competitors are aware of this.

Through this untimely yet legally reasonable trademark and unfair competition lawsuit, we can also see more stubborn traces belonging to the old cycle, such as:

● Deformation of business logic: Terminal network operators, as independent operators, are supposed to operate independently and bear their own profits and losses, but they are restricted by the brand and cannot independently optimize operating costs in their own territory.

● Misuse of data advantages: In the current express delivery terminal market, "pickup codes" are still a highly valuable data innovation. However, on the other side of the coin, when market share advantages bring user data advantages, this advantage has not been used to maximize the overall efficiency of the express delivery market, but has been used as a means to "hijack" consumers and terminal network competition, thereby blocking other market participants and increasing the time cost for terminal consumers.

Certainly, business competition is not a free lunch, and existence is reasonable. However, the connotation of this "reasonable" is always extended by the extension of the times—The "Provisional Regulations on Express Delivery" implemented on May 1, 2018 has already pointed out: "Encourage multiple enterprises engaged in express delivery business to share terminal service facilities, and provide convenient terminal services for users."

This also indicates that returning to the law and competition, the so-called fair competition is nothing but people-oriented.

04 Conclusion: China's express delivery industry does not need "small courtyard high walls"

Broadening the perspective and looking at the entire industrial economy of China, the biggest current problem comes from the "small courtyard high walls" of the semiconductor industry chain erected by other countries in the AI era. The lack of heterogeneous computing power is restricting the technological progress of large AI models in China, and it is also an important obstacle to the recovery of every economic capillary.

Do not do unto others what you do not want others to do unto you. Similar propositions should not, and cannot be erected in the vast industrial belt.

In our view, whether it is Pinduoduo or Cainiao, their industrial positions imply that both are key potential for China's industrial economy to reach a new scale plateau. Competition is inevitable, but fundamentally, as representatives of the new productive forces serving the widest population, they have common interests and missions.

The implication of this underlying logic is self-evident: openness is the only way to industrial prosperity, and China's express delivery industry does not need "small courtyard high walls."

*This article is written based on public information and is for information exchange only, and does not constitute any investment advice.