FedEx (NYSE: FDX)came under pressure from the Chinese government a month ago when freight from telecom company Huawei was not delivered to the correct address. The U.S. government has essentially banned the use of Huawei’s technology by U.S. companies. Huawei, which is controlled by the Chinese government according to some of its critics, said the ban will cost it $30 billion in revenue a year. Just as FedEx seems to put the problem behind it, another Huawei package handled by the freight company was returned to the sender. The Chinese government’s reaction was the glitch was not a mistake.
According to Reuters, “The package in question was mistakenly returned to the shipper, and we apologize for this operational error.” It had been shipped from China to a U.S. destination. FedEx would not say where.
FedEx is in danger of being banned from doing business in China. The Chinese government has threatened to put it on the list of “unreliable entities list”, which is essentially the kiss of death. China medium China’s Global Times tweeted in reaction to the incident, @globaltimesnews:
.@FedEx likely to be added onto #China’s ‘unreliable entities list’ due to its parcel incident on #Huawei product; Chinese netizens not accepting the US firm’s apology again. http://bit.ly/2XtT0kH
All of the FedEx management who spend time on Twitter must have gotten the message quickly. And, FedEx posted its defense: “FedEx can accept and transport all Huawei products except for any shipments to listed Huawei entities on the U.S. Entity List.” However sincere or accurate the FedEx statement is, the Chinese government may well reject it.