China probes express delivery firm Yunda over safety loopholes

China's State Post Bureau has launched an investigation into Shanghai business unit of Yunda Express over safety management issues within its franchises, the bureau said on its website on Wednesday.

The bureau pointed to significant loopholes in the express delivery giant's safety management of its franchisees, which allowed fraudulent promotional materials to enter the delivery channels, leading to substantial losses for customers.

"Shanghai Yunda Express Co has failed to manage its franchisees effectively and bears responsibility for failing to stick to safety assurance measures as required," said the statement, adding that the State Postal Bureau has initiated the investigation in accordance with the law.

Shenzhen-listed Yunda said in a securities filing on Wednesday that it had received the regulatory authority's notice to launch the case against its wholly-owned Shanghai unit.

It has set up a special task force to carry out internal investigations and will enhance the scrutiny over possible loopholes at its franchisees to prevent similar cases in the future.

Yunda shares lost over 2 percent on Thursday morning.