The holding company of one of China's largest express delivery companies, SF Express and Deutsche Post DHL Group have entered into a 10-year strategic partnership under which Deutsche Post DHL Group will transfer its supply chain operations in China to S. F. Holding Co., Ltd.
The transaction involves the supply chain business in Mainland China, Hong Kong and Macau and has no bearing on Deutsche Post DHL Group's business activities in international express, freight
transport and e-commerce logistics solutions in China.
In a statement, DP/DHL Group said that it would receive an upfront payment of around RMB 5.5 billion (approximately €700 million, US$796 m) as part of the partnership.
DP/DHL Group's supply chain China business will be incorporated into S.F. Holding and operate as a co-branded organisation, and Deutsche Post will receive a revenue-based partnership fee over the next 10 years. Yin Zou, currently Greater China head of DHL Supply Chain, and his existing management team will lead the joint operation.
Extremely competitive market
S. F. Holding, whose SF Express is one of the largest players in China’s highly competitive parcel delivery market, said the deal was expected to help the company grow internationally.
According to a Reuters report, China’s parcel delivery market - worth around 976 billion yuan (US$140.5 billion) last year according to the State Post Bureau - has been getting more competitive, with new players like Chinese e-commerce firm JD.com Inc pushing into the sector.
The market also includes firms such as Alibaba Group Holding Ltd’s Cainiao network, as well as dedicated domestic parcel delivery firms such as ZTO Express and YTO Express Group Co Ltd.
DP-DHL speaks of a win-win deal
S.F. Holding chairman Dick Wong said the new partnership deal formed part of the company's expansion strategy which earlier this year saw SF Express investing US$100m in U.S. digital freight forwarder Flexport.
“S. F. Holding has been actively expanding its business-to-business (B2B) capabilities and pursuing different strategic partnerships to grow SF Holding into a truly integrated logistics solutions provider that delivers best-in-class services for our clients,” Wong said.
The statement also quoted Frank Appel, CEO of Deutsche Post DHL Group as saying that S. F. Holding's local market expertise in China had "real advantages for our customers across all industries including technology, healthcare, retail, automotive, and e-commerce. Combined with our global operations standards and network support, the agreement provides a solid foundation to continue exploring further opportunities in China in the coming years."
S.F. has fast grown from small to big in the package delivery market
S. F. Holding is involved in express logistic services in China and internationally. It offers express delivery, warehousing, supply chain financing, financial leasing, financial management, and payment services, as well as cold chain transport services for food and pharmaceutical customers. The company was founded in 1993 and is based in Shenzhen, China.
Nol van Fenema