McDonald’s Skips China-Trade Frictions With Cold-Chain Logistics Deal

Two major courier operators have teamed up to set up a cold-chain logistics joint venture, tapping the booming market amid rising consumer demand for fresh and frozen produce.

SF Holding Co. Ltd., the listed unit under China’s largest courier, SF Express, and U.S.-based Havi Group LP, which counts McDonald’s local franchisee among its clients, officially launched the venture on Friday, after announcing such an intention early this year.

The new entity, New Havi, will be responsible for part of existing Havi’s businesses that include delivering chilled raw ingredients to McDonald’s restaurants across China, SF Chairman and President Wang Wei said at a news conference in the southern metropolis of Shenzhen.

SF Holding will take a controlling stake in the venture, according to a previous announcement. No financial terms were disclosed.

The move comes as logistic providers and e-commerce companies have ramped up efforts to build up their respective cold-chain business, as Chinese consumers are buying more fresh food and medicine that require lower temperatures throughout the logistics process. The market is expected to reach 470 billion yuan ($68.6 billion) by 2020, up from 300 billion yuan in 2018, according to the China Federation of Logistics & Purchasing, a government-linked industry group.

SF started to offer cold chain services as early in September 2014, while smaller rivals YTO Express Group Co. Ltd. and ZTO Express (Cayman) Inc. have followed suit by jumping on the bandwagon.

Not to be outdone, e-commerce giant Alibaba Group Holding Ltd. in August 2017 led a $300 million round of investment in ExFresh, a cold-chain logistics unit of Yiguo.com, China’s largest online platform for business-to-consumer fresh-produce sales.

The deal came weeks after smaller rival JD.com Inc. signed a pact with Japan’s Yamato Holdings Co. Ltd. to cooperate on areas that include cold chain logistics.

The SF-Havi deal is backed by Zhang Yichen, president and CEO of Citic Capital Partners. Zhang is also chairman of both SF Holding and the McDonald’s franchisee on the Chinese mainland and Hong Kong.

Contact reporter Mo Yelin (yelinmo@caixin.com)