China’s Biggest Courier Gets Bigger With Purchase of DHL Logistics Unit

* China’s largest private courier, SF Holding, has purchased DHL Group’s Greater China supply chain business for $792 million

* The latest tie-up marks another step in SF Holding’s expansion into commercial logistics

(Beijing) — Deutsche Post DHL Group has agreed to sell its Greater China supply chain business to local peer SF Holding Co. Ltd., in a tie-up that could further cement the latter’s position as China’s largest private courier.

Under the deal, the German giant’s relevant operations on the Chinese mainland and in Hong Kong and Macau will be incorporated into SF Holding and operate as a co-branded organization, according to a DHL statement issued Friday. The deal doesn’t involve Taiwan.

DHL will receive an upfront payment of 5.5 billion yuan ($792 million), and a revenue-based partnership fee over the next 10 years. Yin Zou, current CEO of DHL’s Greater China supply chain business, will lead the new organization along with his existing management team.

The deal will allow SF Holding access to DHL's know-how in supply chain services, management expertise, and transportation and warehousing technology, the statement said.

"This partnership agreement will strengthen our capability in providing supply chain services to a diverse realm of industries … and will help us achieve our vision to grow further internationally,” said SF Holding Chairman Wang Wei, in the statement.

The latest tie-up marks another step in SF Holding’s expansion into commercial logistics, after its SF Express unit became the largest player in China’s consumer delivery sector amid an e-commerce boom.

In August, the Shenzhen-based SF Express teamed up with U.S.-based Havi Group LP, which counts McDonald’s local franchisee among its clients, to set up a cold-chain logistics joint venture, tapping into rising consumer demand for fresh and frozen produce.

This was followed by a second deal in the same month with China Railway Corp., the country’s rail operator, to form a venture to offer cargo services on high-speed rail.

SF Express will not only focus on consumer delivery in the future, but also China’s whole 1.2 trillion yuan supply chain logistics market, Wang said earlier this year.

Early this month, e-commerce giant JD.com Inc. announced that it would allow customers to send parcels around the country using its vast logistics network. JD.com is seen as a potential challenger to incumbent players that also include YTO Express Group Co. Ltd. and ZTO Express Inc.

For the nine months through September, the Shenzhen-listed SF Holding reported a profit of 3.03 billion yuan, falling around 17% year-on-year, on revenue of 65.4 billion yuan.

Contact reporter Mo Yelin (yelinmo@caixin.com)