DHL Reported Dropping China Domestic Delivery

DHL is dropping its attempt to build domestic express delivery services in China, according to a published report.

Reuters reported that DHL parent Deutsche Post DHL sold its stake in a 50-50 joint venture with China’s Sinotrans to a small courier company, Uni-top.

Sinotrans said in a statement to Reuters that DHL had sold the domestic operation in DHL-Sinotrans International after failing to compete with the many small companies that make up the deeply fragmented China delivery market.

“Because of overly fierce competition in the domestic courier service sector, foreign companies lack cost advantage,” Sinotrans said.

Officials at DHL were not immediately available for comment. Uni-top could not be located for comment.

The move in China follows DHL’s decision to withdraw from domestic express delivery services in the United States in 2009 after losing hundreds of millions of dollars in a bid to compete more directly with FedEx and UPS. DHL said then it was dropping the U.S. domestic delivery to focus on its international services.

Deutsche Post DHL does not break out its business by country but Asia-Pacific revenue made up about 30 percent of overall revenue last year, when revenue in the region grew nearly 31 percent to $4.86 billion.