Deutsche Post moves on China domestic market

Deutsche Post moves on China domestic market

DHL, the express and logistics unit of Deutsche Post World Net, on Tuesday launched an array of services aimed at staking a claim in China's vast domestic market.

The moves come as part of a wider initiative by DHL to position itself as an integrated supply chain solutions provider in China, DHL said, and encompasses the group's DHL Express, DHL Danzas Air & Ocean and DHL Solutions divisions.

As part of the initiatives, DHL today formally launched China Domestic, claiming to be the first international company to introduce a domestic express service in China.

"The introduction of China Domestic marks a significant milestone for DHL and our partnership with Sinotrans," said Klaus Zumwinkel, chairman of Deutsche Post, the German mail monopoly. "The new domestic service is complemented by a DHL network in China which is second to none and enables us to offer the same class-leading quality standards as our international express products."

DHL said it plans to intensify express logistics activities, including third-party management of spare parts inventory for companies, in China, with three express hubs and 16 spare parts centers, to tap the growth of express logistics in China.

DHL Solutions, which provides customs contract and industry-specific logistics solutions, will concurrently "explore" the establishment of hubs targeting the lifestyle, fashion, healthcare and fast-moving consumer goods (FMCG) sectors in China.

DHL Danzas Air & Ocean has also invested $3 million in two logistics centers -- one in Pudong, which opens today, and in Jiuting, Shanghai, offering ocean freight and general warehousing services. The logistics arm of DHL also plans to double its presence in China from 20 cities currently to 37 by 2007 under a $12 million infrastructure development program. This year, DHL Danzas Air & Ocean will establish seven new offices in Wuxi, Jinan, Urumuqi, Fishou, Zhongshan, Dongguan and Wenshou.

DHL in October 2003 unveiled a $200 million, five-year investment plan to expand and enhance four existing gateways, add 14 new branches, implement 73 projects, buy 1,200 new vehicles and create as many as 2,100 new positions in China. China Domestic and the express logistics initiatives mark the second phase of the program, the company said.

"This multi-pronged approach represents the cornerstone of DHL's China strategy, which is to offer the full suite of express and logistics solutions from a single source," said Uwe Doerken, chief executive of DHL Express, in a statement. "From the delivery of a document to managing complex supply chains for customers, DHL has the capability to offer these services across China."

DHL said its China business has been growing at an annual rate of 35-45 percent over the past several years. It is the fastest-growing market in DHL's global network, and is forecast to be the company's largest market in the region in the coming years.

DHL said its DHL-Sinotrans joint venture, launched in 1986, claims close to 40 percent of the express delivery market in China.

DHL's combined presence in China comprises over 4,700 employees in 225 locations, four gateways, and 1,100 vehicles serving 318 cities.

China is a cornerstone of DHL's efforts to capitalize on growth of trade within Asia, and the company has invested more than $1.134 billion in the region over the past few years.