Deutsche Post sells regional logistics unit to China's S.F. Holding

Deutsche Post DHL is selling its supply chain and logistics business in Greater China to S.F. Holding as the two companies enter a 10-year strategic partnership to foster growth in the region.

The German former postal monopolist said in a statement that it would receive an upfront payment of around 700 million euros ($796 million) as part of the partnership.

Deutsche Post DHL Group’s supply chain China business will be incorporated into S.F. Holding and operate as a co-branded organization, 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.

S.F. Holding, whose SF Express is one of the largest players in China’s fiercely competitive parcel delivery market, said that the deal was expected to help the company grow internationally.

China’s parcel delivery market - worth around 976 billion yuan ($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.