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Business Deals

DHL sells China supply-chain units to top local courier

$790m deal offers SF Express management expertise and rights to use brand

An employee of DHL, in the yellow vest, works inside a General Motors-operated plant in Liuzhou, Guangxi Zhuang Autonomous Region, China.   © AP

GUANGZHOU -- China's top private-sector courier SF Express announced on Friday that it will buy the Chinese supply-chain support operations of Deutsche Post DHL Group for 5.5 billion yuan ($792 million), in a deal that would allow SF to use the DHL brand to cater to domestic corporate customers.

Pending approval from Chinese authorities, S.F. Holding, the operator of SF Express, will purchase two of the German company's local units -- one based in Beijing, one in Hong Kong -- which offer logistical support to supply chains in mainland China, Hong Kong and Macau. 

SF will also pay DHL a revenue-based partnership fee over the next 10 years. The two units reaped a combined 3.5 billion yuan in sales in fiscal 2017, for a net profit of 140 million yuan.

The acquisition will allow SF to combine its extensive domestic distribution network and broad base of local customers with DHL's management expertise and warehousing technology. SF believes the purchase will help improve the quality of its logistics facilities and cut costs.

The German company will continue to independently operate its Chinese businesses in international express delivery, freight transport and e-commerce logistics.

"SF's local market expertise in China has real advantages for our customers across all industries including technology, health care, retail, automotive, and e-commerce," DHL CEO Frank Appel said in a statement. "Combined with our global operations standards and network support, the agreement provides a solid foundation to continue exploring further opportunities in China in the coming years."

SF also announced earnings Friday for the first three quarters of 2018, with net profit sliding 17% on the year to 3 billion yuan, despite sales up 31% at 65.3 billion yuan. Investment in its delivery locker service apparently took a bite out of profits, but the company enjoyed a healthy increase in orders for its mainstay businesses, including same-day deliveries.

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