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  • Apr 19, 2014
  • Updated: 4:27pm

DHL planning mainland expansion

PUBLISHED : Tuesday, 17 July, 2012, 12:00am
UPDATED : Tuesday, 17 July, 2012, 12:00am

The supply chain arm of Deutsche Post DHL will invest more in warehouse facilities in Greater China, including Shenzhen's Qianhai Bay economic zone.

'The economy of China will continue to grow as it has a huge growing population of middle-class,' DHL chief executive Frank Appel said at the opening of the firm's HK$630 million warehouse in Tsing Yi yesterday.

'The business has grown quite rapidly in this area over the past few years and no doubt it will continue in the next year.'

Tomorrow, the Germany company will join with the China Merchants Group to develop a supply chain and freight forwarding business in Qianhai Bay, which Beijing has decided will be a service industry hub and a showcase for further integration with Hong Kong.

The joint venture will include a 71,000 square metre warehouse.

By 2015, DHL will invest a further Euro300 million (HK$2.8 billion) in China and other countries in North Asia, on top of the Euro224 million is has already invested in North Asia.

Paul Graham, chief executive Asia Pacific for DHL Supply Chain, said management of warehouses, distribution and repackaging were under-developed in North Asia, where only half of the firms had out-sourced their warehouses to management companies.

Hong Kong's Interlink, a 25-storey warehouse with 900,000 square feet of floor area, will serve industries from the technology, retail, health care and consumer sectors. It is operated under a long-term leasing contract with the landlord, Goodman Group.

DHL rivals United Parcel Service and FedEx Express are applying to gain access to the mainland domestic express market, nearly one year after DHL quit its domestic business.

'If our competitors think they can make money in the domestic market, it's fair enough,' Appel said. 'But I don't understand what they are trying to do in the domestic market when certain things are not allowed.'

On the mainland, foreign players are banned from conveying small parcels and mail under 2 kilograms.

Appel said it would therefore be hard for competitors to make money as local consumers were very price sensitive.

2kg

Foreign carriers in mainland China are banned from dealing with parcels and mail that weigh less than this

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