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By Tang Guhan

China's express giant the S.F. Express Co., Ltd. announced on Oct. 26 it would acquire Germany's Deutsche Post DHL Group (DPDHL) supply chain division in the Chinese mainland, Hong Kong and Macao for 5.5 billion yuan (79 million U.S. dollars).

S.F. Express will attain support in areas like supply chain services, delivery, management and techniques in warehousing from the global express behemoth, the DPDHL.

The DPDHL, on the other hand, could deploy its local partner's infrastructure, wide-spread delivery network and its customer pool to expand its business across China.

DHL is following an asset-light business model since it has rented most of its assets. The cooperation with S.F. Express could save DHL much of its expenditures on infrastructures.

Many Chinese companies are becoming global enterprises, and they are demanding cross-border supply chain management services as the Chinese economy is moving upward in the value chain of global manufacturing, said Chinese analysts.   

Frank Appel, the CEO of DPDHL, said S.F. Express has rich experiences in healthcare services, retail, auto and e-commerce services, which are helpful for the DPDHL.

The supply chain management includes delivery, storage, inventory, and orders among others, which lowers the delivery cost across the supply chain. World-class express companies regard their supply chain management as one of their core services as of now.

The DPDHL is the world's leading postal and logistics conglomerate. Comprised of its postal arm, the Deutsche Post and logistics division, the DHL, the DPDHL employs more than 280,000 workers in 220 countries and regions.

DHL entered the Chinese market as early as 1986 when it partnered with a local company to conduct its international delivery business.

The supply chain management service division has become one of DHL's mature businesses in China.