DHL eyes Sinotrans increase
DHL, the logistics arm of Germany’s Deutsche Post, may raise its 5 per cent stake in Hong Kong-listed Sinotrans as it beefs up delivery operations in China.
The company – which expects to report revenue growth of more than 50 per cent in the mainland this year – said that China Domestic, its domestic parcel service, was expanding its reach to 50 cities from the initial 16.
“There is a chance of raising the 5 per cent Sinotrans holding,” Klaus Zumwinkel, chairman and chief executive of Deutsche Post, told a briefing in Singapore.
But he cautioned: “There is no immediate offering, or immediate need.”
DHL acquired the 5 per cent holding in Sinotrans in February 2003 for USDollars 57m, building on a joint-venture tie-up that the companies have had since 1986.
John Mullen, chief executive of DHL Express, dismissed reported claims from China’s postal regulator, the State Postal Bureau, that China Domestic had not been approved.
“This issue of legality, it’s a bit of a mystery to us. Every part of the operation conforms completely with the laws in China. We are not in the mail market,” Mr Mullen said.
DHL’s domestic operation in China, the first of its kind by a foreign company, is limited to ferrying parcels weighing 2kg or more.
The current draft of Beijing’s new postal law – which had been undergoing a rewrite since 2002 – prevents foreign operators from handling items of less than 500g, well below the China Domestic threshold.
Mr Zumwinkel said that while rapid expansion in China was boosting the company’s bottom line, the magnitude and pace of growth were now making it more difficult to staff the business.
“It’s tough to hire the people, its tough to train the people to digest all this growth,” he said.
