Sinotrans in deal for Fujian lead
Hong Kong-listed Sinotrans, the mainland’s logistics giant, has further expanded its freight-forwarding services in southeastern China by buying a controlling interest in Fujian’s largest firm.
A source said yesterday that Sinotrans will acquire 75 per cent of Greating Group, wholly owned by Hong Kong Crystalray Holdings, for a sum believed to be less than 10 million yuan (HKD9.38 million).Sinotrans provides freight forwarding, air express and cargo handling services and has partnerships with courier giants DHL Worldwide Express and United Parcel Services. Its customers include the container shipping line Maersk Sealand and mobile phone maker Nokia. The source said the move was part of Sinotrans’ drive to improve its network in the fast-growing express market in southeastern China.
Greating was chosen by Sinotrans as its strategic partner because of its dominant market share in Fujian and the fact that it provides similar services.
“Greating has an edge over other freight forwarders in Fujian province,” the source said.
Industry analyst Li Su said he believes Sinotrans will continue to acquire other mainland logistics companies.
“Among the nine major regions where Sinotrans has injected core businesses, its Fujian businesses ranked fifth, which drags down Sinotrans’ nationwide ranking,” he said,.
Li said Sinotrans and Greating could complement each other, with Sinotrans able to restructure its Fujian business with help from Greating’s management.
In the face of tough competition from foreign rivals allowed into the mainland market under China’s World Trade Organisation entry terms, it is high time for Sinotrans to expand its network, chairman Zhang Bin said. Sinotrans signed the co-operation framework agreement with Crystalray last week, the source said, adding that the acquisition is to be completed soon.
The acquisition reportedly does not involve Sinotrans’ parent company Sinotrans Group, the mainland’s largest international freight forwarder and express services provider. Thus the company is under no requirement to make the acquisition public.
Greating is to be renamed Sinotrans Greating and will take over Sinotrans’ Fujian business.
Greating, with sales of almost 400 million yuan last year, is headquartered in Xiamen. It grew from a sea-freight forwarder into a supplier of one-stop logistics services over the past 10 years as booming trade drove demand for its services.
On its website, Greating says it has made significant investments in logistics infrastructure and established branches in Shanghai, Shenzhen, Guangzhou, Shantou and Fuzhou. Greating has set up subsidiaries in Hong Kong and the United States.
Sinotrans’ net profit was 345.6 million yuan in the first half of last year, compared with 294 million yuan over the same period in 2002 .
