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DHL plans investment of millions in China

By Lu Haoting (China Daily)
Updated: 2007-02-15 10:35

German air express and logistics giant DHL will invest more than $110 million in China over the next few years to maintain its leading position and to capitalize on the country's continued growth in trade, the courier announced yesterday.

The investment will be used to expand infrastructure, including more transport vehicles and service center equipment, and for training its employees.

The announcement was made by Klaus Zumwinkel, board chairman of Deutsche Post World Net, DHL's parent company, during his latest North Asian trip.

Zumwinkel early this week announced investment commitments of over $90 million for Japan and $75 million for South Korea.

The new investment is a key initiative for DHL to enhance its position in Northeast Asia, which will be the fastest growing transportation market in the Asia-Pacific region by 2020.

DHL is considering setting up a North Asia hub in either Shanghai Pudong International Airport or Incheon International Airport in South Korea.

An announcement on which airport is selected will be made by the second quarter of this year, said Scott Price, CEO of DHL Express Asia-Pacific.

"There is still one last filter of analysis to do. It is a very close race between the two (airports)," Price said.

DHL will make its final decision according to two factors speed and cost.

The speed consideration includes the ability to secure the correct air timing, customs flexibility and efficiency, and the availability of a bonded area to allow goods to move in and out quickly. New facilities are also evaluated by labor and construction costs, and tax benefits.

DHL currently has a Central Asia hub in Hong Kong and South Asia hub in Singapore.

The company's United States rivals, FedEx and UPS, both have plans to build regional hubs in China. FedEx, previously based mainly in the Philippines, will launch a new Asia-Pacific hub in Guangzhou Baiyun International Airport in 2008.

UPS signed a memorandum of understanding with Shanghai Airport Group last year to establish the UPS International Air Hub at the Pudong airport.

China is one of DHL's fastest-growing markets, accounting for 25 percent of its revenue in the Asia-Pacific and 10 percent of its global sales.

DHL has maintained an annual growth rate of 35 to 45 percent in China in the past years and has set up 73 branches, making it the largest network among international express delivery firms in the country.