“China became the most lucrative location

for foreign express and logistics Companies”

Reasons for entry of foreign players in China.

• Inefficient logistics infrastructure

• Insufficient & unreliable highway system
• Antiquated roads & ports
• Over-stressed Civil Aviation System
• EMS before foreign players entered China
 Reasons for success of foreign players in China

 Door to door delivery

 Security
 Track and Trace technology

 Expedited Customs Clearance

 High level of reliability
 Global Service

Speed of delivery
Services offered by DHL

Customer
 DHL’s strategy to enter China
• 1986, 50-50 JV, DHL – Sinotrans, Beijing
December 1986
• DHL's global expertise + the local advantages
of Sinotrans market leadership position
with 40% market share
 Entry strategies from the Competitors

Fed-Ex
*Entered china in 1984
UPS
*JV in 1999 with Tianjin based
* Entered China in 1988
Da Tian Air Services Ltd.
* Mode: Agent Partnership
with Sinotrans
* Launched its express facility
* UPS delivered packages or
in Shenzhen in 1999.
documents to China and
Sinotrans handled their
* Led to network coverage of
distribution within China.
220 chinese cities by fedex at
the end of May 2003.
• The case examines the contrasting strategies
adopted by FedEx and UPS in their efforts to
establish presence in China. FedEx followed an
aggressive, high risk, more investments approach to
expand its services network in China which enabled
the company to capture higher market share.

On the contrary, till the late 1990s, UPS followed a

conservative, low risk, low investment approach to
establish its presence in China.
Q 2.) DHL won the Express and Mail Operator of

the year’ awards along with the IT

Innovation ‘ Award at the Asia logistics
award in 2003. Examine the role played by
the company’s innovative logistics services
in the success of DHL in China. Compare
DHL’s innovative strategies with those of
other foreign players in the Chinese
markets.
DHL Express Product Offering (Innovative services)

• Worldwide Document Express (DOX)

• Worldwide Package Express (WPX)
• Import Express (IMP)
• Jumbo Junior & Jumbo Box
• Express Pallet
• Global Mail
• Fast Forward*
E-Com Tools for Customer Shipment Visibility

DHL Easyship DHL Web

Shipping

Ultimate shipment management system with EDI On-line shipping and tracking tool that helps you
capabilty prepare your shipments and book a pick-up in a
few simple steps

DHL Connect DHL Express

SMS

Web-enabled shipping software programme that Text DHL<space><awb#> to 2333 for GLOBE or
can handle all your shipment processing needs 288 for SMART subscribers and get real-time
shipment status
 Innovative strategies from the Competitors

Fed-Ex UPS TNT

 100% End-to-End Shipment Visibility

Gateway HUB Gateway

Ground Ground
Ops Checkpoints Ops

Shipper Shipment Information Consignee

Shipment and
Shipment Status
Transit
Times Information

Proactive Overall performance

Tracking and trend measurement
Shipment Status
Query
Q 3.) Despite intense competition in
the Chinese logistics market,
DHL emerged as the No.1
foreign logistics services in
China. Analyze the unique
features of DHL’s expansion
strategy. Do you think it would
be able to sustain its success in
the light of future challenges.
DHL Investments in Asia Pacific
Japan
Japan US$
US$ 125m
125m South
South Korea
Korea US$
US$ 15m
15m
 26
26 Service
Service centers
centers  Bonded
Bonded warehouse
warehouse at
at
New
New International
International Airport
Airport
 Service
Service centers
centers
China
China US$
US$ 9m
9m
 Gateways
Gateways US$
US$ 200m
200m
US$
US$ 58m
58m  Will
 Pudong
Pudong Gateway
Gateway Will be
be invested
invested into
into
 5%
5% stake
stake of
of DHL-Sinotrans
 Beijing airport
Beijing airport DHL-Sinotrans
Sinotrans
Sinotrans infrastructure
 Service
Service centers
centers infrastructure over
over the
the
next
next 55 years
years

Hong
Hong Kong
Kong US$
US$ 82m
82m Taiwan
Taiwan US$
US$ 30m
30m
 Express
Express Logistics
Logistics center
center  Gateway
Gateway movement
movement
 Service
Service centers
centers  44 Service
Service centers
centers
US$
US$ 100m
100m
 DHL’s
DHL’s Central
Central Asian
Asian Hub
Hub
US$
US$ 400m
400m
 joint
joint venture
venture with
with Cathay
Cathay
Pacific
Pacific and
and Air
Air Hong
Hong Kong
Kong
Philippines
Philippines US$
US$30m
30m
Stations
Stations
Gateway
Gateway
Vehicles
Vehicles
Singapore
Singapore US$
US$ 10m
10m
 Southeast
Southeast Asia
Asia Hub
Hub
Malaysia
Malaysia US$
US$ 6m
6m  Service
Service centers
centers
 Service
Service centers
centers
US$
US$ 52m
52m
 Asia
Asia Pacific
Pacific Information
Information ... up to a total of US$ 1.1 B
Services
Services (APIS)
(APIS) Center
Center
• In 2001, GDP growth was 7.3%
• China's WTO membership, restrictions reduced
• In 2000-01, company established its branch in Zhengzhou, Chongquing, Nantong, Lanzhou & Suzhou.
• Developed service network covering 318 cities by Jan 2204When Fedex and UPS launched its own airlines, DHL
continued to to stick to its existing strategy of using commercial airlines instead launching its own as such alliances
ensured faster delivery of goods. D-S believed that on ground service were more important thaan airline services for
express delivery.
• DHL welcomed competition

• Gateways': till 2001 co. had gateways in Beijing, Shanghai, Guangzhou & Shenzen
• In 2001,Pudongairportgateway was opened inShanghai. Maximum shipment processing caopacitry was increased
from 3000 to 10000 pieces per hour.
• Again in Oct 2001, D-S invested US $ 1.2 mn to construct new Beijing international
gateway . Max capacity for tonnage handling was hiked from
7-20 tonnes/hr. Capacity for tonnage handling from 3500-5000 pieces/hour conmpared tp previous gateway.

• In mid 2003, air express market was growing rapidly in China’s Yangtze river delta. So to keep pace, D-S used 182
scheduled commercial flights in Shanghai each week. Also in June, 2003, co. launched an overnight express service
“Asia Overnight” between Shanghai & Hong Kong . Another alliance was with Hong Kong based airline called
‘Dragonir’

• In Oct, 2002, DHL acquired a 30% stake in Air Hong Kong, remaining being held by Cathay Pacific.
• In Feb 2003, To strengthen the relation ship, DHL acquired a 5% stake in Sanitrons for US $ 57 million.

• Between Sep-Dec 2003, DHL opened 11 new branches in China, taking the no. to 50.

• In oct 2003, DHL announced a US $ 200 mn 5 year ‘China Expansion Programme’

• May 2004, DHL total investment in China was US $ 215 million with a market share of 40% in Chinas
Express delivery business. Employees – 4700 in 225 locations, 4 gateways, 1100 vehicles serving 318
cities in China.
 Future Prospects in China
• DHL, UPS, FedEx, and TNT, the largest express
deliverers around the globe, will be able to
enjoy a mechanism for regular communication
with the Chinese government.