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Oct. 29 (NBD) -- China's top delivery firm S.F. Holding Co Ltd (SF, 002352.SZ) has forged a partnership with German mail and logistics giant Deutsche Post DHL Group (DHL) on Friday, paying 5.5 billion yuan (792.8 million U.S. dollars) to buy the latter's supply chain businesses in mainland China, Hong Kong and Macao.

Upon the completion of the deal, SF's Hong Kong subsidiary will become the only shareholder of the Beijing and Hong Kong unit of DHL. 

The statement also mentioned DHL will compensate in cash if the adjusted earnings before interest and tax for the two units in 2018 are more than 10 percent lower than the target amount 299 million yuan (43.1 million U.S. dollars). 

The new collaboration will allow SF access to DHL's supply chain services, management expertise, and transport and warehousing technology. 

DHL's other businesses in Greater China such as international express, freight transport and e-commerce logistics solutions are not included in the deal.

Known as one of the world's largest delivery company, DHL operates business in 220 countries and regions around the world and it has established presence in Chinese market for over three decades. Last year, DHL's two units reaped a total of 3.51 billion yuan (505.9 million U.S. dollars) in revenue, with adjusted net profits hitting 189.4 million yuan (27.3 million U.S. dollars).

However, the German company saw sliding earnings in the supply chain division since this year. The revenue DHL generated in the Asia-Pacific region in the first quarter of 2018 stood at 505 million euros (588.1 million U.S. dollars), down 15.4 percent year over year.

But DHL's sound supply chain network in the area can still create considerable benefits to SF.

Yang Daqing, researcher from China Society of Logistics, said to NBD that the purchase will help SF improve its logistics and supply chain service network especially in Asian market, and will bring talents in the international supply chain field to the firm.

Besides, SF will gain more high-end enterprise customers through the cooperation, Yang added.

SF's move comes after the Shenzhen-based firm set up a big data joint venture with eight other supply chain companies in April this year.

Apart from SF, other players in Chinese logistics market also seek for supply chain business expansion. 

In May 2017, YTO Express acquired a 61.9 percent stake in Hong Kong-listed On Time Logistics Holdings Limited, in an attempt to build a cross-border supply chain network.

Alibaba Group is developing its overseas warehouses and eWTPs to enhance resource aggregation and coordination of services for international supply chains.

Competitions among e-commerce platforms and delivery firms in recent years mainly take place in the international logistics and supply chain service network domain, noted Yang.

Email: zhanglingxiao@nbd.com.cn