DHL's Business Strategy in China
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Case Details:
Case Code : BSTR138
Case Length : 17 Pages
Period : 1995-2004
Organization : DHL International
Pub Date : 2004
Teaching Note : Available
Countries : China
Industry : Logistics
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"DHL intends to stay in step with the needs of our customers in China, where the industry is developing and customer expectations continue to become more sophisticated. We maintain the belief that China will become DHL's most important market in Asia Pacific within the next few years and one of the most important markets within the DHL network. The investments will provide unparalleled strength to our already comprehensive network in China, enabling us to support the growth of the market." 1
- John Mullen, CEO, DHL-Asia Pacific.
The Launch
In May 2004, the Belgium-based DHL International (DHL), in collaboration with its Chinese partner; Sinotrans,2 launched 'China Domestic,' an international express service, in China. DHL-Sinotrans was a leading player in the Chinese express and logistics industry.
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The introduction of 'China Domestic' was a part of the duo's strategy to respond to the fast-changing customer requirements in China's logistics market. The new business was a door-to-door delivery service particularly targeting parcels and freight items. The service offered shorter delivery and pick-up times, besides providing better customer service and shipment visibility via DHL's "Track-and-Trace" technology.3 Wholly owned by Deutshce Post World Net (DPWN), DHL had an established presence in over 220 countries. In April 2004, the company had over 150,000 employees globally. In China, DPWN operated through three divisions - DHL-Sinotrans, DHL-Danzas Air & Ocean and DHL Solutions. While its core business was transporting documents and packages, DHL also offered various other services like e-commerce fulfilment and logistics solutions for industries like automotive and life sciences.
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With its innovative and customized solutions, DHL emerged as the world's leading express and logistics company. It positioned itself as an integrated 'one-stop' supply chain solutions provider, offering services in express, air & ocean freight and overland transport.
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The rapidly improving business environment in China and its entry into the World Trade Organization in 2001 attracted many multi-nationals to the country. DHL was among those who recognized the potential for growth in the country's express logistics industry. To capitalize on growing business opportunities, DHL initiated a massive expansion program. Commenting on this, Uwe Doerken, CEO, DHL Express said, "The logistics industry is widely recognized by the Chinese government as a critical, strategic industry and a key driver of economic progress. This wide-ranging expansion programme will add significantly to DHL's ongoing investments in China, and illustrates the active role which DHL, as a leading industry partner, is committed to undertake in the country."4 |
DHL's Business Strategy in China
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