China-based SF Express and U.S.-based UPS announced on Thursday that their joint venture has been approved by China's Ministry of Commerce. They plan to develop international delivery service from China to the U.S. and eventually to other destinations.
Each side invested $5 million in capital to establish the company, and the 50-50 joint venture (JV) is expected to be based in Hong Kong but with business operations in the Chinese mainland, according to a statement SF sent to the Global Times on Thursday.
The venture will combine "SF's extensive 13,000 service points across 331 cities in China with UPS' globally integrated 220-country network in the world's fastest-growing small package market," said the statement.
The companies unveiled a new product - SF-UPS direct shipment+ - for economic international packages from China to the U.S. on Thursday.
The service, with a maximum delivery time of seven days, will initially launch in South China and gradually become nationwide available by the end of 2017, the statement noted.
The joint venture aims to tap into the booming international delivery market created by China's rising cross-border e-commerce industry, news website jiemian.com reported on Thursday.
In 2016, China's global express delivery services carried 626 million packages, up 44.2 percent year-on-year.
In the first eight months of 2017, volume rose 31.3 percent year-on-year to 490 million packages.
However, "the global delivery service has been dominated by international firms, and domestic logistics are still largely absent from the market," said the report, citing experts.
Experts also forecast that as an increasing number of domestic courier giants have gone public in recent years, the global delivery market will be the next battleground of competition for them.
In February 2016, SF Express made its debut on the Shenzhen Stock Exchange, with a market capitalization of about 210 billion yuan ($31.5 billion).
Subsequently, YTO Express and STO Express also listed in the domestic market. In October 2016, ZTO Express raised $1.4 billion with a New York listing.
On Thursday, shares of SF Holding, the listed unit of SF Express, closed at 54.18 yuan, up 0.13 percent from the opening.
