DHL's Business Strategy in China
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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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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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In 1969, DHL ventured into the air express business and introduced a service between San Francisco and Honolulu. The company came up with a novel idea of sending out documentation before the cargo arrival, which speeded up importing of goods.
DHL's network grew exponentially with its success in offering the best and pioneering services to customers. The company expanded its network towards the West, starting from Hawaii to the Far East and the Pacific regions. It then entered the Middle East countries, and thereafter Africa and Europe.
By 1973, DHL expanded its customer base in the air express business to about 3000. By 1977, the company extended its range of services and started delivering small packages as well as documents. In 1982, DHL added 30 countries to its network. DHL
became the first air express company to open offices in Eastern Europe in 1983.
It was also the first air express company to start operations in China in 1986.
Before 1980, China was a closed economy with protectionist policies...
The Expansion Drive
In 2001, with the global economy facing a general slowdown, China posted a gross domestic product (GDP) growth of 7.3%. The country's trade volume in 2001 was the seventh largest in the world and significant growth was expected in the near future.
With China's WTO membership, the restrictions on foreign international
transportation and logistics companies were reduced.
A highly conducive and transparent business environment was created. This attracted many foreign companies to invest in the Chinese mainland and expand their business too. The demand for export and import courier services increased significantly.
In early 2001, DHL-Sinotrans accounted for 36 per cent of China's international express delivery market. The company sought to expand its operations fast and offer better service quality. Giving a briefing on the company's strategy, Charles Chia, GM and Director of DHL-Sinotrans, said, "In the global view, the service network of DHL is capable of covering more than twenty countries and regions...
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