New initiatives bring total investments in China to more than US$215 million to date

DHL, the world's leading express and logistics company, today announced new expansion initiatives in China, bringing its investments in Asia's fastest growing economy to more than US$215 million to date. The investments, encompassing the launch of China Domestic and infrastructure developments, are part of a wider initiative to cement DHL's leadership position as an integrated 'one-stop' supply chain solutions provider in China, a key engine of growth in the Asia Pacific region.

The initiatives across the group's DHL Express, DHL Danzas Air & Ocean and DHL Solutions divisions are a reflection of DHL's continued commitment to China. Encompassing product, services and infrastructure initiatives, DHL's multi-pronged strategy positions the company to respond to evolving customer requirements in an increasingly sophisticated market.

DHL today formally launched China Domestic, the first international express provider to introduce a domestic express service in China. This new express door-to-door delivery service, targeted at parcels and freight items, offers shorter delivery and pickup times, shipment visibility via DHL's Track-and-Trace technology, dedicated customer service and quality levels that mirror DHL's market-leading international express delivery service.

"The introduction of China Domestic marks a significant milestone for DHL and our partnership with Sinotrans," said Dr Klaus Zumwinkel, Chairman of Deutsche Post World Net (DPWN), the parent company of DHL. "The new domestic service is complemented by a DHL network in China which is second to none and enables us to offer the same class-leading quality standards as our international express products."

DHL also plans to intensify express logistics activities - the third-party management of spare parts inventory for companies - in China. The express logistics market is forecast to be one of the fastest growth areas for DHL. The company plans to establish three Express Logistics Centres (ELCs) and 16 Spare Parts Centres (SPCs) to tap the growth of express logistics in China. DHL Solutions - which provides tailor-made contract and industry-specific logistics solutions - will concurrently explore the establishment of Industry Competence Centres targeting the lifestyle, fashion, healthcare and FMCG sectors in China.

DHL Danzas Air & Ocean has also invested US$3 million in two Logistics Centres - the new Pudong Logistics Centre inaugurated today and another in Jiuting, Shanghai to cater to ocean freight and general warehousing requirements. The logistics arm of DHL also plans to double its presence in China from 20 cities currently to 37 by 2007 under a US$12 million infrastructure development programme. This year, DHL Danzas Air & Ocean will establish seven new offices in Wuxi, Jinan, Urumuqi, Fishou, Zhongshan, Dongguan and Wenshou.

These initiatives are the latest in a series of strategic investments made by DHL over the last few years in China, including a US$200 million 5-year investment plan unveiled in October 2003. The funds will be partly used to expand and enhance 4 existing gateways, add 14 new branches, carry out 73 projects, buy 1,200 new vehicles and recruit more staff, creating up to 2,100 new positions for DHL in China. China Domestic and the express logistics initiatives mark the second phase of the 5-year investment programme.

"This multi-pronged approach represents the cornerstone of DHL's China strategy, which is to offer the full suite of express and logistics solutions from a single source," said Mr Uwe Doerken, Chief Executive Officer, DHL Express. "From the delivery of a document to managing complex supply chains for customers, DHL has the capability to offer these services across China."

DHL's business has been growing at an annualised rate of between 35% and 45% in China over the past few years. It is one of the fastest growing markets in DHL's global network and is forecast to be the company's largest market in the region within the next few years. DHL was the first foreign express delivery company to enter China in 1986 when it established a joint venture with Sinotrans, China's leading transport and logistics operator. DHL-Sinotrans today commands close to 40% of the express delivery market in China, while DHL Danzas Air & Ocean is the leading international airfreight provider over the past four years. DHL's combined presence in China is unrivalled today and comprises over 4,700 employees in 225 locations, 4 gateways, 1,100 vehicles, serving 318 cities.

"The logistics industry is widely recognised 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," said Mr Doerken.

DHL's initiatives in China are at the heart of the company's wider strategy to capitalise on the growth of trade within Asia, in particular between China and countries in the region, and between Asia and the rest of the world. Over the last few years, DHL has invested more than US$1.134 billion in the region.

"These initiatives will build on our strengths in China and across Asia through the expansion of our geographical reach, investment in technology, people development, and enhancement of infrastructure," added Mr Doerken. "With this in place, DHL will be able to offer unrivalled coverage and innovative products with a customer-focused approach across all points of the supply chain."

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