UPS Forges China Joint Venture to Tap Country's E-Commerce Boom

(Bloomberg) -- United Parcel Service Inc. is setting up a joint venture in China to haul more U.S.-bound goods and capitalize on booming e-commerce in the world’s most populous nation.

The partnership with S.F. Holding Co. will offer customers more routes, shipping capacity and service options, the companies said in a statement. S.F. Holding and UPS will each invest $5 million in the 50-50 venture, the Chinese company said in a statement to the Shenzhen stock exchange.

The deal gives the U.S. courier access to S.F. Holding’s network of 13,000 customers, many of them small and midsize Chinese companies, UPS Chief Executive Officer David Abney said Friday on Bloomberg TV. It also offers a stronger foothold in one of the world’s hottest markets for online retailing. The initial focus will be on deliveries going from China to the U.S.

“We are equally as impressed and looking forward to U.S-to-China, and then, of course, China to the rest of the world and back,” Abney said in the interview with David Westin. “One plus one equals a lot more than two in this case.”

S.F. Holding, led by billionaire Wang Wei, is one of several Chinese couriers that have benefited from an e-commerce boom fueled by Alibaba Group Holding Ltd.

“China is leading the world in terms of e-commerce market size, growth, penetration and mobile business usage,” Alan Wong, group vice president of the S.F. Express unit, said in the statement.

UPS and S.F. Express will provide delivery service to the U.S. with a mix of aircraft and rail- and ocean-freight brokerages, a UPS spokesman said. The joint venture requires regulatory approval.

UPS employs about 6,400 people in China and operates more than 200 flights to and from the country weekly, primarily providing import and export services. China was one of the four fastest-growing markets for Atlanta-based UPS last year, Abney said in February. The others were Vietnam, Pakistan and the United Arab Emirates.

To contact the reporter on this story: Michael Sasso in Atlanta at msasso9@bloomberg.net.

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson