Deutsche Post DHL Group and S.F. Holding have entered into an agreement under which DHL will transfer its supply chain operations in China to S.F.

According to DHL, the transaction involves the supply chain business in mainland China, Hong Kong and Macau. DHL will receive an upfront payment of approximately €700 million (US$797 million) as well as a revenue-based partnership fee over the next 10 years.

“The joint capabilities of DPDHL Group and S.F. will create a unique platform to meet the need for a high-quality end-to-end supply chain provider in China,” said Frank Appel, CEO of Deutsche Post DHL Group. “S.F.’s local market expertise in China has real advantages for our customers across all industries including technology, healthcare, retail, automotive and e-commerce. Combined with our global operations standards and network support, the agreement provides a solid foundation to continue exploring further opportunities in China in the coming years.”

As part of the deal, S.F. will gain access to DHL’s supply chain services, management expertise, transportation and warehousing technology. The co-branded organization will be led by Yin Zou, CEO of Greater China at DHL Supply Chain, along with his existing management team.

The strategic partnership will allow DHL to continue to participate in the fast-growing Chinese supply chain market by taking advantage of S.F.’s domestic infrastructure, distribution network and local customer base.

“S.F. has been actively expanding its business-to-business capabilities and pursuing different strategic partnerships to grow S.F. into a truly integrated logistics solutions provider that delivers best-in-class services for our clients,” said Dick Wong, chairman of S.F. Holding. “This partnership agreement will strengthen our capability in providing supply chain services to a diverse realm of industries and allow us to bring world-class management expertise into our supply chain business operations, enabling us to further understand and tailor to our customer needs. This agreement will help us achieve our vision to grow further internationally, partnering with DPDHL Group, a world-class organization.”

The transaction has no bearing on DHL’s business activities in international express, freight transport and e-commerce logistics solutions in China, according to DPDHL Group.