On 7:30 am, Monday, June 29, after a 10-hour flight from Germany, Frank Appel, the deutsche post DHL CEO, started his whirlwind visit in Beijing. After meeting government officials, partners and employees, he told his interviewer: Asia and China will still be their focus.

Unlike all the previous visits, this visit during the global economy crisis which has posed a serious threat on this world’s largest logistics company, with a 13% drop in revenue and 42% drop in underlying EBIT (earnings before interest and taxes) in the first quarter of the year.

However, Appel said the company will not give up investing in China.

And he is serious. Despite the opening of an eastern China domestic transportation hub at the Kangqiao industrial park in Shanghai, ten more similar hubs are scheduled to open within this year.

This facility, which takes up 25,000-sq-m, includes 53 loading and cross docks and provides cross dock operations, storage, multi-modal transfer and data management to customers all day long. It is hoped to strengthen DHL’s supply chain management business in China as well as its expertise in the domestic road transportation and distribution market in the country.

Supply chain management, also known as contract logistics, has become an emerging business in German company’s core businesses. Contrary to the decline in freight forwarding and express delivery businesses, DHL’s contract logistics sector still remains strong and even sees a little increase in business, Appel said.

Only by rationalizing and taking control costs in the supply chain will the company get rid of the economic crisis. The growing pressure on this part will lead to a trend of outsourcing soon, said Appel, who worked at McKinsey for 7 years in the 1990s.

DHL is paying more attention to multinational companies and major Chinese companies that are expanding abroad in order to enlarge its supply chain business, Appel said.

DHL also attached great importance to China’s domestic market.

“10 years from now, China’s domestic market will become so large that the reducing US and European demand will have little impact on it.” Appel said.

For example, according to a joint report by All China Marketing Research and IBIS World, the total revenue of China’s domestic road transportation industry grew nearly 10 billion dollars from 1998 to 2007, which is a 67 percent growth. And the revenue is expected to keep increasing up to $36 billion by 2013.

DHL conduct domestic business in corporation with Sinotrans, the country’s largest international freight forwarding company, in a 50-50 manner

Earlier media reports said DHL-Sinotrans will spend 300 million to purchase a Shanghai-based private logistic company-A Plus Express in the hope of expanding its domestic business. A Plus was founded in 2000, and mainly provides express delivery service in 300 outlets and 7 distribution centers around the country.

Appel is not willing to talk too much on the result of the negotiations, only saying that the negotiation is heading in the right direction.

“It is difficult to find a right target in Chinese market for it is separated, but once we find one, we will definitely take it seriously”

China passed a revised postal law recently. The new law prohibits foreign companies from delivering express letters in China, which means the express packages become only choice of domestic delivery for foreign companies like DHL.

Appel felt no threat of this law for the reason that it has restricted impact on DHL’s three core businesses which has been conducted in China: freight forwarding, express, contract logistic.

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