DHL retreats from China domestic express service

BEIJING, June 30 Thu Jun 30, 2011 3:46am EDT

BEIJING, June 30 (Reuters) - Deutsche Post AG's (DPWGn.DE) courier service has pulled out of its money-losing domestic delivery business in China to focus on the lucrative international segment.

DHL-Sinotrans International, the German company's 50-50 venture with China's Sinotrans Air Transportation Development Co Ltd , had sold its entire domestic courier business to Uni-top, a tiny Chinese delivery company, Sinotrans said in a statement late on Wednesday.

"Because of overly fierce competition in the domestic courier service sector, foreign companies lack cost advantage," it said.

DHL executives could not immediately be reached for comment.

DHL, FedEx Corp and United Parcel Service Inc are major players in China's outbound courier service sector, but have been unable to compete with tiny, privately-owned Chinese companies that are willing to slash their margins to win customers.

DHL-Sinotrans' domestic delivery segment had lost 99.2 million yuan ($15 million) as of the end of 2010 since going into service in 2009, according to the statement. ($1 = 6.463 yuan) (Reporting by Sabrina Mao, Fang Yan and Don Durfee; Editing by Chris Lewis)

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