ComfortDelGro (CDG) has, on Nov 29, entered into a 60:40 joint venture (JV) with China’s Guangzhou Xinhongqiang Concrete Company.
The JV will enable the transport operator to gain a foothold into the fast-growing logistics industry in China. The agreement also marks the group’s first foray into construction logistics in the country.
The JV, Guangxi ComfortDelGro Logistics Co, will have an initial start-up capital of RMB12 million ($2.5 million). It will purchase a fleet of up to 35 trucks by end-2022 to deliver concrete in Nanning, Guiping and Guigang in the Guangxi Zhuang Autonomous Region in Southern China.
The partnership is “an excellent opportunity” for the group to expand into the logistics business, says CDG’s managing director and CEO Yang Ban Seng.
“The concrete delivery business model is ideal, as we can leverage on our business management expertise and experience from our taxi business, which is quite similar. The concrete industry in the province is also primed for growth given the region’s development and infrastructure sectors,” he says.
Zhong Hua, director of Guangzhou Xinhongqiang Concrete Company Limited, adds: “Our network already has 200 trucks serving cities in Guangxi. By establishing a JV with ComfortDelGro, we will be able to tap on its expertise in transportation to further improve our efficiency and service levels as well as enhance our competitive edge.”
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CDG is the largest taxi operator in Nanning with a fleet of 854 taxis. The group has also invested some $261.2 million in China to date, with operations in nine cities, Beijing, Chengdu, Guangzhou, Jilin, Nanjing, Nanning, Shanghai, Shenyang and Suzhou.
As at 4.12pm, shares in CDG are trading 4 cents lower or 2.72% down at $1.32 on Nov 29.
Photo: CDG
