ComfortDelGro enters joint venture to expand into China logistics industry

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ComfortDelGro has entered a 60:40 joint venture with Guangzhou Xinhongqiang Concrete Co. to expand into China’s construction logistics industry, the Singapore-listed transportation company said in a filing to SGX Monday.

The joint venture, called Guangxi ComfortDelGro Logistics, will have initial start-up capital of 12 million yuan, or around S$2.5 million, the filing said. ComfortDelGro will hold 60 percent, while Guangzhou Xinhongqiang Concrete will hold the remainder, the filing said.

The funds will be used to 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, ComfortDelGro said.

Yang Ban Seng, managing director and group CEO of ComfortDelGro, said the concrete delivery business model was “ideal.”

“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,” Yang said in the statement.

Zhong Hua, director of Guangzhou Xinhongqiang Concrete, said his company’s network already has 200 trucks to serve 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,” Zhong said in the statement.

The joint venture investment comes two years after ComfortDelGro’s car rental and leasing arm in China expanded into the heavy vehicle segment, adding five prime movers, which have been leased to container-trucking technology company Haulio, the filing said. ComfortDelGro has a stake in Haulio via its US$100 million corporate venture capital fund.

ComfortDelGro said it has already invested S$261.2 million in China so far, and is the largest taxi operator in Nanning, with a fleet of 854 taxis. The company said it has operations in nine Chinese cities, across taxi, bus station, driving school and car rental segments.