Recent report out of China suggests that Huawei aims to be the largest mobile phone stocking company in Asia. It is worth mentioning that a Chinese distribution company, SF, is helping Huawei to be the largest mobile phone warehouse in Asia. According to Chinese media reports, SF Holdings’s secretary-general, Gan Ling, said that the current logistics cost in China accounts for over 14% of GDP, indicating that there is still much room for development. SF has a nationwide capacity network and there will be space for smart logistics in the future. However, since current revenue mainly comes from time-based components, the service demand and supply chain solutions will be a major driving force for the company’s development.
According to public information, SF Holdings’ revenue in 2018 was 90.943 billion yuan ($13.5 billion), a year-on-year increase of 27.60%. The SF 2018 annual report showed that its operating cost was 74.642 billion yuan ($11.1 billion), a year-on-year increase of 31.4%, higher than the increase in revenue. In fact, SF Holdings’ 2018 annual report revealed that the cost increase is higher than the income mainly because the company actively responds to market demand, expands diversified logistics services, and makes pioneering investment in new business. According to the financial report, SF’s new business capacity investment led to a year-on-year increase of 14.2% in transportation costs. The increase in new employees and the increase in old employee benefits led to a 17.9% increase in labor costs. The increase in new business space leases led to an increase of 46.1% in office and rental expenses.
In response to the decline in profits, SF Holdings said that the company increased its investment in transportation costs and labor costs in 2018. These investments have affected the company’s short-term operating results to a certain extent, but they are based on the company’s long-term strategy and long-term employees. The strategic and forward-looking investment in development considerations will help the company maintain a long-term stable and healthy profit level.