Alibaba to Invest $15Bn in Logistics Affiliate Cainiao

Alibaba to Invest $15Bn in Logistics Affiliate Cainiao

Alibaba Group said Tuesday it will boost its stake in Cainiao Smart Logistics Network to 51 percent from 47 percent for RMB5.3 billion (US$807 million). Cainiao was founded by Alibaba in May 2013 with a consortium of other logistics companies.

The Chinese ecommerce giant will invest a further RMB100 billion (US$15.2 billion) over the next five years to strengthen its global logistics network. It aims to fulfil orders in China within 24 hours and within 72 hours in other parts of the world.

The investment will also go into research and development, to develop smart warehousing and smart delivery, which will improve overall efficiency and lower costs in China’s logistics sector.

“Our goal with this investment is to provide comprehensive, first-class experience for consumers globally,” said Daniel Zhang, CEO of Alibaba Group. “Our commitment to Cainiao and additional investment in logistics demonstrate Alibaba’s commitment to building the most-efficient logistic network in China and around the world.”

The transaction is expected to be finalised next month, subject to regulatory approvals.

Cainiao operates a platform that links a network of logistics providers, warehouses and distribution centers together in order to enable higher efficiency in China’s logistics industry. It allows participants to confidentially share information on orders and delivery status, and reduce costs.

Cheaper delivery prices have helped spur online shopping in China. A recent report on the China Express Delivery Industry says surging market demand brought about by the booming e-commerce in China has stimulated the fast growth of express delivery.

The volume of business of express delivery in China increased from 1.2 billion parcels in 2007 to 31.3 billion in 2016. In 2016, the revenue of China's express delivery industry exceeded CNY 400 billion. Both the Chinese government and some local governments have issued policies to support the development of the express delivery industry.

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