Chinese e-commerce behemoth, Alibaba, on Tuesday announced its plan to invest USD 807 million or 5.3 billion yuan in its logistic service provider, Cainiao Smart Logistics Network, in a bid to escalate its stake in the Chinese logistics & warehousing firm from 47% to 51%. For the records, Cainiao was created by Alibaba through a joint venture of top Chinese logistics firms including investment conglomerate Fosun International Ltd. and department-store chain Intime Retail (Group) Co. Ltd.
Reportedly, post the deal, Alibaba will represent four out of seven seats in the Cainiao’s board. The company has further pointed toward the consolidation of the financials of Cainiao in its own books, once the venture is through.
The deal comes as an extension of Alibaba’s vision to strengthen its footprints in the global logistics market. Reportedly, the Chinese retail market giant plans to invest 100 billion yuan, over the coming five years, in a bid to develop a strong logistics network that spans the world. Apparently, this venture will aid Alibaba in improvising its operations and know-how in terms of data technology, warehousing, and delivery models.
Allegedly, this is not the foremost step taken by the Chinese conglomerate to expand its logistics and e-commerce network globally. The company recently made an investment of USD 2 billion in Lazada Group, a German e-commerce company, which operates primarily in South East Asia covering Indonesia, Philippines, Malaysia, Thailand, Singapore, and Vietnam. The investment aided Alibaba in building direct sales channels in Thailand, Philippines, and Indonesia.
Earlier this year, in June, Cainiao made it to the headlines with its controversial spat with SF Holding Co, a Chinese delivery services company over data confidentiality issues. Followed by the tiff, SF Holdings cut its partnership with Cainiao, the logistics service provider to Alibaba, claiming that Alibaba had demanded data which was not listed in their then partnership agreement, an accusation which was denied by Cainiao. However, the spat was eventually resolved as it negatively impacted the country’s shipment and delivery model.
Alibaba’s recent investment would seemingly make Cainiao’s worth at around USD 20 billion. For the records, Cainiao currently manages an approximate of 57 million deliveries in a day.