A sign of Alibaba Group is seen during the third annual World Internet Conference in Wuzhen town of Jiaxing, Zhejiang province, China, November 16, 2016 (REUTERS / Aly Song)
Hong Kong: Chinese e-commerce firm Alibaba Group has taken control of logistics unit Cainiao and pledged to spend 100bn yuan ($15bn) over five years to build out a global logistics network, underscoring aggressive expansion plans overseas.
Alibaba will invest 5.3bn yuan to boost its stake in Cainiao Smart Logistics Network to 51 percent from 47 percent, giving it direct control over the loss-making affiliate, suggesting a rough valuation of Cainiao at around $20bn.
The announcement comes as Alibaba rapidly expands its e-commerce and logistics network abroad to diversify its consumer base, including newly announced direct sales channels in counties around Southeast Asia. “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,” Alibaba CEO Daniel Zhang said yesterday.
Cainiao was the focus of an investigation last year by the US Securities and Exchange Commission (SEC) into Alibaba’s accounting practices.
Alibaba, which will gain an extra seat on Cainiao’s board giving it four out of a total seven seats, added that more shares were issued in the funding round to other investors. It did not give details about the other issuances, which would impact Cainiao’s valuation.
The investment also signals Alibaba’s intention to boost control over China’s domestic warehousing and delivery market, increasingly competitive as firms seek to make use of troves of logistics data about the country’s Internet-savvy shoppers.
The firm, headed by billionaire magnate Jack Ma, said that the longer-term $15bn investment would be used to develop its data technology and improve its warehousing and delivery. The battle to control logistics networks in China has at times created tensions between e-commerce and delivery firms.
In June major logistics company SF Holding cut ties with Cainiao, which provides logistics support directly to Alibaba’s top e-commerce platform Taobao. SF Holding claimed Alibaba had requested data unrelated to an existing partnership agreement.
