The vast Chinese e-retailing business, Alibaba has begun to develop its logistics infrastructure with the announcement of a joint venture called ‘Cainiao Network Technology’ (translated as ‘Rookie Network Technology’), which in turn will manage the ‘China Smart Logistics Network’.
The new company will reportedly have a capitalisation of over US$16bn and will look to invest US$48bn in assets. 10% of the joint venture will be owned by the Shanghai-based investment company, Forsun International, with other partners reported to be the Intime Department Store Group and the logistics companies Shentong Express, ZTO Express and YTO Express, as well as other investors. However, it is not known if the latter group of express companies will be involved in the management of the new company.
Alibaba has already stated that it wished to invest in logistics in China; with its founder Executive Chairman Jack Ma saying that both the prices and the quality of service were inadequate to support the growth of his business. The objective of the new company will be to provide a 24-hour response time for e-commerce to 2,000 cities in China. The company will also look to develop internet tools to offer logistics capabilities to other companies looking to enter e-commerce in China. These tools appear to be in the area of order tracking and visibility.
Mr Ma said earlier in the year that he expected internet retailing volumes in China to increase eight-fold within ten years, seeing parcel activity of around 200m items a day.
Alibaba is also rumoured to be planning to float its shares on the Hong Kong stock exchange in the near future. The company, which is possibly worth as much as US$70bn, is partly owned by Yahoo, the US based internet service company.
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