Alibaba lo­gis­tics arm gets Te­masek, GIC funds

The Pak Banker - - COMPANIES/BOSS -

BEI­JING: Alibaba Group Hold­ing Ltd's lo­gis­tics off­shoot Cainiao has at­tracted in­vest­ment from Malaysia and Sin­ga­pore, in­clud­ing Te­masek Hold­ings Pte, in its first round of ex­ter­nal fundrais­ing since be­ing cre­ated in 2013.

Zhe­jiang Cainiao Sup­ply Chain Man­age­ment Co, to give its full name, also gained fund­ing from global in­vest­ment firm GIC Pte and sov­er­eign wealth fund Khaz­anah Na­sional Bhd which is ex­pected to bankroll its ex­pan­sion, ac­cord­ing to a state­ment on Mon­day. The com­pany de­clined to spec­ify the amounts raised or the stakes sold, al­though Caixin re­ported that its de­liv­ery net­work is now val­ued at about 50 bil­lion yuan ($7.7 bil­lion) as a re­sult of the fund­ing round.

Cainiao fa­cil­i­tates the de­liv­ery of 70 per­cent of China's ex­press pack­ages us­ing a net­work span­ning 2,800 coun­ties at home, and in 224 coun­tries and re­gions glob­ally. Chief Ex­ec­u­tive Of­fi­cer Tong Wen­hong said the com­pany is now an­gling to­ward a pub­lic of­fer­ing to bankroll fur­ther ex­pan­sion. "If e-com­merce was the fo­cus of China's econ­omy in the past 10 years, lo­gis­tics will be the fo­cus for the next 10," Tong said in the state­ment.

In an in­ter­view with Sina.com on Mon­day, she said most of China's e-com­merce firms have built their own lo­gis­tics net­works to de­liver goods, in­clud­ing huge and ex­pen­sive in­vest­ment in ware­houses and de­liv­ery teams, and led to losses in many cases. "But in fact, the lo­gis­tics in­dus­try can use big data and col­lab­o­ra­tion to re­duce costs and in­crease ef­fi­ciency," she said. Founded by Alibaba with a con­sor­tium of lo­gis­tics com­pa­nies, how­ever, Cainiao is dif­fer­ent in that rather than ex­pand­ing its own net­work it op­er­ates a pro­pri­etary lo­gis­tics in­for­ma­tion plat­form, that links a net­work of providers, ware­houses and dis­tri­bu­tion cen­ters, which of­fers ef­fi­ciency and cost sav­ings.

The new in­vest­ment, Tong said, will be used to build up Cainiao's core busi­nesses, in­clud­ing its own ware­houses and cross-bor­der de­liv­ery ser­vices, ex­pand its ru­ral de­liv­ery abil­i­ties and sup­port its busi­ness part­ners.

Alibaba ini­tially had a 48 per­cent stake in Cainiao af­ter cre­at­ing it with depart­ment store chain In­time Retail Group Co and in­dus­trial con­glom­er­ate Fo­sun In­ter­na­tional Ltd. The busi­ness had 700 em­ploy­ees in June last year.

China's lo­gis­tic cost ac­counted for 16 per­cent of the coun­try's GDP in 2015, cre­at­ing 30 mil­lion jobs, ac­cord­ing to the China Fed­er­a­tion of Lo­gis­tics & Pur­chas­ing.

The sec­tor's dra­matic growth has been largely driven by China's rapidly ex­pand­ing on­line retail mar­ket, which it­self was worth 3.83 tril­lion yuan in 2015. Sta­tis­tics from China Ex­press As­so­ci­a­tion show that as many as 20.6 bil­lion parcels were de­liv­ered last year, a 48 per­cent in­crease.

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