Unprecedented delivery

ALIBABA Group’s delivery arm is establishing a Chinese network of unprecedented scale, even as it expands warehousing in the US and elsewhere to propel the e-commerce operator’s global ambitions.

Zhejiang Cainiao Supply Chain Management, of which Alibaba owns 48 percent, was angling toward a future initial public offering (IPO) to help bankroll that expansion, President Judy Tong said on Friday in Hangzhou, China.

The two-year-old company is now erecting delivery hubs centred around five of China’s largest cities, including one in the vicinity of Beijing that will span an area equivalent to 37 football fields. Cainiao has set its sights on extending a network reaching the US, Russia, Brazil and Spain to complement existing bases in seven countries, including Amazon.com’s home turf.

“We will definitely conduct an IPO in the future,” Tong said in an interview. “There is no delivery company that covers the entire nation, providing services to all merchants.”

The quintet of Chinese delivery centres will underpin a rural network that can spirit packages to 100 000 villages within three years. It would service external clients and even other e-commerce sites, Tong added. The hub outside China’s capital would span 200 000m², larger than the giant fulfilment centres Amazon has become known for.

Alibaba is relying on the shipping company to support a march into the countryside and across borders, as competition with JD.com intensifies at home and it seeks to get half its revenue from outside of China.

Cainiao has 700 employees, half of which focus on technology. The firm runs its own warehouses while also operating as a network overseer, using software to marshal trucking, shipping and delivery firms to get packages from seller to buyer. “The essence of Cainiao’s business is an information platform that leverages its strength in traffic and data,” said Li Muzhi, a Hong Kongbased analyst.

Alibaba created Cainiao in May 2013 with department store chain Intime Retail Group and industrial conglomerate Fosun International, which own a combined 42 percent of the company. – Bloomberg

PHOTO: REUTERS A worker looks on as a rectifying tower is lifted at a propane plant in Fuzhou, Fujiang province, China, on Friday. China’s growth is undershooting the government’s 2015 target of about 7 percent so far this year.