Alibaba Group taken control of logistics to spend $15 billion to expand network

FILE PHOTO: A logo of Alibaba Group is pictured at its headquarters in Hangzhou, Zhejiang province, China, October 14, 2015. REUTERS/Stringer/File Photo
Vastavam web: Chinese e-commerce firm Alibaba Group has taken control of logistics unit Cainiao and pledged to spend 100 billion yuan ($15 billion) over five years to build out a global logistics network, underscoring aggressive expansion plans overseas.Alibaba will invest 5.3 billion 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 $20 billion.“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 in a statement on Tuesday.
Cainiao was the focus of an investigation last year by the U.S. Securities and Exchange Commission (SEC) into Alibaba’s accounting practices.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.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. Alibaba denied the claims.
Shares of ZTO Express Inc, which raised $1.4 billion from a New York IPO last October, are down 22 percent from the listing price to-date. Best Inc, a Chinese delivery firm backed by Alibaba, raised under half of what it had initially intended to in a U.S. IPO last week.