There are reports that Alibaba has paid $807M to take a majority ownership in logistics operation Cainiao. The investment takes Alibaba from a 47% stake to a 51% holding in the company and, obviously, that now means they have a controlling share.
Alibaba CEO Daniel Zhang said of the investment: “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 will now have control over 4 of the 7 seats on the board and has also pledged to invest strongly in the enterprise. Apparently, Alibaba will now spend something like 100 billion yuan ($15 billion) over the next five years to develop the global logistics network.
Alibaba is all powerful and is clearly looking for expansion. Taking on a greater responsibility for fulfilment is now demonstrably part of that process and they’re putting their money where their mouth is. They are not short of funds and influence, so it’s an obvious move.
It’s worth noting that Alibaba co-founded Cainiao in 2013, with partners including retailer Intime Group and the Fosun Group alongside a handful of logistics companies. As it stands, it currently enabless roughly 57 million deliveries a day and clearly there is a scope for huge growth there. Not just in China, but in the broader Asian market and overseas.
