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Alibaba spends $3.3bn to tighten grip over key logistics arm

China’s Alibaba said it will spend 23bn yuan ($3.3bn) to tighten its grip in a logistics firm at the heart of the sprawling e-commerce giant‘s empire.

The online group said it would up its stake in Cainiao Smart Logistics Network to 63 per cent from 51 per cent, in a bid to exert more control over its service to customers.

Alibaba, co-founded by billionaire Jack Ma (pictured) in 1999, established Cainiao six years ago, along with a number of other partners, including Chinse conglomerate Fosun.

Alibaba chief executive Daniel Zhang said: “Logistics is a key pillar of the Alibaba business operating system. It allows us to offer the best service to customers and to effectively advance our new retail strategy.”

 

Upping stake

Cainiao is rapidly expanding its operations in China and abroad, overseeing at least a dozen shipping firms that ensure deliveries to millions of Alibaba’s customers.

Cainiao’s Guoguo app, which handles parcel delivery services, had 100 million annual users at of the end of August. Its parcel volume more than doubled in the September quarter, compared with last year, according to its latest filings.

The move by Alibaba seems designed to exert closer control over its logistics infrastructure, in similar fashion to US rival Amazon.

Last May, Ma said Alibaba would invest 100bn yuan ($14bn) in logistics, without giving a time frame.

Alibaba first took control of Cainiao two years ago, lifting its stake to 51 per cent from 47 per cent at the time.

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Roger Baird

Roger Baird

Roger Baird is News Editor at Finixio. He has worked as a financial journalist for 20 years reporting on companies, capital markets and the UK economy.
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