Alibaba logistics arm Cainaio has received new funding from Malaysian and Singaporean firms that it intends to use for expansion. (Photo : REUTERS)
Cainiao, logistics arm of Alibaba Group Holding Ltd., has received funding from investors in Malaysia and Singapore, including Temasek Holdings Pte, in its first round of external fundraising. It intends to use the fund to bankroll expansion, China Daily reported.
In a statement issued on Monday, March 14, Zhejiang Cainiao Supply Chain Management Co. said that global investment firm GIC Pte also invested in the company, as well as sovereign wealth fund Khazanah Nasional Bhd, which is expected to subsidize its expansion.
As a result of the funding, Cainiao's delivery network is now worth about 50 billion yuan ($7.7 billion), although the company declined to specify the amounts raised or the stakes sold during the fundraising.
About 70 percent of express packages in China are facilitated by Cainiao through its network that spans 2,800 counties and 224 countries and regions globally.
Chief Executive Officer Tong Wenhong said that the company's public offering is now aimed to finance 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.
Tong said in an interview with Sina.com on Monday that most of China's e-commerce firms, which have built their own logistics networks to deliver goods and made invested heavily in warehouses and delivery teams, have reported losses.
"But in fact, the logistics industry can use big data and collaboration to reduce costs and increase efficiency," Tong said.
Cainiao, which is founded by Alibaba with a consortium of logistics companies, is different in the sense that it operates a proprietary logistics information platform rather than expanding its own network. In addition, it links a network of providers, warehouses and distribution centers to save on costs and be more efficient.
Tong said that with the new investment, Cainiao can use it to build up its core businesses, which include its own warehouses and cross-border delivery services, as well as expand its rural delivery abilities and support its business partners.
After Alibaba created Cainiao with department store chain Intime Retail Group Co. and industrial conglomerate Fosun International Ltd., the e-commerce giant initially had a 48-percent stake in the company, which reportedly had 700 employees in June last year.
Data from the China Federation of Logistics & Purchasing showed that China's logistic cost accounted for about 16 percent of the country's GDP in 2015, which resulted in 30 million jobs.
The data showed that the dramatic growth in the logistics sector had been driven mainly by the rapidly expanding online retail market in China, which itself was worth 3.83 trillion yuan in 2015.
As many as 20.6 billion parcels were delivered last year, a 48-percent increase, according to statistics from China Express Association.
