Alibaba Tightens the Grip on China’s Logistics Sector
Alibaba has entered the capital of the Chinese STO Express. For the giant founded by Jack Ma, it is the fourth investment of this type.
China’s e-commerce giant Alibaba has announced its decision to invest 4.66 billion yuan (about 693 million dollars) in exchange for about 14.6 percent of the shareholding of the courier company STO Express.
According to a statement issued by STO, its majority shareholder, Shanghai Deyin Investment Holding Co. Ltd., will establish two new subsidiaries. Alibaba will invest 4.66 billion yuan and will own 49 percent of one of them.
For the Hangzhou company active in e-commerce, this is the fourth significant investment in a logistics company, a sign that controlling the transfer of goods is now seen as a necessity.
The stake was acquired for a total of 693 million dollars.
The new division of STO Express
In detail, the controlling shareholder of STO Express has created a new division which has been assigned 29.9% of the capital of the parent company. Of this new company, Alibaba has been assigned 49%, and therefore Alibaba will hold over 14 percentage points of STO’s capital.
Alibaba confirmed the news by defining STO “one of the top five Chinese delivery companies.”
It is an investment “which represents a further step towards the goal of a 24-hour delivery throughout China and 72 hours globally.”
As mentioned, STO represents the fourth investment of this kind by Alibaba: in the past minority stakes have been acquired in Best Inc, ZTO Express and YTO Express Group.
Deliver anywhere in the world
The agreement will allow the cooperation between Alibaba and STO Express in the transformation of the Chinese logistics industry to deepen, especially in areas such as technology, collection and delivery capacity, and deliveries related to the business of the new retail sales.
In May of last year, the delivery wing of Alibaba, Cainiao Network, reported that it would install more global logistics bases to enhance and streamline its logistics network, with the ultimate goal of being able to deliver anywhere. Alibaba has set itself the goal of delivering orders in China within a maximum period of 24 hours, while in the rest of the world, customers will receive their orders within 72 hours.
In 2017, Alibaba Group also announced an investment of 100 billion yuan over five years to build a global logistics network.
Unlike the American Amazon, Alibaba has not bought department stores or entire courier services and logistics companies but has only bought a small chunk of a number of relevant groups.