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  • Jul 31, 2014
  • Updated: 11:50am
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Alibaba links farmers to cities in logistics project

PUBLISHED : Wednesday, 10 July, 2013, 12:00am
UPDATED : Wednesday, 10 July, 2013, 4:59am

The mainland's biggest e-commerce company, Alibaba, has pledged to create an internet logistics network that will enable suburban farmers in the country to deliver their products to city dwellers directly and swiftly, tapping into the government's bold urbanisation plan.

Established in May, the 10 billion yuan (HK$12.5 billion) Cai Niao joint venture - of which Hangzhou-based Alibaba owns about 43 per cent - is poised to be the next big project for Jack Ma Yun, who stayed on as Alibaba's chairman after stepping down as chief executive in May.

At his first media briefing since succeeding Ma as chief executive, Jonathan Lu said yesterday: "The low-cost and low-barrier-to-entry model of Cai Niao aims to be a consortium of e-commerce, logistics and warehouse inventory, which can make delivery within 24 hours in mainland China."

The low-cost and low-barrier-to-entry model of Cai Niao aims to be a consortium of e-commerce, logistics and warehouse inventory, which can make delivery within 24 hours in mainland China

The venture also highlights the investment opportunities in the mainland's highly fragmented and inefficient transport and logistics systems, where companies are shifting to multichannel and direct sales models from dealerships amid rapidly changing consumer behaviour.

Premier Li Keqiang has described the scale of the mainland's urbanisation as unprecedented in human history. Li is now looking to take the country's market-oriented reforms to the next level, unleashing the power of domestic consumption and developing smaller cities in central and western areas.

Lu, who was hired in 2000 to build up Alibaba's South China sales region and lead a number of important platforms such as the AliPay e-payment system and the Taobao consumer-to-consumer website, said Alibaba aimed to be a "data-services" company focused on the internet and its e-commerce business. He also laid out the concept of "internet life", an early-stage, developing service for mobile users that involves cloud computing and data analysis.

The mainland, home to the world's biggest population of internet users, is also the world's biggest smartphone market, with the number of users growing 150 per cent last year to 330 million.

"The future is clearly on the side of mobile devices such as cell phones and tablets, followed by personal computers designed for professionals," Lu said.

He said a highly anticipated initial public offering was a small part of the firm's long-term plans.

Apart from its flagship business-to-business site Alibaba.com which helps connect mainland suppliers with domestic and overseas buyers, the firm, delisted from the Hong Kong exchange in August, is poised to come back in the fourth quarter this year with assets such as Taobao.

"We are 120 per cent ready for an IPO at any time and Jack will be the person to press the button," Lu said. "As a cash-rich company, proceeds raised will be used for acquisitions."

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