Indonesia’s J&T Express buys Chinese rival Best’s logistics business amid price war centred in manufacturing hub of Yiwu

J&T Express announced a US$1 billion acquisition of Best’s logistics business, which has suffered ballooning losses amid an industry price war in China

The deal is expected to close in the first quarter next year and will only affect Best’s Chinese logistics operations, not other business segments

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Beixiazhu Village in Yiwu, Zhejiang province, was at the forefront of a brutal price war in delivery services this year. J&T Express, which initiated the price war, has announced an acquisition of its Chinese rival Best’s logistics operations for more than US$1 billion. Photo: Tracy Qu

Published: 3:59pm, 30 Oct 2021Updated: 3:59pm, 30 Oct 2021

Indonesian logistics firm J&T Express announced that it will acquire its Chinese rival Best Inc’s courier business for 6.8 billion yuan (US$1.06 billion), amid a brutal price war among the industry’s major players.

“The acquisition of Best Express advances J&T Express’ strategy to enhance our end-to-end supply chain management in the Chinese market by leveraging Best’s strong infrastructure capabilities and extensive partnership network,” said J&T CEO Steven Fan, adding that the deal will also help its cross-border logistics business.

The two companies announced the acquisition on Friday, adding that they are currently making steady progress towards completing the transaction.

The deal, contingent on regulatory approval, is expected to close in the first quarter next year, Hangzhou-based Best said in a separate statement. The sale of Best’s express business in China will not affect its other segments, which include supply chain management, freight, cargo and other global businesses, the company said.

The deal comes amid heightened competition among China’s logistics companies, which have grown on the back of rapid e-commerce growth in the country. Jakarta-based J&T initiated a price war while aggressively expanding in China, offering services for as little as 1 yuan (15 US cents) per package. Competitors such as Best, which is backed by Alibaba Group Holding, responded by lowering its prices.

Alibaba, which owns the South China Morning Post, is also an investor of some of the country’s bigger logistics players, including YTO, STO, ZTO and Yunda.

The price war has so far been concentrated in Yiwu, a manufacturing and logistics hub in eastern China, where the postal authority punished J&T and Best for “price dumping” and shut down some of their delivery centres in April.

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