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While it is the operator of the country’s largest online marketplaces Taobao and Tmall, Alibaba does not have a big dispatch fleet of its own in China. Photo: Reuters

Alibaba strengthens logistics network by investing US$966 million in YTO Express, doubling its stake

  • Chinese e-commerce giant Alibaba has increased its stake in YTO Express from 10.5 per cent to 22.5 per cent
  • The latest investment in YTO Express, one of China’s largest logistics service providers, comes amid an e-commerce boom driven by the stay-home economy
Chinese e-commerce giant Alibaba Group Holding has invested an additional 6.6 billion yuan (US$966 million) in YTO Express, more than doubling its stake in the major Chinese courier from 10.5 per cent to 22.5 per cent, in its latest move to strengthen its logistics network.

Hangzhou-based Alibaba has agreed to buy an additional 12 per cent of YTO’s shares from founding couple Yu Huijiao and Zhang Xiaojuan, at a price of 17.406 yuan per share, according to a YTO statement on Wednesday, which added that the founding couple will continue to be controlling shareholders.

The companies will collaborate in four main areas: express deliveries, air cargo, building a global logistics network and supply chain, and digital technologies, the statement said.

“We are pleased to further strengthen the strategic partnership with YTO, focusing on digitisation and globalisation to enhance customer service capabilities,” said a spokeswoman from Alibaba, which is the parent company of the South China Morning Post.

Alibaba’s latest investment reflects aggressive efforts by Chinese e-commerce players recently to broaden their logistics and transport infrastructures to meet fast-growing consumer demand, which has picked up pace this year due to the stay-home economy created by Covid-19 lockdowns and travel restrictions.

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JD.com, the country’s second-largest e-commerce operator after Alibaba, also agreed to buy a controlling stake in express transport firm Kuayue-Express Group Co for 3 billion yuan last month.

China’s logistics industry has been developing fast in recent years, driven by the e-commerce boom. In the first half of 2020, delivery firms in China dispatched 33.9 billion parcels, up 22.1 per cent from the same period last year, while revenue from the sector recorded a 12.6 per cent year-on-year growth to 382.4 billion yuan, according to data from the Ministry of Transport.

While it is the operator of the country’s largest online marketplaces Taobao and Tmall, Alibaba does not have a big dispatch fleet of its own in China. To compete with rivals like JD.com, which owns its own network, the company has been ramping up investments in major logistics firms instead.

Alibaba founded logistics affiliate Cainiao in May 2013 in partnership with a consortium of logistics companies including YTO. Other Chinese logistics companies the e-commerce giant has acquired stakes in include ZTO Express, STO Express, Yunda Express and BEST Inc.

Founded in 2000, YTO Express is one of China’s major logistics service providers. By the end of 2019, the company had over 400,000 employees operating 133 transfer centres, and over 70,000 service points across the country, data from its website showed.

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