China's Alibaba teams up with state-owned arms maker to develop positioning services as Beijing shuns GPS

PUBLISHED : Wednesday, 19 August, 2015, 4:03pm
UPDATED : Wednesday, 19 August, 2015, 5:01pm

E-commerce giant Alibaba is bent on developing the country’s home-grown global positioning system for corporations and developers as China continues to wean itself off its dependence on GPS.

Alibaba set up a joint venture called Qianxun Location Network on Tuesday with China North Industries Group (Norinco), a state-owned military group responsible for developing the BeiDou Navigation Satellite System (BDS), dubbed “China’s GPS”.

Its cloud computing business Aliyun will work on building up the system with data-processing and internet technologies, and Norinco will provide more positioning technology by drawing on its three subsidiaries that offer location-based services,3sNews reported.

The new company has been set up in Shanghai with 2 billion yuan (US$312.6 million) of registered capital. Both partners will hold a 50 per cent share, Norinco said.

BDS is one of the world’s biggest navigation systems, along with American-made GPS, Russia's GLONASS, and Galileo from the European Union. Galileo is not expected to become commercially operational until next year. India is also working on its Indian Regional Navigation Satellite System.

Media reports say China hopes to have it account for 60 per cent of the domestic market by 2020, and it is furthering its campaign to go global this year with two more satellites launched in July.

Named after the Chinese characters for the Big Dipper - beidou in Putonghua - BDS was launched in 2000, about two decades after the space-based navigation system GPS was first set up in the US. 

BDS has covered the entire Asia-Pacific region since 2012. With China’s state-run People’s Daily reporting the new satellite launches last month, it now has 19 in orbit and expects full global coverage by 2020 with a total of 35 satellites.

At that time, BDS' market value is projected to hit 240 billion yuan (US$37.5 billion), China's Securities Daily newspaper reported.

Rumours of Alibaba’s plans to collaborate with Norinco first took root last year, but the company, which controls 80 per cent of online shopping revenue in China, declined to comment ahead of its record US$25 billion listing in New York.

Alibaba flashed its interest in location-based services in February when it agreed to buy Chinese digital mapping company AutoNavi for US$1.5 billion. AutoNavi has been providing mapping data on China for Apple’s built-in Maps App since 2012.

Its major Chinese rivals have been running their own online mapping services for at least as long, with top search engine Baidu getting stuck in a decade ago and Tencent, which operates the hugely popular WeChat and QQ mobile messaging services, entering the fray three years ago.