By Tang Guhan
China’s e-commerce giant, Alibaba and its logistics arm, the Cainiao Network on Tuesday night announced they would forge a partnership with China’s leading logistics company ZTO Express.
Alibaba and Cainiao were slated to buy 10 percent stakes in ZTO Express for 1.38 billion yuan. The two sides will join hands in a joint venture in the digitalized logistics industry.
The deal will be accomplished by the start of June.
The ZTO Express stock price surged by 17 percent following the announcement. Its most robust performance so far.
The move was alleged to be a confrontation for another e-commerce giant JD.com’s self-owned logistics and quick delivery services.
The cooperation, according to Zhang Yong, the CEO of Alibaba, would help create a brand-new delivery experience for their customers. Wang Lin, the chairman of Cainiao Network, also noted his company would strengthen the coordination in technological innovations and applications.
The operating income of ZTO Express, according to its quarterly financial reports, rose by 35.6 percent to 3.544 billion yuan in the first quarter and its net profits ended at 557.5 million yuan, up by 10.9 percent.
Founded in 2002, ZTO Express has expanded its business significantly in recent years. Its delivery volume has ranked ahead of Yuan Tong, Shen Tong, and SF Express. The company went public in New York in 2016.
Leveraged by ZTO Express’s executive strengths and clear business strategies, as stated in a report by Morgan Stanley in March, the company would further expand its market share in China.
Analysts believed the move would further facilitate the integration of logistics firms with e-commerce giants as well as logistics firms’ transformations towards high-quality growth to replace price wars with each other.
Apart from ZTO Express, other logistics firms have also sought partnerships with Alibaba by investing in Cainiao Network. They shared information and data with Cainiao, and 70 percent of their delivery volumes come from the Tao Bao vendors.
