29 January 2020
China Post's operation reaches over 200 countries worldwide. Photo: Bloomberg
China Post's operation reaches over 200 countries worldwide. Photo: Bloomberg

Alibaba’s logistics ambition goes global

Just months before Alibaba’s planned US listing, the e-commerce titan makes another major move in the logistics sector in a bid to expand its footprint worldwide.

Alibaba has signed a strategic cooperation deal with China Post to build a smart logistics network in China. The deal allows the two firms to work together on logistics, e-commerce, finance and information security.

China Post’s postal and logistics operation reaches over 200 countries worldwide. The state-owned behemoth has carved up the largest market share in China’s international postal services.

At present, over 50 percent of international mail and delivery services in China are done through China Post, according to Fang Zhipeng, vice general manager at EMS, a courier service subsidiary under China Post.

Teaming up with China Post will help Alibaba to expand its logistics business overseas.

China Post has established direct postal relationship with over 120 countries, which means Alibaba could enjoy preferential treatment in those countries, particularly in customs-related matters, and its customers and merchants could receive and deliver their goods faster.

Earlier, Alibaba bought a minority stake in Singapore Post for around US$249 million. Under the tie-up, Alibaba and SingPost will create a joint venture that provides logistics services for international online retailing.

We could see that all these moves point in the same direction: boosting Alibaba’s global presence.

What’s more, China Post has an immense presence in lower-tier cities in China, which can also complement Alibaba’s mega Cainiao logistics project at home.

In May 2013, Alibaba led a consortium in setting up Cainiao Network Technology. Members include Intime Department Store as well as a number of leading delivery companies such as SF Express, Shentong Express, ZTO Express, YTO Express and Yunda Express.

Once completed, Alibaba founder Jack Ma has said, the network will be able to deliver goods in any part of China within 24 hours.

Cainiao’s warehouses and distribution infrastructure now cover first- and second-tier cities including Beijing, Shanghai, Tianjin and Chengdu. China Post’s network in lower-tier cities and villages will fit in nicely.

Arch rival is pushing on the logistics front too but it is confined to China and the company takes a different path to leverage on partners. The number two e-commerce player has teamed up with more than 10,000 convenience stores to boost its reach in smaller cities and villages.

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EJ Insight writer