(Yicai Global) Sept. 21 -- Leading Chinese fast-growing smart supply chain service provider, BEST Inc. [NYSE:BSTI] kicked off an initial public offering on the New York Stock Exchange yesterday.

Compared with the IPO price, the firm opened 14.8 percent higher at USD11.48.

It issued 45 million American depositary shares (ADS) in total priced at USD10 per share, and the total issue size is as high as USD450 million, making it the largest Chinese IPO in the US this year. The company and its selling stockholder have granted the underwriters the right to purchase up to an additional 6.75 million ADS to cover over-allotments.

Alibaba Investment Limited is BEST Inc.'s largest shareholder with a pre-IPO shareholding of 23.4 percent. The second-largest shareholder is founder, chairman and chief executive officer Shao-Ning Johnny Chou, with a 14.7 percent stake in the firm prior to the IPO. Alibaba Group's affiliate Cainiao Smart Logistics Investment Limited is also a major shareholder of the firm with a pre-IPO shareholding of 5.6 percent.

Smart Supply Chain Ecosystem

Chou founded BEST Inc. in 2007, seeking to transform the Chinese logistics industry and supply chain market through technology and business model innovations.

BEST Inc. offers multiple supply chain and logistics solutions ranging from warehouse management, express delivery, freight, retail, finance and cross-border supply chain management. Such a diverse business network enables the company to integrate technology, one-stop logistics and supply chain services, 'last mile' delivery and value-added businesses. All of these operations are seamlessly incorporated into BEST's ecosystem via its proprietary technology platform, BEST Cloud. The firm has a proven track record of providing smart supply chain services on a global scale.

Its core business is providing consumers with comprehensive information technology-based supply chain services. Adopting a business strategy that gives priority to technology development and human resources, BEST Inc. aims to continuously expand its business platform and ecosystem, focusing on investment in technology and human capital. Such an 'asset-light' business model has enabled the firm to outperform its rivals in terms of both market share and business growth in the past four to five years.

The asset-light model involves leasing service network facilities and sites and outsourcing transportation operations, Yicai Global learned. BEST's express delivery, freight business, and cloud-based order fulfillment centers are operated by franchises partners.

The company has benefitted from the asset-light business model in terms of maintaining a high degree of flexibility and 'proactivity' in business operations, and achieving economies of scale at minimum cost, industry insiders observed.

From 2012 to 2016, BEST Express's parcel volume and BEST Freight's freight volume in tonnes grew by 93 percent (compound annual growth rate) every year. Orders fulfilled by the BEST Supply Chain grew at a yearly rate of 96 percent. As of June 30, BEST Inc. had more than 27,000 service stations in its express and freight network and 215 franchised cloud-based order fulfillment centers operated by some 9,000 franchise partners.

Technology Development and Foreign Market Operations

Apart from the establishment of its ecosystem, BEST Inc. has focused its efforts on the development of technology. It promotes an internal 'engineer culture', and has amassed a team of more than 500 technology specialists including engineers, Chou said.

The company's technological strengths lie in its ability to connect millions of end users such as consumers, deliverymen and sellers; the ability to create different services including warehouse management systems and transportation management systems; the ability to use innovative technologies to optimize various applications; and the ability to invent new applications employing artificial intelligence and other new technologies, Chou told Yicai Global.

After the IPO, BEST Inc. will continue to increase R&D and improve the technology infrastructure. This will enable the company's ecosystem to design, manage and operate highly complex supply chain services and solutions by effectively applying Big Data analysis, machine learning AI and mobile technologies.

By applying the latest technologies in network and path optimization, exchange box, sorting automation system and intelligent cloud warehouse management operations, operational efficiency and service quality will be maximised. Furthermore, new services such as cold-chain delivery will be introduced to attract more users and enhance user retention.

The company also plans to set up new joint ventures and foster new partnerships by investing in or acquiring select businesses that can positively contribute to its business and technology development efforts.

"The bigger goal going forward is to create greater value, including business globalization, for consumers drawing on our technology and innovation capabilities that we acquired over the years, and offer more high quality services," Chou told our reporter. BEST Inc. started operations on the global markets a couple of years ago, with the aim of giving Chinese consumers access to the best products in the world, and assisting Chinese businesses with their globalization efforts. The firm will continue to scale up its overseas businesses in future.

At present, its overseas operations mainly include integrated door-to-door cross-border supply chain services, including international delivery, less-than-truckload shipping, order fulfillment, reverse logistics and freight forwarding, offered by BESTGlobal relying on its own operations network and services provided by transport and warehousing business partners across the world. The firm is working on expanding its overseas operating centers, and will be on the lookout for global M&A opportunities, Chou disclosed.