(Yicai Global) May 30 -- Alibaba Group Holding is leading a group of investors taking a 10-percent stake in major Chinese courier service ZTO Express for USD1.4 billion, as part of efforts to strengthen the e-commerce leader's logistics operations.
The group includes Alibaba's logistics unit Cainiao Network, the Hangzhou-based firm said in a statement, without disclosing the names of any other investors. Shanghai-based ZTO's American Depositary Receipts [NYSE:ZTO] surged almost 7.9 percent in trading yesterday after the announcement.
"ZTO has been an important partner to Alibaba Group and Cainiao Network in the development of the new digital economy," said Alibaba Chief Executive Daniel Zhang. The firm is expected to expand business volumes by distributing more products from Alibaba's main retail platforms Hema Fresh, Tmall, and Taobao.
Alibaba's investment follows rival JD.Com's purchase of a 10-percent stake in warehouse partner China Logistics Property Holdings last month for USD115 million.
China's domestic delivery sector is booming, driven by growth in online shopping, with parcel volumes doubling every two years. Alibaba and JD, the country's leading e-commerce players, have stepped up investments in the sector as part of efforts to shorten delivery times and ensure vast networks while also exploring digital innovations to enhance the user experience.
Alibaba and JD have long pursued divergent logistics strategies. JD sticks to a self-built warehousing and distribution system, while Alibaba has opted to partner up with the country's leading couriers including ZTO, YTO Express Group, STO Express and Yunda Express. Alibaba's Cainiao Network is responsible for running a platform for couriers to carry out distribution, while also providing service support.
Editor: William Clegg