International funding for Cainiao

At least six groups injected an estimated US$1.54 billion into Alibaba’s logistics unit Cainiao during the company’s first round of external funding since it was founded in 2013.

In a move led by e-commerce giant Alibaba, Cainiao was founded three years ago with financial support from two strategic partnerships, one led by China Life Insurance and including Alibaba Group and Yintai Group; the other led by China Citic Bank. At the time, Alibaba said it expected total eventual investment in Cainiao of upwards of $15 billion over the following five to eight years, as the company worked to piece together China’s fragmented logistics industry into a comprehensive, big-data driven, cloud-based ecosystem built out of Alibaba technologies. In this latest round of fund-raising, notable foreign investors include Singapore’s Temasek Holdings GIC Pte Ltd, Khazanah Nasional Berhad from Malaysia, as well as private investment firm Primavera Capital from China.

Over the next few years, Cainiao will attempt to translate this new wave of cross-border capital into logistical solutions that facilitate cross-border e-commerce. Cainiao President Judy Tong has made it clear that “the ultimate goal of Cainiao is to make it easy to deliver goods to anywhere, so that parcels delivered in China can arrive in 24 hours and parcels delivered cross-border can arrive in 72 hours – instead of several days currently for China shipments, and days or weeks for international orders.”

Within mainland China, the company already handles 70 percent of all express packages, but Cainiao plans to extend its reach outside of China, and expand its platform to encompass every stage of cross-border logistics, including the transaction, payment, and shipping and tracking processes.

At present, Cainiao operates nine bonded warehouses which enable expedited customs clearance and the import of goods at lower tariff rates. Chinese consumers can pay tariffs and clear customs on imported goods before the product is shipped, and every stage of the process is overseen by Cainiao. As Cainiao Vice President Wan Lin put it, “it’s not just about lowering the custom duty and tax; it’s about achieving a more efficient global supply chain.” In doing so, the company will likely shift its focus to partners and solutions outside of mainland China.

If you would like to learn more about Cainiao’s plans for international expansion, join us in Hong Kong next week at Cargo Facts Asia 2016, where Steven Li, Cainiao’s Director of Strategic Partnerships and Cross- border Logistics will speak on a session devoted to the impact of e-commerce on the air freight industry. To register, or for more information, go to www.cargofactsasia.com.