Why Alibaba Is Investing More in Its Affiliates



Alibaba now has a majority stake in Cainiao

Chinese e-commerce company Alibaba (BABA) is getting more serious about logistics. It now has a controlling stake in Cainiao Smart Logistics Network after agreeing to invest an additional 5.3 billion yuan (about $808 million), which takes Cainiao’s valuation close to $20 billion.

This increases Alibaba’s stake in the company from 47% to 51%. Cainiao is not a profitable company, but analysts think that its close ties with the e-commerce giant could eventually change its fortunes. In any case, the move suggests that Alibaba wants to increase its control over the country’s warehousing and delivery market.

According to the Wall Street Journal, Alibaba plans to invest a whopping 100 billion yuan (around $15.1 billion) over the next five years in ramping up its global-logistics infrastructure.

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Alibaba wants to expand globally

Alibaba wants to expand its e-commerce and logistics networks globally, now that it has conquered the Chinese e-commerce market. Alibaba-backed PayTM, an Indian mobile payment service company, has now entered the Indian e-commerce market via “PayTM Mall.” However, it will have to compete with Amazon.com (AMZN) and local company Flipkart, which eat up most of the e-commerce pie in India (INDA).

Alibaba’s other subsidiary companies include Koubei, which helps enable local commerce. Alibaba invested $1.1 billion in the company in January 2017. Another notable affiliate is Ant Financial, which owns Alipay. Ant Financial now has a valuation of around $60 billion and is likely to go public soon.

Alibaba invested an additional $1 billion in Lazada, a Southeast Asian online retail company, in June, increasing its stake from 51% to 83%.


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