China's Alibaba and partners to invest $16 billion in logistics network: report

SHANGHAI (Reuters) - Alibaba Group, which runs China’s largest e-commerce platforms, and its partners will spend 100 billion yuan ($16.08 billion) in the first phase of investment to build a logistics network, a local newspaper reported on Friday.

An employee walks past a wall painted with the logo of Alibaba (China) Technology Co. Ltd at its headquarters office on the outskirts of Hangzhou, Zhejiang province May 21, 2012. REUTERS/Steven Shi

The unit will be chaired by Jack Ma, founder and chairman of Alibaba Group, and over the next 8-10 years aims to complete the network that would allow the delivery of products across China within 24 hours, Beijing News said.

Once complete, the network will be able to support annual online sales of 10 trillion yuan, it said. Alibaba will lead the group of investors, which will include private equity firms, express companies and a bank, the paper said.

Alibaba Group said it is spearheading the project in cooperation with industry partners.

“This is consistent with what we’ve said in the past that logistics is a key industry bottleneck for e-commerce growth in China and that everyone involved in this sector needs to work together to drive rapid development,” an Alibaba spokeswoman said in an email to Reuters.

Alibaba’s Taobao Marketplace and Taobao Mall are China’s largest e-commerce platforms by transaction volume, where everything from imported almonds to precious jade can be bought from the millions of virtual storefronts run by small businesses.

The value of transactions on the two e-commerce platforms exceeded 1 trillion yuan ($160.6 billion) for the first time in January-November in 2012, up 58 percent from a year ago and equivalent to 2 percent of China’s gross domestic product in 2011, reflecting the boom in the sector.

Over the past few years, Chinese e-commerce companies have been developing logistics operations to improve service and efficiency. The platform 360buy, also known as Jingdong Mall, began building its own logistics system in 2007.

Last week, Alibaba said Ma, one of China’s best-known corporate leaders, will step down as CEO of the group, passing the reins to “a younger, better equipped” generation.

($1 = 6.2181 Chinese yuan)

Reporting by Kazunori Takada; Editing by Matt Driskill