Wednesday, August 30, 2017

New Logistics Company Established Between Chinese e-commerce Rivals

What a Tangled Web We Weave (When Cooperation Makes Sense)
Shipping News Feature
CHINA – Whilst in Europe Amazon plans to manage all its own deliveries, the tentacles of Eastern giant Alibaba stretch even further when it comes to logistics. The e-commerce group has dozens of subsidiaries and two transport companies in which it has a stake have just completed what is claimed to be the first $1 billion dollar merger between Chinese and Hong Kong registered partners. Mind you the announcement came first on the South China Morning Post - and Alibaba owns that too.

The deal was arranged by investment bankers the China Renaissance Group and sees Hong Kong based GoGoVan join with the larger carrier and e-commerce group, mainland headquartered 58 Home, in a new venture 58 Suyun. Both partners are basically 3PL operations, asset light and with a serious number of subcontractors. 58 Home has a customer base which spans over 100 Chinese cities and is itself a subsidiary of classified ad website, also part funded by Alibaba.

GoGoVan is basically a web based courier and van hire site which boasts you can hire a van in 30 seconds, transporting both goods and passengers around using a variety of vehicles from smaller vans to 9 tonne trucks, all of which carry up to 5 passengers and or goods around Hong Kong. It also serves markets in certain Chinese cities, Taiwan and beyond with 180,000 listed drivers spread across 6 Asian countries and and rents out materials handling equipment, carries construction waste and pets whilst having an interest in cycle share companies Ofo and Mobike whose bikes it collects and returns to the racks.

The deal illustrates the current willingness of many of the major Chinese players to cooperate on commercial enterprises when there is a mutual advantage, Alibaba stakes Ofo whilst rival Tencent supports Mobike (apparently investing over $1 billion so far this year) and also has an interest in 58 Suyun. Tencent finances which spawned 58 Home and 58 Suyun in turn.

58 Home was established in 2014 and GoGoVan a year earlier, Chen Xiaohua, the founder and chief executive of 58 Home becomes chairman of the newly merged entity which will trade under the 58 Suyun name in mainland China and GoGoVan elsewhere. GoGoVan founder Steven Lam Hoi-yuen becomes CEO of the new operation.