Chinese Billionaires Clash Over Alibaba's Parcel DeliveriesBloomberg News
Jack Ma-backed Cainiao, SF Holding sever some data access ties
China’s postal bureau urges them to resolve dispute soon
China’s wealthiest man, Jack Ma, has locked horns with the country’s fourth-richest in an escalating dispute over the lucrative business of shipping Alibaba’s parcels to millions of shoppers nationwide.
Billionaire Wang Wei’s SF Holding Co. on Friday accused Alibaba Group Holding Ltd.’s delivery affiliate in an exchange filing of removing the company as a shipping option and blocking access to vital data. The affiliate backed by Ma, known as Cainiao, fired back by saying it was SF that first walled off information it needed to get parcels to customers.
It’s unclear what originally triggered their spat, which threatens a symbiotic relationship that underpinned SF’s listing this year and helped Wang accumulate a fortune of some $21.5 billion. Alibaba’s part-owned Cainiao depends on services such as as SF Express -- the largest of a handful of domestic delivery businesses -- to get parcels to customers’ doorsteps. But their falling out was serious enough that the country’s postal bureau, which also regulates the industry, urged both parties to resolve their differences as soon as possible to avoid throwing the market into disarray.
Their dispute may have arisen over a desire to control the valuable customer information generated through the millions of orders and shipments that flow through Alibaba’s massive e-commerce operation. SF wouldn’t provide data Cainiao demanded in May because it wasn’t relevant, the delivery firm said in a brief post on messaging service Weibo Thursday.
“The heart of this conflict revolves around how Cainiao wants access to SF’s data and SF getting more reluctant,” said Marie Sun, a Shenzhen-based analyst at Morningstar Investment Service. “SF probably wants to maximize its own interest and in the short term it has options to work with other e-commerce platforms.”
Cainiao and SF Express have been close partners in a parcel delivery business underpinning China’s 6.2 trillion yuan ($910 billion) online retail market. Alibaba’s 450 million active buyers helped spur more than 30 billion express deliveries in China last year, a significant proportion of which were shipped via Shenzhen-listed SF. Wang’s company said Cainiao accounts for about a fifth of its total deliveries, though it maintained the dispute wouldn’t affect the company’s profit projections for this year and next.
“We are surprised and disappointed by SF’s abrupt action to stop providing the information that is necessary for the smooth completion of parcel deliveries,” Cainiao said in an emailed statement. “To protect more than a million of consumers and merchants from potential parcel losses, we have no option but to remove SF as a delivery option on Cainiao’s network.”
SF on Friday declined to comment on the latest developments. Its shares were down 3.2 percent at 11:22 a.m. in Shenzhen.
Zhejiang Cainiao Supply Chain Management Co., of which Alibaba owns 48 percent, has been building a software platform to connect other delivery providers and speed the shipment of packages across the country. Alibaba’s shoppers can track their parcels via Cainiao, while actual delivery is carried out by third-party services such as SF Express.
Alibaba created Cainiao in 2013 with department store chain Intime Retail Group Co. and industrial conglomerate Fosun International Ltd. The company said last year it was erecting delivery hubs centered around five of China’s largest cities, including one in the vicinity of Beijing that will span an area equivalent to 37 football fields.
For more on China's technology industry, check out the Decrypted podcast:
— With assistance by Lulu Chen, and Dong Lyu