Cainiao Seeks Public Listing in Hong Kong

Alibaba’s Cainiao seeks to raise 7 billion yuan (US$1 billion) in a Hong Kong IPO in the near future, the logistics firm should be no stranger to those who shop online, as it is the default logistics company that delivers goods purchased from Taobao to the door or to the nearest collection point.

Founded by Alibaba Group and other partners in 2013 to address the growing and evolving requirements for logistics services of the buyers and sellers on Alibaba Group’s e-commerce platforms, Cainiao has emerged as the world’s leading cross-border e-commerce delivery solutions provider with over 1.5 billion cross-border parcels delivered.

It is currently among the top three e-commerce logistics companies in China and has the world’s largest gross floor area of warehouses for cross-border e-commerce at 3 million square meters. Its international coverage spans 200 countries and regions.

Cainiao is unique in that it was founded to serve the e-commerce requirements of its parent company Alibaba, thus e-commerce being at the very heart of its business since inception, in contrast to its competitors that are traditional logistics companies which expanded into e-commerce services.

The company emphasizes its “e-commerce × technology” DNA, and indeed technology is at the core of business operations. In 2014, Cainiao was the first in China to successfully introduce a standardized e-waybill system open to all express delivery companies and merchants, increasing the logistics industry’s parcel digitalization rate from less than 5% to more than 80% within three years.

It has evolved from a pure technology platform into a smart logistics network with end-to-end capabilities, and which controls the key nodes of the network, such as e-commerce logistics hubs (“e-Hubs”), warehouses, sorting centers and last-mile delivery operations, to enable service quality, efficiency and reliability. Its focus on technological developments is needed for the company to stay at the forefront of the industry given the cutthroat nature of the logistics sector; rival SF Express, which is also raising 7 billion yuan (US$ 1 billion) in a Hong Kong IPO, should give Cainiao much reason to invest in its future.

AI is one area of investment focus; armed with vast quantities of data, Cainiao trains its AI engines to optimize operations by reducing costs, improving inventory management and optimizing route planning and vehicle dispatching. Smart hardware is another area of development focus, it already has a wide array of proprietary smart hardware technologies, including Radio Frequency Identification and smart Internet of Things devices, to assist in digitalizing the end-to-end logistics chain at low cost. Unmanned delivery vehicles are in the pipeline.

Cainiao can show off a healthy set of finances, its revenues from 2021, 2022 and 2023 were 52.7 billion, 66.8 billion and 77.7 billion yuan respectively, with profits at 5.5 billion, 7.1 billion, 8.1 billion yuan during those years respectively.

Alibaba continues to be Cainiao’s majority shareholder, however reducing its current 70% stake to 50%, according to the filing, therefore Cainiao will remain a subsidiary of Alibaba. The critical synergistic relationship with Alibaba therefore remains but is both a source of strength and possible weakness.

It is anticipated that Cainiao will use raised funds to invest in expansion in both China and international markets as well as continue to ensure its hardware and software maintain its operational edge.

Photo source: Cainiao