Alibaba and its logistic arm Cainiao Network and ZTO Express (Cayman) Inc., a leading and fast-growing express delivery company in China, announced a strategic agreement in which investors led by Alibaba and Cainiao will invest US$1.38bn in ZTO in exchange for an approximately 10% equity stake in the company. The transaction is expected to close in early June, subject to customary closing conditions.

The investment will see Cainiao and ZTO deepen their collaboration in the transformation of China’s logistics industry amid the growth of New Retail, a concept developed by Alibaba that promotes seamless integration between online and offline commerce. The investment will further support both Cainiao and ZTO’s focus on building up first and last-mile pickup and delivery capabilities, warehouse management, cross-border logistics and technology-driven smart solutions.

Daniel Zhang, CEO of Alibaba Group and Chairman of Cainiao Network, said: “ZTO has been an important partner to Alibaba Group and Cainiao Network in the development of the new digital economy. The continuing expansion of New Retail is catalyzing new opportunities and demands in logistics. This strategic investment will strengthen synergies across our mutual businesses to create new value and improved experience for merchants and consumers.”

Lin Wan, President of Cainiao Network, said: “The logistics industry in China is highly competitive with its own unique features and presents plenty of new opportunities ahead. This investment will enable Cainiao and ZTO to supercharge joint innovation and development to accelerate digitalization of the industry. We will continue to work closely with industry leaders, including ZTO, to enhance our logistics infrastructure and broaden our service offerings to meet the growing demand from New Retail.”

Meisong Lai, Founder, Chairman and Chief Executive Officer of ZTO, said: “The growth of e-commerce and New Retail in China demands more efficient express delivery and expanded logistics services. To that effect, we are delighted to enhance our partnership with Alibaba and Cainiao through their strategic investments in ZTO. This partnership will enable us to expand our selection of high quality service offerings both in China and internationally, and is fully aligned with our common interest in improving logistics efficiency and enhancing customer experience.”

Lai added: “Built as an open platform based on a shared-success philosophy, ZTO has become one of the leaders in the express delivery industry in China. Our continued collaboration with all industry constituents, and particularly with Alibaba and Cainiao through this strategic partnership, will amplify our competitive advantage and support our mission to become a world-class comprehensive logistics service provider.”

New Retail links online and offline commerce through deep consumer engagement based on insights drawn from advanced technology and data analytics. Moving forward, New Retail will require investment in smart supply chains, retail technologies, advanced logistics and mobile payments. These investments are all aimed at delivering a better experience for both consumers and merchants.