Alibaba’s Jack Ma Aims To Invest $15.6 Billion In Smart Logistics

Chinese e-commerce giant Alibaba Group Holding Ltd. wants to invest over RMB100 billion (US$15.6 billion) on smart logistics to improve delivery reach and efficiency, the company’s founder and executive chairman Jack Ma said this morning at a conference in Hangzhou.

Ma did not specify in what time frame will the investments be made. The smart logistics network aims to push logistics costs down to less than 5% of China’s gross domestic product, from around 15% at the present.

"China’s logistics sector…currently depends on labor and is driven by thousands of couriers using their shoulders and hands. But the logistics in the future, I believe…must be driven by the brain," said Ma, one of the wealthiest Chinese entrepreneurs with an estimated personal wealth of US$41.9 billion. "In the past 20 years, we made people into machines. But in the next 20 years, we will turn machines into people."

In the past 15 years, China’s logistics industry has undergone tremendous changes. The express delivery industry has started from almost zero to the largest in the world, accounting for 40% of the world’s total in terms of market size.

China’s courier parcels reached 9.2 billion annually in 2013, and will exceed 50 billion this year. The number of courier workers in China grew from a very small number 15 years ago to around five million today. There are now seven publicly listed express delivery companies in China from zero 15 years ago, according to Ma.

China’s logistics sector is quickly adopting the latest technology to improve efficiency. For example, Cainiao Network, Alibaba’s logistics arm, has been using electronic bills and labels to digitize and standardize the industry infrastructure. Sending a package in most places in China today can be done within a minute entirely on one’s smartphone with a few swipes and scans, with the help of technologies such as image recognition and mobile payment.

Just two days ago, Alibaba and Cainiao Network led a strategic investment of US$1.38 billion in Chinese express delivery company ZTO Express.