WATCH: Chinese giant Alibaba to acquire over 10% stake in Singapore Post
Chinese multinational conglomerate holding company, Alibaba which specializes in e-commerce has announced that it will purchase a 10.35 percent stake in Singapore's international postal service provider, the Singapore Post.
First announced on 8 July 2015, the investment, is the culmination in deepening business ties between Singapore Post and Alibaba. The collaboration between the two companies will work as a common platform to grow and enhance e-commerce logistics capabilities in South East Asia and Oceania, serving the regions rapidly growing online retail markets.
In what can be described as Alibaba’s first strategic pact or move in the Asia-Pacific, the multinational conglomerate will get access to Singpost’s extensive last-mile delivery network in the region. Therefore resulting in Alibaba competing against its giant American rivals, Amazon and eBbay. Alibaba which is led by billionaire Jack Ma, is gearing up for an initial public offering in the US, which will result in the company emerging as the second largest shareholder in SingPost, after Singapore Telecommunications (SingTel), who owns 25 percent.
In a recent interview, SingPost group Chief Executive Wolfgang Baier stated “The step-change collaboration will enable SingPost to grow its e-commerce logistics business much faster and strengthen its regional revenue stream.” Baier also states that the lifeline of the future for SingPost lies in e-commerce as it grapples with a declining mail business.
However, Daniel Zhang, Chief Operating Officer of Alibaba stated in a press release that through Alibaba and SingPost’s collaboration, the company hopes to create stable benefits for overseas buyers and sellers by enhancing the users experience and providing more access to international e-commerce logistic solutions.
Sources close to the management of Alibaba, also states that SouthEast Asia will be the fastest growing market. International retail revenue that has doubled in the same period, recording more that $572 million international sales just in 2013.
This being Alibaba’s first investment in a foreign logistics service provider in the Asia-Pacific, the move signifies the resolve of this e-commerce giant to expand its growing ecosystem beyond China’s borders. Zhang further expressed in a statement that, “we are excited to collaborate with Singpost and leverage its strong delivery networks.” This collaboration with one of the worlds largest online and mobile commerce firms, is a leap for SingPost yet fits in well with SingPost’s next stage of growth.
With $183.6 million in net proceeds raised, SingPost stated, “75% will go towards investments, mergers and acquisitions and upgrading operations and information technology systems with the rest for general working capital.” Both companies see this decision as a way to deepen their ties and collaboration, with the investment also resulting in both companies making use of each others strengths in the e-commerce logistics industry.