How broke logistics fundraising record

The e-commerce giant’s decision to carve out its own space in the booming logistics sector pays off as big-name investors pile in. It will spend big on automation, exploiting robotics, drone delivery., a major US-listed e-commerce rival to Alibaba Group in China, announced a fresh round of fundraising for its logistics unit, JD Logistics, on Wednesday – smashing the funding record for the red-hot sector.

The investment, expected to total approximately $2.5 billion, comes from a group of big-name investors including Hillhouse Capital, Sequoia China, China Merchants Group, Tencent, China Life, China Development Bank Capital FOF, state-backed China Structural Reform Fund and ICBC International. And will remain the majority shareholder of the business, with an 81.4% stake after the deal, which is expected to close in the first quarter.

The fundraising, the largest single-round financing to date in China’s logistics sector, underlines the vast potential of the world’s largest logistics market. According to the State Post Bureau, the industry generated Rmb496 billion ($78.18 billion) in revenue in 2017, up 24.7% year on year. The bureau said the target annual revenue for the courier sector in China would be Rmb800 billion by 2020.

The growth in logistics was stimulated by an e-commerce boom – the latter industry is today worth more than $600 billion in China. But heavy competition also makes the hunt for hulking warehouses more urgent, as e-commerce firms have a specific need for high-quality warehouses and efficient, on-demand delivery.

Mirroring that is the growth of Global Logistic Properties, the largest prime warehouse developer in China. E-commerce accounted for only 3% of leased space in its China portfolio in 2009, but rose to 26% in 2016. And, although having been buying warehousing space itself, is one of GLP’s top five tenants by leased area.

“Over the decade that we have built out our operations, initially to support our own e-commerce business, we have created the most efficient, integrated and user-friendly logistics network in China,” said Wang Zhenhui, CEO of JD Logistics.

Instead of relying on contractors such as ZTO Express or SF Express, the online retailer has been operating and developing its own logistics system since 2007, a costly approach that weighed on's profitability. And in April last year, it established JD Logistics as a stand-alone subsidiary, followed by aggressive expansion of adding 21.5 million square feet of warehouse space in the third quarter alone.As of September 30, operated seven fulfillment centres and 405 warehouses covering 2,830 counties and districts across China.

But the spending paid off. In December, JD Logistics announced annualised revenue of Rmb30 billion. According to Wang at the time: “JD Logistics has been profitable. The orders from third-party seller platforms and outside partners have witnessed rapid growth, which surpassed the growth rate of JD’s self-owned orders.” It claimed to operate China’s largest nationwide delivery network and had been able to provide same or next-day delivery to over one billion people.

On the contrary, the other Chinese e-commerce titan Alibaba had, prior to last year, relied heavily on third parties for its logistic needs. In September, Alibaba paid Rmb5.3 billion to raise its stakes from 47% to 51% in Cainiao, a logistics affiliate it co-founded in 2013. Alibaba also committed another Rmb100 billion in five years to 2022 to develop Cainiao’s data technology, smart warehousing and delivery.


Over the next decade, emerging technologies including drone, robotics, automation and big data analysis will be widely used in the logistics industry, and wearable devices, three-dimensional printers, and driverless trucks will have major impacts on storage and transportation, according to a Deloitte report in January. The consultancy predicted that the size of China’s smart logistics market, which reached Rmb200 billion in 2016, would exceed Rmb1 trillion by 2025.

Richard Liu, chairman and CEO of, said: “This current funding round sets the stage for us to further invest in expanding our lead in the sector in areas like automation, drones and robotics.” This is consistent with what he pledged at JD Logistics’ establishment – “to make technology even more central to what we do over the next 12 years.”

Among other experiments the company has been exploring ways to cut expensive human beings out of the delivery process. It introduced drone delivery in areas such as Shaanxi and Jiangsu provinces in June 2016, launched a flagship “smart” warehouse equipped with an army of robots in Huiyang, Guangdong province, in October last year, and now operates around 40 unmanned aircraft in Suqian, a city near Shanghai.

JD also formed partnerships with automakers SAIC Maxus and Dongfeng Motor Corporation to develop the country’s first automatic vans.

China Renaissance and Orrick acted as financial and legal adviser to

¬ Haymarket Media Limited. All rights reserved.
Share our publication on social media
Share our publication on social media