Jusda, a supply-chain management platform under Foxconn Technology Group, has raised Rmb2.4 billion ($356 million), illustrating how private investor interest in some niche Chinese areas remains strong.
In what is China’s largest private fundraising deal so far this year, the Chengdu-headquartered company said on Tuesday that it had put together a decent roll of domestic investors to its series A round of funding, headed by China Life Insurance.
Other investor participants include IDG Capital and China Railway Supply Chain Group, as well as Chinese investment funds TI Capital, Oriza Holdings and China Capital Investment Group, an investment fund under China International Capital Corporation.
Jusda completed round of funding comes two weeks after Chinese crowd-sourced delivery firm Yimidida raised $266 million. Together, these two January transactions show China’s logistics sector continues to attract investment capital despite concerns that liquidity is slowly drying up across the broader private equity market.
They also illustrate the depth of China’s logistics market as investors search for value outside the typical warehousing and business-to-consumer (B2C) delivery business, underpinned by recent jumbo transactions such as Global Logistics Properties’ $11.6 billion take-private and JD Logistics’ $2.5 billion fundraising.
As China’s logistics sector embraces technology like many other sectors, investors now see value in smaller startups that support delivery of goods and services with their digital platforms or advanced technologies – a burgeoning new sector known as smart logistics.
In the past two months alone, investors have bet on Chinese startups like G7, which runs a digital management system for truck freight companies, and Geek+, a logistics robot developer. Manbang, China's largest truck-hailing app, raising a whopping $1.9 billion from the likes of Softbank, Alphabet and Tencent last April.
In the case of Jusda, investors are looking at exploring China’s business-to-business (B2B) logistics market, which is much larger than its business-to-consumer (B2C) market but at the same time less penetrated.
That is because China’s e-commerce boom has largely driven the country's development of B2C logistics – referring to the delivery of goods and services to retail customers.
Alibaba’s Cainiao Network, which comprises leading express delivery firms such as S.F. Express, YTO Express and ZTO Express, is largely retail-focused. JD Logistics, the logistics arm of e-commerce giant JD.com, similarly, offers its services mainly to retail customers.
A B2B logistics company like Jusda, on the other hand, helps its corporate clients to manage their supply chains, overseeing the delivery of both their raw material inputs and their finished goods to customers.
According to Jusda, the B2B segment accounts for about 92% of the value of China’s logistics market.
Helping corporate clients with supply-chain management is understandably much more complex than B2C logistics because it involves more parties, a larger variety of goods and more complex delivery and storage network. Generally speaking, corporate clients also have higher requirements with delivery, storage and handling of their products.
Jusda, which literally means "arrive on time" in Chinese, evolved into a sophisticated B2B logistics player as a unit of Foxconn, the world’s largest electronics contract manufacturer, which counts Apple, Sony, Dell and BlackBerry among its clients. The business was spun off as an independent entity in 2010 when it began to offer supply-chain management services across the world.
At the moment, the firm has a business network spanning 155 locations globally and manages over 2 million square metres of warehouse space. Jusda also offers air and sea transport as well as the truck and rail transport services typically provided by local logistics firms.
In addition to freight logistics and warehou sing, Jusda offers inventory management, cross-border e-commerce and supply-chain finance services.
“Jusda is a leader in B2B logistics and resonates well with our focus on supply-chain management and financial services for business clients. This investment is a win-win for both of us,” China Railway Supply Chain Group president Shen Peng said in a statement in response to the investment.