Chinese online retail giant JD.com has agreed to buy a controlling stake in express transport firm Kuayue-Express Group Co for 3 billion yuan (US$432 million), escalating its efforts to transform into a major supply chain services and technology company.
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The deal was made weeks after JD.com bought a stake in Hong Kong-based Li & Fung for US$100 million, a strategic partnership that marries a 21st century hi-tech platform with one of the world’s largest logistics and supply chain networks.
Subsidiary Jingdong Express Group Corp, known as JD Logistics, will acquire a controlling interest in Kuayue Express, a specialist in so-called “limited-time express service” in China, according to Nasdaq-listed JD.com’s statement on Friday. The transaction, which is expected to close this third quarter, involves a combination of buying existing shares and subscribing to newly issued shares of Kuayue Express.
“The cooperation between Kuayue Express and JD Logistics is expected to rewrite the current competitive pattern of China’s logistic market,” Shenzhen-based Kuayue Express said in a statement via its official WeChat account on Friday. It indicated that the collaboration “will perform like mortise and tenon, and have a perfect fit”, referring to the joint that woodworkers and carpenters around the world have long used to connect two pieces of wood.
Backed by Sequoia Capital, Kuayue-Express Group Co was established in Shenzhen in 2007 and now has more than 50,000 employees. Photo: Handout
JD.com’s latest deal shows the aggressive push being made by Chinese e-commerce players to broaden their logistics and transport infrastructure to meet fast-growing consumer demand, which has picked up pace this year amid the country’s coronavirus pandemic lockdowns and travel restrictions.
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Sales of online retail channels in mainland China saw a 19 per cent increase in the first quarter from a year ago, while offline sales dropped by 13 per cent, according to a report by global consultancy Bain & Co.
