Supply Chain News / Finance & Credit

Alibaba and Haier in Online Tie-Up

Haier Group and Alibaba Group announced a strategic partnership aimed at combining the strengths of both companies to create a comprehensive system and standards for the delivery and installation of household appliances and other large-sized goods.

The partnership will leverage Haier Group’s supply chain management skills, logistics warehouses, delivery and installation services and Alibaba Group’s e-commerce capabilities.

As part of the strategic partnership, Alibaba Group will invest a total of HK$2.822 billion into Haier Electronics Group Co. Ltd., a member company of Haier Group. Of the total investment amount, HK$1.857 billion will be invested into Goodaymart, a subsidiary of Haier Electronics, and a joint venture company will be established.

Alibaba will subscribe for a 9.9 percent stake of Goodaymart for HK$541 million, and will subscribe for convertible bonds of Haier Electronics totaling HK$1.316 billion. These convertible bonds can be converted into shares in Haier Electronic or upon satisfaction of certain conditions (including applicable regulatory approval) a 24.1 percent stake in Goodaymart in the future. Additionally, Alibaba will subscribe for HK$965 million of newly issued shares of Haier Electronics and take a 2 percent stake in the company.

“The future economy is an experiential economy wherein the user is no longer just a passive buyer, but an active participant throughout the entire process, and companies around the world need to adapt to this,” said Zhang Ruimin, board chairman and CEO of Haier Group.

“The aim of this partnership is not simply to grow the Goodaymart business but ultimately to enhance the experience for all participants in the logistics industry. Haier Group can learn a great deal from Alibaba through this partnership, and I’m confident that this collaboration will create concrete benefits for all involved.”

“We are grateful for the trust Haier Group has placed in us, and appreciate Haier Group’s vision and consistent commitment to driving change,” said Jack Ma, executive chairman of Alibaba Group. “This collaboration with Haier Group is a win-win-win partnership. Through this partnership, we will create value for our customers and as a result create value for Alibaba Group and Haier Group. The new economy is not the digital economy, but rather one that combines the real economy and digital economy, a true blending of “virtual” and “real”. Only with the growth of the real economy can there be true digitalization in the digital economy. Alibaba Group is honored to join with Haier Group to create this platform that will equip China’s manufacturing industry with enhanced nationwide and global access.”

Haier Electronics possesses extensive networks and expertise in the delivery and installation of household appliances and other large-sized goods. Goodaymart, a business operated by Haier Electronics, has nine shipping bases nationwide, 90 logistics delivery centers and more than 2 million square meters in warehouse space.

It has also established 7,600 county-level stores, approximately 26,000 stores in various townships across the country and 191,000 village contact points. It has also established logistics and distribution sites in more than 2800 counties across China and operates more than 17,000 service points.

Alibaba Group is focused on fostering the development of an open and collaborative e-commerce ecosystem. More than 70,000 international and Chinese brands have established retail storefronts on Tmall.com, the business-to-consumer platform operated by Alibaba Group.

In 2012, the Tmall.com transaction volume exceeded RMB200 billion and on November 11th 2013, Tmall.com and Taobao Marketplace set a record for highest single-day transaction volume, facilitating the sales of goods totaling more than RMB35 billion on the day. On November 11th, the GMV (gross merchandise value) of household appliances sold via Tmall.com increased by more than 350 percent year-on-year, and the GMV of furniture and large-sized products sold via Tmall.com increased by 150 percent year-on-year.

Haier Group and Alibaba Group will invest resources and fully leverage Haier Group’s operational experience and Alibaba’s e-commerce, data and information capabilities to create a fast and convenient end-to-end e-commerce and logistics experience for consumers.

Using the newly established Goodaymart joint venture company, the parties will establish industry logistics service standards for point-to-point delivery of large-sized goods and create a nationwide logistics and service network for the delivery and assembly of household appliances and large-sized goods.

At the same time, Haier Group and Alibaba Group will jointly develop and provide innovative supply chain management solutions and products to drive the development of the Chinese logistics industry. The Goodaymart logistics and service network will fully support the growth and development of Tmall.com and will provide Tmall.com merchants and consumers with high-quality logistics, delivery and assembly services for household appliances and large-sized goods.

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