Jack Ma, the richest man of China and the chairman of the e-commerce giant ‘Alibaba Group Holding Ltd.’, has started a battle with the fourth-richest man of China in a rising dispute over the profitable business of shipping parcels of the e-commerce giant to millions of shoppers nationwide.
How did the spat start?
In an exchange filing, the billionaire of SF Holding Co. – Wang Wei – has accused the delivery affiliate of the Chinese e-commerce giant of blocking access to important data and eliminating the company as a shipping option. The affiliate that is supported by Ma is known as Cainiao. It has fired back at SF Holding Co. by saying that it was SF that walled off the information that it required to get parcels to customers.
We are still uncertain about what really started this battle of words, which is threatening a symbiotic relationship that underpinned the listing of SF this year and assisted Wang in accumulating a fortune of some US$21.5 billion. Cainiao, which is part-owned by the China-based online retailing giant, is relying on services like SF Express to get parcels to doorsteps of customers.
The spat between the two richest men of China was serious enough that the postal bureau of the country – which regulates the industry as well – urged both parties to resolve their differences as fast as possible to avoid throwing the market into a chaos. SF Express, which is a major logistics partner of e-commerce giant and its services, is used by the online retailer to deliver goods across the length and breadth of vast expanses of China. The dispute may have come when the delivery company decided to control the valuable customer information generated through the millions of shipments and orders that flow through the massive e-commerce operation of Alibaba.
The main reason of this conflict is Cainiao, explains analyst
Bloomberg was the first to report the battle. In May, Cainiao demanded some data but SF express refused to provide the data because it was not relevant, said the delivery firm in a brief post last Thursday on messaging service Weibo. Marie Sun, a Shenzhen-based analyst at Morningstar Investment Service, said “The heart of this conflict revolves around how Cainiao wants access to SF’s data and SF getting more reluctant.”
Sun added, “SF probably wants to maximize its own interest and in the short term it has options to work with other e-commerce platforms.” SF Express and Cainiao have been close partners in a parcel delivery business underpinning the 6.2 trillion yuan (US$910bil) online retail market of China. The 450 million active buyers of the e-commerce giant assisted in spurring more than 30 billion express deliveries last year in China.
A lion’s share of those was shipped through Shenzhen-listed SF. In an emailed statement, Cainiao said, “We are surprised and disappointed by SF’s abrupt action to stop providing the information that is necessary for the smooth completion of parcel deliveries.”