The logistics affiliate of Alibaba Group Holding has rebutted criticism from Liu Qiangdong, founder of China's second-largest online retailer JD.com Inc, over its business model.
A spokesperson for Alibaba's Cainiao Network said in a statement sent to the Global Times on Monday that Liu doesn't understand the merits of resource sharing.
Liu said during a live talk show on State broadcaster China Central Television on Sunday that the profits of China's major express delivery firms will be "drained by Cainiao."
Cainiao, which was jointly established in 2013 by Alibaba and leading domestic express delivery companies including Shanghai YTO Express and STO Express, is expected to be something that the e-commerce giant can bank on to make up for its shortcomings in logistics.
Liu noted that among major logistics companies, SF Express hasn't sacrificed profits for close cooperation with Alibaba, so "I believe only SF can survive independently and generate very good profits."
In response, Cainiao said that it's seeking cooperation with SF as well.
"Everyone wants win-win cooperation, but not all companies can participate. Such criticism is just a typical case of sour grapes," Cainiao's spokesperson said.
JD uses a different business model than Alibaba that involves using its own logistics system, which Liu said is an effective way of ensuring fast and high-quality delivery service.
According to Liu, 70 percent of JD's employees are in the logistics unit and 50 percent of the total employees are express delivery staff.
But it seems that JD's aggressive logistics efforts haven't helped its bottom line. In the first quarter of 2016, JD reported 54 billion yuan ($8.4 billion) in revenue, an increase of 47.3 percent year-on-year, but its losses widened to 864.9 million yuan from 822.6 million yuan a year earlier.
Cainiao, which aims to provide an open and resources-sharing logistics platform, said that it helped its delivery partners increase their revenue at an annual rate of around 30 percent.
