China

JD Terminates Cooperation With Suning-backed TTK Express And Removes Alibaba-backed YTO Express From Its Recommended List

Summary:

  • JD.COM (JD.NASDAQ) recently announced that it plans to terminate cooperation with Chinese logistics firm TTK Express, effective on July 31, as reported by Eastmoney.
  • JD also asked all online shops on its e-commerce platform to shift their logistics partnerships to its recommended delivery companies by the end of July. JD removed YTO Express (600233.SS) from its recommended list.
  • Both TTK Express and YTO Express publicly complained about JD’s actions. This issue is the focus of considerable attention in the Chinese market.

Why It Matters:

  • TTK Express is fully-owned by Chinese O2O firm Suning Commerce Group (002024.SZ), which is a direct competitor to JD. TTK believes that this is the reason for JD suddenly terminating cooperation between the two firms. TTK also claims that JD’s action is illegal. Alibaba Group (BABA.NYSE) is Suning’s second largest shareholder.
  • Alibaba made a strategic investment in YTO Express in 2015 without disclosing the transaction amount. More than half of YTO’s orders are from Alibaba, and orders from JD only account for about 2% of YTO’s orders. YTO holds a similar view about JD’s actions.
  • Earlier in June, SGI reported that Alibaba Group’s logistics unit Cainiao had a similar dispute with S.F. Holding Co. (002352.SZ).