Alibaba, NORINCO agree on satellite service JV

Chinese e-commerce giant Alibaba and State-owned defense industry enterprise China North Industries Group Corp (NORINCO Group) will set up a joint venture to provide satellite service, news portal aastocks.com reported Monday.

The report said the registered capital of the joint venture is about 1 billion yuan ($160 million) and Alibaba may invest 10 billion yuan in China's homegrown BeiDou Navigation Satellite System (BDS) service.

NORINCO Group, which works in weapons research and development, could not be reached for comment by press time.

Although Alibaba declined to comment when contacted by the Global Times Monday, the news has been widely reported in the media and pushed up related share prices on the same day.

The share price of Shenzhen-listed North Navigation Control Technology Co, a subsidiary of NORINCO Group, increased 9.97 percent, closing at 13.79 yuan on Monday.

At this year's China Satellite Navigation Conference held in May, researchers reportedly said that information industry giants such as Alibaba, Tencent and Huawei, should be encouraged to join the BDS service.

In recent years, many Chinese government departments, including the National Development and Reform Commission and Ministry of Science and Technology, all released policies encouraging private companies to develop the civilian service of BDS, Liu Shuihong, General Manager of Yitongxingyun (Beijing) Co Ltd, a company working in the field, told the Global Times Monday.

BDS is still at an early stage in civilian usage and the US-built Global Positioning System (GPS) occupies the leading position in the market, but equipment compatible for both GPS and BDS have become a majority in the market, he said.

Liu noted that China's transportation and logistics industries have widely adopted GPS, which results in potential information security risk, therefore, it is inevitable that China would develop its own positioning system.

China started to build its own space-based positioning, navigation and timing system in 2000 to compete with GPS.

The BeiDou network, which initially was for military usage and currently consists of 16 operational satellites, started providing public service to Asia-Pacific countries in December 2012.

BDS service can be widely used in navigation, positioning and telecommunication service, including civilian applications such as emergency rescue and auto navigation, Liu said.

The next several years will be a key period for the BDS service to have quick growth and form a mass market, according to Liu.

He predicted that Alibaba's entry will boost the industry's development.

With China's strong promotion of the BDS civilian service, many drivers in China will install BDS navigation service, news portal qq.com reported Monday. If Alibaba can take major control of civilian access to BDS service, it is expected to have the chance to obtain a large amount of traffic data.

Alibaba bought a 28 percent stake in digital mapping company AutoNavi Holdings Ltd last May, which is widely regarded as a move to boost its competitiveness by beefing up its product lineup in the digital mapping sector.