Hong Kong-based logistics company GoGoVan has achieved unicorn status after agreeing to a merger with mainland China-based freight company, 58 Suyun. 58 Suyun is the freight service arm of the classified ad web service, 58 Home. With the merger sealed, it produced a company slated to be worth about $1 billion U.S. dollars, according to a source quoted by the South China Morning Post.
The China Renaissance Group said this merger is “Asia’s largest online platform in the intra-city logistics and freight business.”
Pinsent Masons law firm partner Paul Haswell told the South China Morning Post he was skeptical of the estimated value of the merger since the only thing confirmed about the deal is the plan itself. “If that valuation proves accurate, then this deal would serve as a much-needed source of inspiration for Hong Kong’s start-up scene.”
In a 2014 interview granted to CNBC, founding chairman Gabriel Fong explained the business concept, which led what some to compare GoGoVan’s service to Ikea. “You just put your furniture, your bed and all that. And you just put [all of them] in a taxi. You might wait for Ikea and it might take them a couple of days … You use a GoGoVan. We get it to you immediately and it’s delivered [on] the same day. It is far more convenient.”
There are 2 kinds of drivers under the GoGoVan system. One that has the blue wrap-around GoGoVan label around it. The others are freelancers connected to the GoGoVan system using a mobile app. That is where the comparison with on-demand transportation services like Uber come in. Except GoGoVan is moving household items.
It was a transportation niche that GoGoVan cornered when the company was founded in July 2013. As of August 2017, it has grown to more than 180,000 drivers registered under its logistics system. Services have also evolved from its earliest models of cargo vans to freelance drivers piloting 15-ton trucks.
The misconception about GoGoVan being a Hong Kong-based logistics company is its ability to beat the competition by appealing to the price-sensitive crowd. Fong said in the interview that it wasn’t the case. “We beat them on efficiency. We beat them on being able to get it – to deliver what you need today.”
Fong managed to get business moving by capturing the time-sensitive crowd through responsiveness and ensuring that goods are delivered in one piece.
According to Business Insider, 58 Suyun serves as the freight logistics arm of China’s largest online marketplace, 58 Home. This merger is seen as a major shot-in-the-arm for GoGoVan now that the latter has expanded its customer base to Southeast Asia.
The companies will still be distinguished from one another. The merger will be marketed as 58 Suyun in mainland China. Elsewhere, the GoGoVan brand will remain.
The Managing Director and Head of M&A at the China Renaissance Group, Jeremy Choy, emphasized how this merger was possibly the biggest deal “between a mainland China start-up and a Hong Kong start-up.”