Chinese e-commerce behemoth Alibaba is slowly snaking its arms around a larger piece of China's online business growth.

Cainiao Network Technology, logistics subsidiary of Alibaba Group, announced that the company will establish the Cainiao Alliance by cooperating with logistics partners to improve e-commerce logistics in China.

The Cainiao Alliance will first launch quality products like same-day delivery and next-day delivery and will promise compensation if goods are not delivered on time. Cainiao Alliance's goal is to serve ten million businesses and deliver 100 billion packages annually over the next five to eight years.

Zhang Yong, chief executive officer of Alibaba Group and chairman of Cainiao Network, said that logistics is the important infrastructure component for China's new economy. Cainiao Network hopes to use its technology and data to enable its logistics partners to jointly provide high-quality and reliable logistics services, create more logistics products, form industry-leading brands, improve end-to-end supply chain efficiency, and bring better experiences to more consumers.

Meanwhile, Cainiao Network announced that to encourage vendors to join Cainiao Alliance and make quality logistics service a routine part of how they do business, Cainiao Network will invest CNY1 billion as the starting fund of the alliance. Vendors who join Cainiao Alliance before May 28, 2016 will gain a large discount on service fees.

Many domestic and foreign businesses are jumping into China's booming logistics business. SF Express, YTO Express, Yunda Express, and ZTO Express are other local players competing with Cainiao, while DHL and FedEx are trying to make more inroads into more Chinese cities too. And foreign investors like the large Dutch pension fund manager APG are betting on Chinese transportation hubs — the fund's managing director in Hong Kong Sachin Doshi said last week in a China Money Network interview that his fund invested USD920 million in warehousing and logistics services in Shanghai.

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