Alibaba pays $2B to acquire China’s cross-border shopping portal Kaola

Chinese ecommerce company Alibaba has recently announced that it intends to purchase Kaola, a cross-border ecommerce business, from Chinese internet technology company NetEase in a transaction worth $2 billion.

For the record, Kaola sells imported products in China including consumer electronics, clothes and sports accessories. It is one of the largest ecommerce sites in the country, alongside JD.com’s JD Worldwide and Alibaba’s Tmall Global.

Alibaba confirmed that Kaola will continue to operate independently under its current brand, but Tmall’s import and export GM, Alvin Liu, will take over as CEO.

Research firm eMarketer reports that China is the largest ecommerce markets in the world and will amass over $1.935 trillion in ecommerce sales by 2019 end, about three times more than the United States.

Analysts also claim that ecommerce is more preferable in China than in other markets. That’s partly because Chinese consumers say buying products online is far more convenient in terms of price.

With Tmall leading online trade across the country, the addition of Kaola to its business empire will apparently help the brand establish strong dominance over the cross-border ecommerce sector.

 

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Meanwhile, the acquisition of Kaola and its investment into NetEase Cloud Music will help NetEase further optimize its costs. Alibaba, along with technology startup Yunfeng, plans to invest around $700 million in NetEase Cloud Music, NetEase’s music streaming business.

Alibaba CEO Daniel Zhang mentioned that the group is confident about the future of China’s import ecommerce business which is still in its infancy and exhibits promising growth potential. The team will focus to enhance import service and customer experience, he added.

Alibaba said that its core business, which includes Tmall and Taobao shopping portals, and its booming cloud unit have contributed substantially towards its growth in the June quarter. The company registered over 674 million active consumers, a rise of 20 million, during the same period with most of the new consumers based in less-developed areas.

Earlier this year, Amazon’s China unit was reportedly in talks to merge with Kaola. While Amazon’s sales and profits were skyrocketing, it has invested billions of dollars into establishing markets in China and India to boost future profits.

 

Source credit: https://www.cnbc.com/2019/09/06/alibaba-baba-to-buy-e-commerce-unit-kaola-from-netease-for-2-billion.html