Daily Management Review

Chinese E-Commerce Platform Kaola To Be Acquired By Alibaba For $2 Billion


The cross-border e-commerce business unit, Kaola that is owned by Chinese internet company NetEase, which is also listed at Nasdaq, will be bought by Alibaba for a value of about $2 billion, the largest Chinese e-commerce firm said on Friday.
A range of consumer products including clothes, consumer electronics, and sports accessories imported from foreign countries is sold by Kaola in China. Just like with Alibaba’s Tmall Global and JD.com’s JD Worldwide, Kaola is among the largest Chinese e-commerce platform that is completely focused on offering imported products in the Chinese market.
Kaola will continue to operate independently under its current brand, according to the plans for the company announced by Alibaba. However the chief of the company will be changed by Alibaba. The company said that the new CEO of Kaola will be Tmall Import and Export General Manager, Alvin Liu.
After the acquisition of Kaola, and together with Tmall Global, the reach of Alibaba as an e-commerce platform offering foreign products in the cross-border e-commerce sector will by significantly increased.
The Chinese online retailing market is the last one the world and according to estimates of research firm eMarketer in a report published by it in June, the market will reach a total value of $1.935 trillion in e-commerce sales in 2019 which would be about thrice the value of the e-commerce market of the United States.
Alibaba is confident about the future of China’s import e-commerce market, said Daniel Zhang, chief executive officer of Alibaba Group, and added that the market “remains in its infancy with great growth potential.”
“With Kaola, we will further elevate import service and experience for Chinese consumers,” he added in a statement.
There were reports earlier this year that talks for a merger with Kaola was being held by Amazon’s Chinese joint venture.
The June quarter revenue and earnings for Alibaba was better-than-expected as reported by the company last month. However the company reported a slowdown in sales.
The growth of Alibaba was accounted for by its core e-commerce business, that included its Tmall and Taobao online shopping platforms, as well as its now booming cloud computing business division. During the quarter, there was an increase of 20 million in the number of annual active consumers on Alibaba’s China retail marketplaces to reach a total of 674 million. According to the company, the majority of those new consumers were residents of ythose cities of China that were comparatively less developed than some of the cities on China’s East coast.

An investment of about $700 million in NetEase’s music streaming service, NetEase Cloud Music, will also be made by Alibaba, together with Yunfeng, the companies have also announced.