Alibaba acquires competitor Kaola from NetEase in $2bn deal

6 Sep 2019130 Views

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Alibaba Group's office in Hangzhou. Image: zhudifeng/Depositphotos

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Alibaba is acquiring Kaola and integrating it into Tmall, creating the largest cross-border e-commerce platform in China.

On Thursday (5 September), Alibaba announced its intention to acquire NetEase’s import e-commerce platform Kaola for approximately $2bn.

Both Alibaba and Kaola have significant operations in Hangzhou, the capital of China’s Zhejiang province. The transaction will pave the way for the two e-commerce companies to further explore business collaborations.

In a statement, Alibaba said that Kaola will continue to operate independently under its current brand. The platform will be integrated into Tmall, creating the largest cross-border e-commerce platform in China.

Tmall Global, which is operated by Alibaba Group, holds a 31.7pc share of the cross-border e-commerce market in China, while Kaola holds 24.5pc of the market.

Tmall import and export general manager Alvin Liu has been appointed as the new CEO of Kaola.

Strategic fit

Alibaba and Jack Ma-backed Yunfeng Capital have also agreed to invest $700m in NetEase Cloud Music. This will make Alibaba a minority shareholder, but NetEase will remain the controlling shareholder.

William Ding, CEO of NetEase, said: “We are pleased to have found a strategic fit for Kaola within Alibaba’s extensive ecosystem, where Kaola will continue to provide Chinese consumers with high-quality import products and services.

“At the same time, the completion of this strategic transaction will allow NetEase to focus on its growth strategy, investing in markets that allow us to best leverage our competitive advantages. We remain fully committed to offering our users best-in-class and differentiated online content born from our relentless drive for craftsmanship and innovation.”

Meanwhile, Daniel Zhang, CEO of Alibaba Group, said the company remains confident in the future of China’s import e-commerce market.

“We welcome Kaola to the Alibaba family and value NetEase’s contributions in incubating an e-commerce platform with strong import capabilities. With Kaola, we will further elevate import service and experience for Chinese consumers through synergies across the Alibaba ecosystem,” Zhang said.

“Alibaba also looks forward to becoming a partner in the future development of NetEase Cloud Music and exploring innovative collaboration in the digital entertainment space.”

Alibaba Group’s office in Hangzhou. Image: zhudifeng/Depositphotos

Kelly Earley is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com