Alibaba Group has confirmed that it is acquiring Chinese e-commerce business Kaola from NetEase for $2 billion. The deal will help Alibaba integrate the two in Tmall, which will make it China's largest cross-border e-commerce platform.
Interestingly, Alibaba is making an investment in the firm as well for a minority stake as it pumps up to $700 million in the company's music streaming arm. This step is towards countering the rival Tencent Music.
Alvin Liu, the general manager of Tmall Import and Export is the new CEO of Kaola as part of the deal. However, the firm will continue to work independently under its own brand. Koala allows the buyers to get access to top overseas brands such as Gucci, Shisheido and Burberry sourced directly from suppliers to resell to consumers.
William Ding, the current CEO of NetEase talking about the deal through a press release 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.”
Alibaba Group’s CEO Daniel Zhang talking about the acquisition said, "Alibaba is confident about the future of China's import e-commerce market, which we believe remains in its infancy with great growth potential. With Kaola, we will further elevate import service and experience for Chinese consumers through synergies across the Alibaba ecosystem."
It will be interesting to see how rivals react to this strong step of Alibaba.