HONG KONG – Chinese holding Alibaba Group has bought a cross-border online store, Kaola, for about $ 2 billion, as the online retailer in the # 1 market in the country continues to solidify its first position against growing competition.
"Alibaba is confident about the future of the e-commerce import market in China, which we believe remains in the bud with great potential for growth," Alibaba CEO Daniel Zhang said in a statement on Friday.
Kaola, created by NetEase listed in Nasdaq, will continue to operate independently under its current brand, but will be led by Alvin Liu, head of Alibaba's cross-border e-commerce initiative.
The announcement comes days before Zhang formally assumed the chairmanship of Alibaba after legendary founder Jack Ma stepped down, the longstanding deal is also one of Alibaba's biggest acquisitions in recent years.
Shares of New York-listed Alibaba were down 0.24% during Thursday's trading session, while NetEase was down 0.21
"This move is to give up competition from all fronts," said an industrial analyst, who asked not to be named.
Pinduoduo and JD.com – two other Chinese e-commerce players – were announced in talks with NetEase to acquire Kaola. The analyst said Alibaba's profits now give it control of "more than half" its market share in China's cross-border e-commerce, far outpacing competitors such as JD Worldwide, VIP International and Amazon China.
The acquisition is also expected to help Alibaba sustain its growth. Over the last five years, revenue has expanded at an average annual rate of 49%. However, "forecasting top line growth will now drop to 20%," given the size of the company, the analyst said. "Alibaba will have to rely on mergers and acquisitions to further boost its growth," the analyst added.
Alibaba, with a quarterly revenue of 114.92 billion yuan ($ 16.7 billion), blew analysts' expectations for the April-June period, largely due to its ability to attract new buyers to smaller cities and cities. Chinese villages. But market observers say selling premium products to Chinese middle classes will play a key role in Alibaba's profitability and enable the company to differentiate itself from Pinduoduo, which grew into a Nasdaq-based company focusing on the sale of cheap goods in less developed regions
Despite a slowdown in the economy, China's hunger for high-quality food, cosmetics and other imported goods generated transactions worth about $ 246 billion last year, according to a news release China Internet Watch portal.