Alibaba acquires NetEase ecommerce platform Kaola for $2b

Two Chinese internet titans Alibaba and NetEase have struck a deal that will send NetEase’s ecommerce business, Kaola, to Alibaba for roughly US$2 billion. Alibaba will also invest US$700 million in NetEase’s music streaming business, NetEase Cloud Music, as part of its latest funding round.

The completion of the deal is still subject to certain closing conditions, according to a statement.

Photo credit: moovstock / 123RF

With the acquisition, Alibaba will continue to operate Kaola as a separate business, with Tmall Import and Export general manager Alvin Liu serving as its CEO.

“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,” said NetEase CEO William Ding.

The deal will also enable NetEase to “focus on its growth strategy, investing in markets that allow us to best leverage our competitive advantages,” Ding added.

Speculations of the deal first came up last month, when the two companies were reportedly in talks about the acquisition. Rumors followed saying it fell through, as Alibaba and NetEase failed to agree on certain details, including the price.

With the latest announcement, Alibaba is buying up the only other company that beat its Tmall Global.

See also: Here’s why Alibaba acquired a fast-growing new shopping app

According to a Q1 2019 report by iiMediaResearch, Kaola was the top cross-border ecommerce platform in China, taking a 27.5% share of the market. It was followed closely by Tmall, which took about 25%.

To differentiate itself from its cross-border peers, Kaola is focused on high-quality foreign products in different categories such as fashion, jewelry and accessories, and nutrition and health food. It has also formed strategic partnerships with more than 1,000 brands and suppliers from over 80 countries.

The platform is more popular with white-collar citizens aged 20 to 40 and has been growing during the last few years, according to a report.

“Alibaba is confident about the future of China’s import ecommerce market, which we believe remains in its infancy with great growth potential,” said Alibaba Group CEO Daniel Zhang. “With Kaola, we will further elevate import service and experience for Chinese consumers through synergies across the Alibaba ecosystem.”