China’s Alibaba & Russian tech firm announce partnership

Lloyd Doyle
September 12, 2018

China's top e-commerce player will form a joint venture with Russia's sovereign wealth fund, telecom company MegaFon and internet firm Mail.Ru Group.

The parties inked the deal at a Vladivostok economic forum attended by President Vladimir Putin and Alibaba Chairman Jack Ma.

E-commerce has grown rapidly in Russian Federation in recent years, spurred by improved internet access, with turnover exceeding $14 billion last year, one third of which were cross-border deals, according to Russia's Association of Internet Trade Companies.

Alibaba and said in a statement that the partnership will "launch a leading social commerce joint venture in Russian Federation and the CIS (Commonwealth of Independent States)". Alibaba will fold the domestic operations of its online marketplaces Tmall and AliExpress into the venture, while Usmanov's MegaFon PJSC will sell its 10 per cent stake in - worth roughly US$486 million at Monday's close - to Alibaba in return for 24 per cent of the venture.

The new company will be called AliExpress Russia - taking after the name of an existing Alibaba platform.

Russia's RBK media group reported that the RDIF would invest up to $300 million.

"Today's deal gives Mail a stake in what we believe is the best-positioned platform to capitalize on ecommerce in Russian Federation", analysts at Renaissance Capital said in a note.

Alibaba Group President Michael Evans called the joint venture "an exciting step in Alibaba's worldwide expansion".

"What we we bring from China is all the experience that we have and the technology that we have" from building e-commerce, cloud and payment businesses, Evans said.

The three Russian entities will have a combined 52 percent stake in the e-commerce platform after contributing cash, shares and other assets.

Mir is used in Russian Federation in addition to worldwide payment systems, including Visa and MasterCard.

Alibaba, which is steadily expanding its reach beyond China as part of a global expansion, will access's large audience through two of the country's most popular social networks.

Asia's most valuable company signed an accord Tuesday with to merge their online marketplaces in the nation of more than 140 million people.

Other reports by Iphone Fresh

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