Alibaba officially acquired NetEase Kaola

On September 6, 2019, Alibaba officially acquired Kaola, a cross-border e-commerce platform owned by NetEase, for $2 billion.

China’s largest e-commerce giant Alibaba Group Holdings Ltd. acquired cross-border e-commerce platform Kaola from NetEase Inc for US$2 billion. This marks the latest consolidation of China’s highly competitive overseas cross-border online shopping market. Because NetEase Kaola is China’s biggest import retail e-commerce platform and it’s the biggest competitor of Alibaba’s Tmall Global (one of Alibaba’s online sales platforms). After the acquisition of Alibaba, Kaola will retain its name and maintain an independent entity but will be led by Tmall’s manager Alvin Liu.

Founded in 2015, Kaola has more than 9,000 brands from 80 countries. Unlike Tmall Global, a marketplace that allows merchants to set up their own store on the platform, Kaola buys its products from suppliers, stocks them and sells them to customers. Kaola is also a leader in the export of high-end products in China: Bordeaux wine, cosmetics, care products, and so on.

According to iiMedia Research Group, the company’s cross-border e-commerce market share in 2018 was 27.5%, while Tmall global market share was 25%. This consolidation would help Alibaba integrate the relatively stronger logistics and warehousing system of Kaola into its logistics network, Cainiao Network Technology Co., Ltd. Therefore, in the future, Alibaba and Koala will achieve together more than half of china’s cross-border e-commerce.

Alibaba and the video game giant NetEase also agreed that Alibaba and Alibaba founder Ma Yun’s private equity fund Yunfeng invested 700 million dollars in music streaming platform NetEase Music which is the fourth largest music mobile application in China.

“Alibaba is confident in the future of the online business of imported products, and we believe this is still in its infancy and has great growth potential,” said Daniel Zhang, Managing Director of Alibaba.

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