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Alibaba has bought NetEase Kaola for a deal worth $2 billion, the two companies made this statement today itself, and will integrate it into Tmall, making it the largest cross-border e-commerce platform in China. The announcement was followed by weeks of media reports about a potential deal, which was said to have to have gone down by middle of August after the companies reportedly disagreed on transaction details.
Tmall Import and Export general manager Alvin Liu has been named as Kaola’s new CEO, replacing Zhang Lei, but Kaola will continue to operate independently under its own brand.
Both Tmall Global and Kaola are known to be China’s largest and second-largest cross-border e-commerce platforms. With respective holdings of 31.7% and 24.5% of the market, it is predicted that they will create a business that will outrun rivals like JD Worldwide, VIP International and Amazon China. (Earlier this year, NetEase was reportedly in talks to merge Kaola with Amazon China).
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Jack Ma, the founder of Yunfeng, an investment firm, also agreed on investing about $700 million into NetEase Cloud Music’s latest funding round. This will give Alibaba somewhat of a minority stake in the streaming music service, while, NetEase, on the other hand, will remain to be its controlling shareholder.
In a press release, NetEase’s CEO William Ding said “We are glad 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.”
Daniel Zhang, Alibaba Group’s CEO, said “Alibaba is confidence about the future of China’s import e-commerce market, which we believe remains in its infancy with great growth potential.”
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