Alibaba makes a huge relocation into Russian e‑commerce

Adrien Henni, primary editor, East-West Digital News

Alibaba, Mail.Ru Group, Russian telco MegaFonand sovereign fund Russian Direct Financial investment Fund (RDIF) today revealed a “tactical partnership” that encompasses such a large area as e-commerce, social media, online entertainment and communications combined.The agreement

intends to take advantage of on the existing services of AliExpress Russia, the B2C marketplace owned by Alibaba which manages a big part of the e-commerce flows in between China and Russia. The partners will put their “capital, tactical possessions, management, resources and competence” in a joint venture (JV) which, keeping the brand name of ‘AliExpress Russia,’ will “operate across all e-commerce segments, including cross-border and regional markets and first-party retail.”

A genuinely historic offer of the greatest importance for us, for the Russian market and for the tech market globally.

Kirill Dmitriev, general director

Russian Direct Financial Investment Fund (RDIF)

This will “create an unrivaled value proposal for merchants, customers and Internet users” throughout Russia and some other post-Soviet republics.The secret points of the

agreement, as openly revealed, are the following: ad Alibaba Group

will add to the JV its Russian organisation systems AliExpress and Tmall; Ru Group will contribute Pandao(the platform it
  • released in 2015 to offer Chinese products to Russian online customers)to the JV, and”support cash and circulation product combinations, “in exchange for a 15 %stake in AliExpress Russia; AliExpress Russia and Mail.Ru Group will also”cooperate
  • in traffic and item efforts, among other things. “After deal conclusion, AliExpress Russia will
  • be owned by Alibaba Group( 48%), MegaFon(24)%, Mail.Ru Group (15 %)and the RDIF (13%). The transaction is, nevertheless, still based on traditional closing conditions and the particular corporate approvals of each party.Mixing e-commerce, video gaming and social interactions The collaboration has ramifications beyonde-commerce. Accessing Mail.Ru Group’s huge user base, the JV

    will “fill an extremely complementary role in the Russian consumer way of life worth chain, creating a one-stop platform for social, communications, gaming and shopping.”This statement refers to Mail.Ru Group’s leading positions in Russia’s social media(

    via the group’s properties VK and OK, whose audience far exceed that of Facebook in Russia), online video gaming (100 million signed up users worldwide ), e-mail services(100 million user accounts)and online communications.Alibaba Group and Group are planning to broaden even further this community by”investing in another organisation together with Mail.Ru Group, including foodtech and other initiatives.

    “(Previously this year Mail.Ru Group produced a dedicated vehicle to purchase foodtech, following a series of direct acquisitions in this field.)ad Mail.Ru Group already deals with Alibaba: in early 2017, the two companies< a href= >

    revealed a plan to enter the international video game distribution industry with a scheduled financial investment of$150 million.Historic deal or”capitulation”? RFID General Director Kirill Dmitriev sees in the recently created JV”a really historicdeal of the greatest significance for us, for the Russian market and for the tech market internationally.”

    He highlighted that personal information

    will be treated and kept on Russian area, as asked for by the legislation, while the JV will use Russian payment technologies such as Mir, the nationwide bank card system. Another essential benefit of the deal is to”support Russian SMEs”both locally and globally by providing access to 600 million consumers checking out Alibaba’s platforms, Dmitriev underlines. As a matter of reality, even though AliExpress’s preliminary function when getting in the Russian market was to offer Chinese goals to Russian customers, it quickly opened its platform to Russian retailers. In a Facebook post, Boris Ovchinnikov, a leading Russian e-commerce expert, perceived the deal in an entirely different method, calling it” , as reported in late 2017. Dmitriev then announced future investments together with Alibaba in the field of e-commerce logistics, before discussing an even larger scope of collaboration with the Chinese group.The sovereign fund’s contract with Alibaba is coming as last in a series of offers with Chinese players. Last year, the RFID concurred with China Advancement Bank to develop the China-Russia RMB Investment Cooperation Fund. The fund likewise purchased Chinese steel marketplace ), and tattooed a partnership with several Russian and Chinese market gamers to develop and manufacture medical robotics.Back in 2012, the Russian fund teamed up with China Investment Corporation to produce the Russia-China Mutual fund(RCIF). This short article first appeared in< a href= > East-West Digital News, the international online resource on Russian digital markets, and is reprinted with permission.advertisement

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