Alibaba Group Holding agreed to form a joint venture for its South Korean operations with E-Mart’s e-commerce platform to better compete in the country’s fast-paced online retail sector.
AliExpress International and Gmarket are creating a 50-50 JV, according to a stock exchange filing by E-Mart, which confirmed a report by Bloomberg News. The companies plan to make further investments in the JV, which will own 100% of Gmarket. Both Gmarket and AliExpress Korea will continue to operate their platforms independently.
The new entity could be valued at about US$4 billion ($5.44 billion), people familiar with the matter told Bloomberg, asking not to be identified discussing confidential information.
E-Mart shares rose 5.5% in Seoul, giving the company a market value of US$1.4 billion. Alibaba’s American depositary receipts climbed as much as 2.1% in New York on Thursday, bringing this year’s gains to more than 11% and valuing the firm at US$206 billion.
The deal would help the companies face off against local rivals including Naver and Coupang. This month, South Korea’s consumer confidence dropped by the most since the outbreak of Covid-19, battered by the political turmoil triggered by President Yoon Suk Yeol’s declaration of martial law and his impeachment.
Alibaba has been seeking to expand its international footprint to make up for slower growth in its core Chinese e-commerce business. The internet pioneer’s domestic e-commerce operations reported anemic growth in the September quarter, dragging down financial results that benefited from progress in its cloud division and international business, which encompasses Lazada and the Temu-like AliExpress.
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Once a dominant player in China’s e-commerce field, Alibaba is struggling to grow amid competition from rising rivals like PDD Holdings and ByteDance. That has forced a hard pivot under the leadership of co-founder Eddie Wu, who took on the chief executive officer role more than a year ago, toward consolidating its core businesses and focusing investment into the most promising growth areas.
Alibaba is now integrating its domestic and international e-commerce operations, under the leadership of Jiang Fan, and has been steadily selling off holdings it doesn’t consider essential.
Alibaba last week agreed to sell its Intime department store business to Youngor Fashion for around US$1 billion in a move to offload non-core assets. The deal will see the Chinese e-commerce giant record a loss of 9.3 billion yuan ($1.73 billion) on its initial investment in Intime.
E-Mart has been expanding its e-commerce business both organically and via acquisitions. In 2021, it acquired a controlling stake in eBay’s South Korean online marketplace for about US$3 billion, expanding its customer base in categories such as groceries and general merchandise.
