Alibaba Taps Russia Market With USD 2 Billion Joint Venture

There’s no stopping for Alibaba to expand its reach beyond China. The e-commerce giant has recently teamed up with billionaire Alisher Usmanov’s Mail.ru Group on a joint venture to grow its business in Russia.

Under the $2 billion JV, Alibaba and Mail.ru Group will join forces with the aim of creating AliExpress Russia, a one-stop destination for consumers where they can communicate, socialize, shop and play games, all within the same online ecosystem.

The partnership will be backed by sovereign-wealth fund Russian Direct Investment Fund (RDIF) and Russian telecommunications company MegaFon, which owns 10 per cent of Mail.ru Group. The three Russian firms will have a combined 52 per cent stake in the e-commerce platform, which will be jointly controlled by the local investors.

Upon completion of the deal, Alibaba Group will control 48 per cent of AliExpress Russia, MegaFon 24 per cent, Mail.ru 15 per cent and RDIF 13 per cent. The transaction is expected to close in the first quarter of 2019.

Leveraging Each Other’s Strength

By partnering with Russia’s leading consumer internet platform, AliExpress Russia will leverage Mail.Ru Group’s 100 million internet users across its social media, messaging, e-mail and online games properties.

“Together with Alibaba Group and Mail.ru Group, the parties will inject capital, strategic assets, leadership, resources and expertise into a joint venture that leverages AliExpress’ existing businesses in Russia,” Alibaba shared on its Alizila blog.

Accelerating Consumption Upgrade & SME Growth

AliExpress Russia will leverage Alibaba Group’s global ecosystem to provide local consumers with an unmatched breadth of high-quality products in every price category from Russia, China and around the world.
The partnership is expected to create significant opportunities for Russian SMEs (small and medium-sized enterprises) by giving them access to an inclusive ecosystem for local merchants to sell their products, locally and globally. With over 600 million consumers visiting Alibaba’s platforms, SMEs will have access to consumer markets more than four times larger than the entire Russian population, including in China, Southeast Asia, Turkey, Europe and India, among others.

Transforming Retail In Russia

Alibaba Group President Michael Evans called the joint venture “an exciting step in Alibaba’s international expansion.” The Chinese e-commerce giant has set a goal of helping 10 million businesses worldwide to reach profitability via e-commerce and serve 2 billion consumers globally.

“By partnering with Russia’s leading consumer internet platform, AliExpress Russia will help digitize and transform the retail value chain in Russia, enabling a seamless and innovative experience for consumers as well as creating significant opportunities for Russian entrepreneurs and SMEs to grow in their home market and expand globally,” Evans said when announcing the deal at the Eastern Economic Forum in Vladivostok.

Evans feels Alibaba’s experience in China and other markets around the world makes the group uniquely qualified to help build the future infrastructure of commerce in Russia and neighboring countries.

Alibaba is also set to launch its B2C marketplace platform Tmall along with Aliexpress in Russia. In Russia, Tmall will operate as a separate online shop and a marketplace to maximize the sales opportunity.