Alibaba Partners with Three Russian Firms to Push Online Shopping in Russia

Published Date : Sep 12, 2018

China’s leading e-commerce company, Alibaba has announced its joint venture with three top firms in Russia: Mail.Ru Group, MegaFon, and sovereign wealth fund of the world’s largest country. The Chinese e-commerce player is expected to contribute AliExpress Russia, its existing business in Russia and unspecified amount of cash. It was during the event Eastern Economic Forum that a joint statement was made to announce the deal. Two powerful presidents, Xi Jinping and Vladimir Putin met each other during the Vladivostok event. Now, China’s e-commerce company has a trio of new partners in the largest country of the world.

Alibaba to Own 48% of AliExpress Russia, MegaFon will Control 24%

The deal between Alibaba and the Russian trio could be important for both China and Russia economically. Using its ambitious Belt and Road initiative, Beijing is looking to spread its economic influence in Europe and Asia. On the other hand, Russia wants to build closer business and political ties with China. This could involve the use of faster e-commerce services and high-speed internet networks to develop a “digital Silk Road” and constructing railways, ports, and other infrastructure.

After the transaction is approved, 48% of AliExpress Russia will be bagged by Alibaba, 13% will go to Russia’s sovereign wealth fund, Mail.Ru Group will own 15%, and MegaFon will secure 24%. However, the internet firm will be putting Pandao, its online shopping business, into the joint venture.

Only 20% of Russians shop online, according to the 2016 estimation of Ecommerce Europe, a regional trade group. This could be an open window for Alibaba to cash in on as the Russian market holds a large potential for growth.