Alibaba Buys Chinese E-Commerce Company Kaola for $2 Billion

In a transaction worth about $2 billion, e-commerce giant Alibaba announced on Friday that it has purchased Chinese e-commerce business Kaola.

Kaola is the biggest in China next to Alibaba’s Tmall Global and JD.com’s JD Worldwide. The company sells imported products in China which include clothes and consumer electronics.

Alibaba said that it would acquire Kaola from Nasdaq-listed Chinese internet company NetEase.

Kaola will continue operating independently under its current brand, but it will have a new leader said Alibaba. The company’s new CEO will be Tmall Import and Export General Manager, Alvin Liu.

Analysts at Jefferies wrote that with the acquisition of Kaola and an investment into NetEase Cloud Music, NetEase can “further optimize its costs while Alibaba strengthens its leadership in cross border ecommerce.”

In a press release, NetEase CEO William Ding said “We are pleased 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, remarked, “Alibaba is confidence about the future of China’s import e-commerce market, which we believe remains in its infancy with great growth potential.”

According to eMarketer, China will have $1.935 trillion in e-commerce sales, about three times more than the United States, in 2019.

Disclaimer: We have no position in Alibaba Group Holding Ltd (NYSE: BABA) and have not been compensated for this article.