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Tmall Global and Kaola are China's largest and second-largest cross-border e-commerce platforms, and they hold 31.7% and 24.5% of the market, respectively. Alibaba Group acquiring NetEase Kaola will pull well ahead of the competition in China, outstripping rivals like JD Worldwide, VIP International and Amazon China. NetEase had been in talks earlier this year to merge Kaola with Amazon China.

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NetEase?

Alibaba Group are known globally, but NetEase, Inc. may be less known. Here is a bit about them:

NetEase, Inc. is a leading internet technology company based in China dedicated to providing premium online services centered around content, community, communication and commerce. NetEase develops and operates some of the most popular PC-client and mobile games in China and has been expanding rapidly into other international markets such as Japan and North America in more recent years. In addition to its self-developed game content, NetEase also operates some of the most popular international online games in China by partnering with Blizzard Entertainment, Mojang AB (a Microsoft subsidiary) and other global game developers. NetEase also operates Yanxuan, an e-commerce platform that cater to the rising middle-class consumer market in China as well as offering advertising, e-mail and other innovative services including music and online education.

Techcrunch reported all of this, including that Yunfeng, the investment firm launched by Alibaba's founder, Jack Ma, had also agreed to invest $700 million into NetEase Cloud Music's latest round of funding. That gives Alibaba a minority stake in the streaming music service, NetEase remaining the controlling shareholder.

The NetEase Announcement

NetEase CEO William Ding had the following to say in a press release: “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, said “Alibaba is confident about the future of China’s import e-commerce market, which we believe remains in its infancy with great growth potential.” 

The New Boss

Tmall Import and Export general manager Alvin Liu has been named as Kaola’s new CEO, replacing Zhang Lei, but Kaola will continue to operate independently under its own brand.