Alibaba may buy Kaola from Netease

Alibaba and Chinese tech firm Netease are in talks on the internet giant’s potential acquisition of its cross-border e-commerce platform Kaola, which would be merged with Tmall.

According to sources from the mainland, Alibaba may offer as much as US$2 billion for the business.

“The deal would represent a step toward market consolidation in China’s e-commerce sector,” wrote Tech Node’s Emma Lee. “A merger between the country’s top cross-border players would create a single market behemoth.”

She said Alibaba could also use the deal to fend off rival Pinduoduo, which has also taken an interest in Kaola to expand its cross-border presence.

Tmall was responsible for 32.3 per cent of China’s entire cross-border e-commerce takings in the first quarter, with Netease Kaola in second place with 24.8 per cent of the business.

Alibaba rival Pinduoduo has also expressed interest in the Kaola business.

“Netease has always been open-minded in seeking business development opportunities and strategic business partners to bring more vitality to Netease’s cross-border e-commerce and other business units,” said Netease CFO Yang Zhaoxuan.