Alibaba signs deal for AliExpress Russia

Alibaba Group has formed a US$2 billion joint venture AliExpress Russia to create a major e-commerce venture in the Russian-speaking market.

Alibaba and the Russian government-backed RDIF sovereign wealth fund will each invest US$100 million in the venture which will absorb Alibaba’s existing AliExpress business. Russian mobile phone network Megafon will sell its 9.97 per cent interest in internet group Mail.ru to Alibaba in return for a 24.3 per cent stake in the new JV.

In return, Mail.ru will roll its Pandao e-commerce business into AliExpress Russia and contribute $184 million in cash for a 15 per cent share.

AliExpress Russia has been created to expand the three companies’ e-commerce offer in both Russia and neighbouring countries.

Documents to create AliExpress Russia were signed last week. The company will be jointly run by Alibaba and Mail.ru, each of which will appoint a CEO.

“This partnership will enable the AliExpress Russia JV to accelerate the development of the digital consumer economy of Russia and CIS countries in ways that no one party could accomplish alone,” said Daniel Zhang, CEO of Alibaba Group. “Together, we are uniquely positioned to offer consumers in Russia and neighbouring countries an innovative shopping experience by combining social platforms with commerce, as well as enabling regional brands and SMEs to sell their products locally and globally.”

He said Alibaba’s mission is to make it easy to do business anywhere. “This JV is an important part of Alibaba’s international expansion and step toward our goal of supporting 10 million small businesses reach profitability and serving 2 billion consumers around the world.”