Alibaba speeds up Russian expansion with Mail.ru JV

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Alibaba’ global expansion initiative widened further Wednesday when it announced a joint venture with a series of big-name Russian partners had finally received approval from the Federal Antimonopoly Service (FAS) in Russia, around nine months after the plan was first announced in September 2018.

Russia’s sovereign wealth fund, Russian Direct Investment Fund (RDIF), along with pan-Russian operator of digital services MegaFon and Mail.ru Group, a wide-reaching media and information technology conglomerate in the country, are partners in the new AliExpress Russia JV which aims at consumer internet and e-commerce markets in Russian and neighboring countries.

Involvement of multiple partners makes for a complicated share exchange and holding structure between companies. Alibaba and RDIF will each invest $100 million and Mail.ru will invest $182 million in the joint venture, according to a RFID announcement. While Alibaba holds 55.7% of the economic rights, the new firm will be majority-controlled by the Russian companies, which hold a combined 50.1% stake.

The joint venture will build on existing e-commerce businesses for both Mail.ru Group’s Pandao and Alibaba’s AliExpress Russia, operator of Alibaba’s Russian-based domestic and cross-border operations.

Although Russia might not appear to be a key target market, it is an increasingly important piece in Alibaba’s globalization map thanks to market size and a rising number of internet users in the region, as well as obvious geographic advantages.

Teaming up with a domestic partners like Mail.ru allows Alibaba to take advantage of the infrastructure its partners have already established, to access resources such as their user bases and marketing channels.

“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. Together, we are uniquely positioned to offer consumers in Russia and neighboring 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,” Daniel Zhang, CEO of Alibaba Group, said in the statement.