Alibaba’s rumored acquisition of Kaola, NetEase’s cross-border e-commerce business, has reportedly fallen through after the two companies failed to agree on details, Chinese media reported, citing people familiar with the matter.

Why it’s important: A merger of Tmall Global and Kaola, China’s two largest cross-border platforms, would have resulted in a clear-cut leader of the fragmented cross-border segment and consolidated Alibaba’s dominance in the country’s e-commerce industry.

  • The failure opens possibilities for Alibaba rival Pinduoduo, which is trying to tap higher-tier city markets.

Details: The talks collapsed after NetEase founder and CEO Ding Lei vetoed Alibaba’s offer, according to Tencent News.

  • The talks broke down because NetEase was not satisfied with the price, an unnamed source said.
  • In addition to Kaola, the deal was said to also include NetEase Music and NetEase’s research and development unit.
  • NetEase is reshuffling its e-commerce business including Kaola and own-label platform Yanxuan as growth has slowed.

Alibaba declined to comment on the matter when reached by TechNode on Friday. NetEase also declined to comment to Chinese media outlets.

Context: NetEase previously held talks with Amazon to acquire its China operations over several months, but the deal fell through after the two companies failed to agree on final terms.

  • Pinduoduo’s gross merchandise volume from Tier One and Two cities as a percentage of total GMV has risen to 48% in June from 37% in January this year, the company’s CEO said during its second quarter earnings call on Wednesday.

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at More by Emma Lee

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