In a strategic move to strengthen its position in South Korea's competitive e-commerce market, Alibaba Group (BABA, Financial) has agreed to merge its operations with E-Mart's e-commerce platform, Gmarket. An exchange filing from E-Mart revealed that E-Mart and Hakchoban will each own 50 percent of the $4 billion joint venture.
Shanghai AliExpress International, part of Alibaba, will enter into a partnership with E-Mart, the company behind Gmarket, one of South Korea's best-known online components stores, having set up Gmarket to boost its operations in the country. Under the deal, Alibaba and E-Mart, along with the venture, have agreed to keep investing to strengthen the venture's competitive advantage.
The merger, which is a response to growing competition in the country's e-commerce sector from domestic rivals, including Naver Corp and Coupang, could boost prior revenues at South Korea's largest retailer. E-Mart shares jumped 5.5 percent in Seoul, and Alibaba's Hong Kong-listed shares added 2.6%.
The deal is part of Alibaba's broader efforts to internationalize as growth slows in its home market, China. The company posted weak performance in its domestic e-commerce division for the September quarter but has managed growth from cloud business and international ventures such as Lazada and AliExpress.
It also comes on the heels of Alibaba's decision to offload some noncore assets, such as the $1 billion sale of its Intime department store unit earlier this year to Youngor Fashion Co., under CEO Eddie Wu.
