Alibaba Partnering with Russian Company in E-Commerce

On Tuesday, Alibaba, the giant of e-commerce based in China, has signed a new partnership with several firms in Russia. The strategic alliance will form a new platform of e-commerce and utilize Russia’s payments system.

The agreement, signed in Vladivostok, Russia at the Eastern Economic Forum includes the Russia sovereign wealth fund, the Russian Direct Investment Fund, MegaFon the mobile operator and the internet group.

The partnership wants to integrate Russia’s important consumer internet with e-commerce platforms, and launch a social commerce joint venture across Russia.

Alibaba also said that one goal was to create a one-stop landing place for consumers to communicate, shop, play games and socialize all in the same ecosystem online.

Collectively, all the parties will inject capital, leadership, strategic assets, expertise and resources to create a value proposition that is unmatched for consumers, merchants and users of internet throughout Russia and the Russian Commonwealth. In addition, the press release by the group said it would accelerate development of the rapidly expanding digital economy in Russia.

The statement added that Alibaba would contribute with AliExpress Russia, its Russia e-commerce arm, to the strategic partnership, which could allow the Chinese company to reach a larger audience in Russia. It said as well that it would look at investing money into the new venture.

Through partnering with the leading internet platform in Russia for consumers, AliExpress Russia is leveraging Mail.Ru Group’s more than 100 million users of internet across its messaging, e-mail social media and online games platforms, said the company’s official statement.

Alibaba will cede control as well of its business in Russia to form this partnership. The Chinese-based company will have ownership of 48% of its AliExpress Russia with entities in Russia owning 52%. The idea is that it will allow Alibaba increased access to the market in Russia.

This agreement, expected to be setup formerly in the 2019 first quarter, will use the payment system in Russia called Mir, said the head of RDIF Kirill Dmitrieve. Mir was developed during 2014 after sanctions by the West were imposed on the country for the annexation of Crimea and the alleged role it had in destabilizing eastern Ukraine.

Mir is used alongside other international payments systems in Russia such as MasterCard and Visa.