Alibaba and E-Mart Join Forces to Dominate South Korea’s E-commerce Market
In a strategic move to strengthen its presence in South Korea’s fast-paced online retail sector, Alibaba Group Holding Ltd. has agreed to form a joint venture with E-Mart Inc.’s e-commerce platform. This 50-50 partnership, valued at approximately $4 billion, will enable both companies to better compete against local rivals such as Naver Corp. and Coupang Inc.
A New Entity Emerges
The joint venture, which will own 100% of Gmarket, will operate independently alongside AliExpress Korea. E-Mart shares surged 5.5% in Seoul, boosting the company’s market value to $1.4 billion. Alibaba’s American depositary receipts also climbed 2.1% in New York, valuing the firm at $206 billion.
South Korea’s Consumer Confidence Takes a Hit
This month, South Korea’s consumer confidence plummeted, battered by political turmoil triggered by President Yoon Suk Yeol’s declaration of martial law and his impeachment. Amidst this uncertainty, Alibaba’s partnership with E-Mart is a timely move to capitalize on the country’s growing e-commerce market.
Alibaba’s International Expansion
Alibaba has been aggressively expanding its international footprint to offset slower growth in its core Chinese e-commerce business. The company’s domestic e-commerce operations reported sluggish growth in the September quarter, while its cloud division and international business, including Lazada and AliExpress, drove financial results.
A Shift in Focus
Once a dominant player in China’s e-commerce field, Alibaba is now refocusing its efforts under the leadership of co-founder Eddie Wu. The company is consolidating its core businesses, investing in promising growth areas, and selling off non-essential assets. Last week, Alibaba agreed to sell its Intime department store business to Youngor Fashion Co. for around $1 billion.
E-Mart’s E-commerce Ambitions
E-Mart has been rapidly expanding its e-commerce business through organic growth and strategic acquisitions. In 2021, it acquired a controlling stake in eBay Inc.’s South Korean online marketplace for about $3 billion, expanding its customer base in categories such as groceries and general merchandise.
A New Chapter in E-commerce
The partnership between Alibaba and E-Mart marks a significant milestone in South Korea’s e-commerce landscape. As the companies invest further in the joint venture, they are poised to revolutionize the country’s online retail sector and take on local competitors.
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