Alibaba Group Holding Ltd. and South Korean retail giant E-Mart have joined forces to establish a $4 billion e-commerce joint venture in South Korea, a move aimed at solidifying their foothold in one of the world's most dynamic online retail markets. The collaboration will see AliExpress International and Gmarket, a subsidiary of E-Mart, operating under a newly created entity, which will be co-owned equally by the two companies, according to an E-Mart regulatory filing.
The joint venture, slated to begin operations in 2025, marks a significant step in Alibaba's strategic shift to expand its international presence amidst slowing growth in its core Chinese market. The deal, which will encompass Gmarket's full integration into the new entity, also allows AliExpress and Gmarket to operate independently, catering to their unique customer bases.
Alibaba's expansion comes at a time when the company has been restructuring its global operations to offset declining domestic e-commerce performance. Under the leadership of Eddie Wu, who assumed the role of CEO over a year ago, Alibaba has been shedding non-core assets and consolidating key business units. Last week, the Chinese tech giant announced the sale of its Intime department store business to Youngor Fashion Co., a move that resulted in a reported loss of $1.3 billion on its initial investment.
Jiang Fan, the head of Alibaba's integrated domestic and international e-commerce operations, has been tasked with steering the company toward promising growth sectors. The partnership with E-Mart signifies Alibaba's intent to strengthen its global influence while competing with rising e-commerce players like PDD Holdings Inc. and ByteDance Ltd.
E-Mart, a subsidiary of South Korea's Shinsegae Group, has also been aggressive in expanding its online footprint. In 2021, the company acquired a controlling stake in eBay's South Korean marketplace for $3 billion, significantly boosting its e-commerce presence. Gmarket, one of the platforms included in the joint venture, has faced stiff competition from local heavyweights Coupang and Naver, as well as Chinese entrants like AliExpress and Temu.
The joint venture's establishment comes at a critical time for South Korea's e-commerce market, which ranks as the fourth-largest globally, according to Euromonitor. Consumer confidence in the country, however, has recently taken a hit due to political uncertainty stemming from President Yoon Suk Yeol's impeachment and the declaration of martial law.
E-Mart shares saw a 5.5% increase following the announcement, raising its market value to $1.4 billion. Meanwhile, Alibaba's Hong Kong-listed stock has gained 11% this year, bringing its valuation to over $200 billion.
