Editor’s note, 6.11.19: This story was updated to include the two newly named co-CEOs for the AliExpress Russia JV.
Editor’s note, 6.5.19: This story was updated to reflect new developments in the planned joint venture in Russia between Alibaba Group, Mail.ru Group, MegaFon and the Russian Direct Investment Fund. The original story ran Sept. 11, 2018.
A joint venture in Russia for Alibaba Group, which will bring together popular e-commerce, social-media and gaming platforms for the benefit of the country’s consumers and give Russian small and medium-sized businesses greater access to both local and international markets, has won approval from Russian regulators, the e-commerce giant said Wednesday.
Russia’s Federal Antimonopoly Service has cleared the JV, which was first announced last September, to move forward. Now, Russia’s most-popular shopping site, Alibaba-owned AliExpress, along leading internet company Mail.ru Group, Russian mobile-telecommunications operator MegaFon and sovereign-wealth fund Russian Direct Investment Fund (RDIF) can join forces to create what they call a one-stop destination for merchants, consumers and internet users across Russia and the CIS to communicate, socialize, shop and play games, all within the same online ecosystem.
“This partnership will enable the AliExpress Russia JV to accelerate the development of the digital consumer economy of Russia and CIS countries in ways that no one party could accomplish alone,” Alibaba Group CEO Daniel Zhang said. “Together, we are uniquely positioned to offer consumers in Russia and neighboring countries an innovative shopping experience by combining social platforms with commerce, as well as enabling regional brands and SMEs to sell their products locally and globally.”
“This JV is an important part of Alibaba’s international expansion and step toward our goal of supporting 10 million small businesses reach profitability and serving 2 billion consumers around the world,” Zhang said.
In addition to the regulatory approval, the companies signed “definitive documents” in Moscow on Wednesday that bring the JV closer to launch. First, they agreed that the joint venture would be majority owned by Russian shareholders, overseen by a board of directors with representation from RDIF, Alibaba, MegaFon and Mail.ru Group, and managed by two co-CEOs. One CEO will be nominated by Alibaba and the other by Mail.ru Group, according to the terms of the JV. Alibaba nominated current AliExpress Russia head Liu Wei, while Mail.ru Group nominated Dmitry Sergeev, current first deputy chief executive officer of Mail.ru Group. They are expected to take on their new roles once all transactions for the JV have been completed.
In addition, the JV and Mail.ru Group will enter into a strategic cooperation agreement relating to, among other things, traffic and product initiatives. The JV also will promote its services on Mail.ru Group’s platforms through exclusive product integration and marketing solutions, the companies said.
Mail.Ru Group counts 100 million internet users across its social-media, messaging, email and online-gaming properties, with 90% of all internet users in Russia using at least one of its properties each month. Russia’s two largest Russian social media sites VKontakte and Odnoklassniki and its top email service and are all owned by Mail.ru Group.
In addition to blending social media and e-commerce, the joint venture will work to support Russia’s consumption upgrade by delivering a greater selection of high-quality products to the market. For Russian small and medium-sized enterprises, it’s a chance to tap a newly connected ecosystem in the domestic market while accessing over 600 million consumers using Alibaba’s platforms, including in China, Southeast Asia, Turkey, Europe and India.
The joint venture also plans to participate in the acceleration of Russia’s digital economy by leveraging the parties’ respective strengths in e-commerce, social and digital media, logistics and the local market and help build the future infrastructure of commerce in Russia and globally, they said.
“This partnership is in line with our strategy of bringing together people and businesses, as we will offer customers richer social experience and provide entrepreneurs with a platform for growth,” Mail.ru Group CEO Boris Dobrodeev said. “This is a major milestone for the Russian e-commerce market, and we believe it will promote the development of the digital economy.”
Each shareholder has agreed to make certain contributions to the JV, including the following:
AliExpress launched in Russia in 2010 to bring a new selection of affordable products to consumers by giving them direct access to the China market. Alibaba later included access to its B2C marketplace Tmall via AliExpress as well.