Alibaba, Haier set up joint venture
Updated: 2013-12-09 17:40
HANGZHOU - China's e-commerce giant Alibaba Group will invest HK$2.8 billion ($365 million) in a subsidiary of the Haier Group, China's largest home appliance maker.
The investment will go mainly into Haier Electronics Group Co Ltd with HK$1.9 billion going to Goodaymart, a subsidiary of Haier, to establish a joint venture company.
Alibaba will buy 9.9 percent of Goodaymart's shares for HK$541 million, purchase convertible bonds in Haier Electronics for HK$1.3 billion and HK$965 million of newly issued shares in Haier Electronics, and thereby hold a 2 percent stake in the company.
The partnership will create a system and standards for delivery and installation of household appliances and other large-sized goods.
It shows e-commerce expansion focusing on smaller cities and the rural areas after its rapid development in large cities, according to analysts.
"The future economy is an experiential economy wherein the user is no longer just a passive buyer, but an active participant throughout the entire process, and companies around the world need to adapt to this," said Zhang Ruimin, CEO of Haier Group, in a press release.
"The aim of this partnership is not simply to grow the Goodaymart business but ultimately to enhance the experience for all participants in the logistics industry," he went on.
Jack Ma, executive chairman of Alibaba Group, said Alibaba hoped to join with Haier to create a platform that will provide China's manufacturing industry with better national and global access.
As the leading global home appliance manufacturer, Haier Group realized revenues of $25.8 billion and profit of $1.42 billion in 2012.
Transaction volume on Tmall.com, the business-to-consumer platform operated by Alibaba Group, exceeded 200 billion yuan ($32.6 billion) last year. On Nov 11, the Chinese version of Cyber Monday, sales on Alibaba's two online platforms Tmall.com and Taobao.com hit 35 billion yuan ($5.7 billion).