Alibaba invests additional US$2 billion in Lazada Southeast Asia

19/03/2018

Alibaba Group Holding Ltd. announced plans to invest another US$2 billion in Lazada Southeast Asia

Alibaba announced today that it will inject another US$2 billion in Southeast Asian online shopping platform Lazada. This new injection ups Alibaba’s total investment to US$4 billion after an initial US$1 billion majority stake purchase in April 2016, and an additional US$1 billion last year. The latter investment lifted Alibaba’s stake in the company to 83% cementing a foothold for China in the region’s e-commerce market.

Alibaba told the press, “The investment underscores Alibaba’s confidence in the future success of Lazada’s business and the growth prospect of the Southeast Asian market, a region that is a key part of Alibaba’s global growth strategy.”

Rather than to open an Alibaba branch abroad, the company opted to purchase Lazada and move its own management into the existing corporate structure. Monday’s announcement brought news that Lucy Peng, chairwoman of Ant Financial and one of Alibaba’s 18 co-founders, will take up the helm as Lazada’s CEO. Peng joins other Alibaba friends at Lazada including Chun Li, co-president of technology, and Raymond Yang, chief product officer. Peng replaces Maximilian Bittner who launched the company via Berlin-based startup Rocket Internet.

The additional investment suggests that Alibaba perceives a threat from the growing presence of other e-commerce platforms in the region. Its biggest competitor is Chinese e-commerce platform JD.com, which has a standalone operation in Indonesia and a joint e-commerce fintech investment JV in Thailand. Amazon launched Amazon Prime in Singapore last December although its efforts to expand in the region have been more conservative than its rivals.

Online shopping currently accounts for just 4% of retail purchases in Southeast Asia leaving plenty of room for e-commerce giants to grow the region. Consultancy Frost & Sullivan forecast total gross merchandise value of e-commerce in the region to rise to $65.5 billion in 2021 from $20.5 billion last year.

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