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Shinsegae, Alibaba to form $4B joint venture amid intensifying e-commerce rivalry

Published: 26 Dec. 2024, 16:26 Updated: 26 Dec. 2024, 19:12

CHO YONG-JUN
[email protected]

Alibaba, Shinsegae Group [EACH COMPANY]

Shinsegae Group and Alibaba International will form a joint venture in 2025 to run their respective e-commerce sites, Gmarket and AliExpress Korea, as the Korean and Chinese retail giants seek to scale their business amid stiff competition.

The joint venture is valued at around 6 trillion won ($4.1 billion) according to market insiders and media reports, while Shinsegae declined to confirm the size of the deal.

The two retail giants will each have 50 percent of shares in the joint venture, which will include AliExpress Korea and Gmarket as its subsidiary, according to Shinsegae Group on Thursday. Gmarket and AliExpress Korea will continue to operate their platforms separately under the joint venture.

Shinsegae said it will make an in-kind investment in the joint venture using Gmarket shares as an asset instead of cash. Emart, a supermarket chain operated by Shinsegae, bought an 80.01 percent stake in Gmarket for 3.44 trillion won in 2021 from eBay Korea, a subsidiary of the U.S. e-commerce giant.

Alibaba will invest 300 billion won in cash on top of an in-kind investment using AliExpress Korea, according to a report from Maeil Business Newspaper.

The new joint venture will allow “continued investment” by the two companies in the Korean e-commerce industry, which will include investments in “technology, products and pricing,” according to the Korean retail giant.

Emart hypermarket store in central Seoul [NEWS1]

Gmarket will be adopting user experience and user interface technology developed by Alibaba International Digital Commerce and utilize its analytical tool, which will be beneficial to sellers on the platform. Alibaba International Digital Commerce, commonly known as Alibaba International, is a subsidiary of the Chinese company that operates overseas-focused wholesale and retail platforms, such as AliExpress, Lazada and Alibaba.com.

The joint venture will also allow local vendors listed on Gmarket to export to foreign markets using the Chinese retail giant’s well-established overseas presence with the introduction of new tools for Gmarket sellers to join Alibaba’s global platform with ease.

“We are currently in discussions to further simplify the process or to further benefit the sellers joining [through Gmarket],” Shinsegae said, adding that support for such a feature will start by the first half of next year.

The joint venture announcement comes as Gmarket struggles to compete with Naver Shopping, Coupang and even China’s AliExpress and Temu, while AliExpress has been eyeing a further expansion in the Korea.

Gmarket, since Shinsegae Group’s acquisition in November 2021, has consistently recorded operating losses over the years, only reporting an operating profit of 200 million won in the fourth quarter of 2023.

Alibaba Group announced in March that it planned to invest $1.1 billion in Korea over the next three years and plans to build a $200 million distribution center in the country. It acquired Korean fashion startup Ably for 100 billion won in early December.

Gmarket’s CEO, Chung Hyung-kwon, said there will be no changes in the employment status of its workforce and offered assurances that Gmarket will “remain a Shinsegae Group subsidiary” and “the operation of Gmarket will not change massively” in a message released to employees on Thursday. Chung joined the company in July 2024 after working as the head of Alibaba Korea.

Upated, Dec. 26: Added details about financing, platform integration plans.

BY CHO YONG-JUN, PARK EUN-JEE [[email protected]]