Ma may be leaving but this two year deal in the making is likely to bring huge growth to his firm and significant job opportunities to Russian speaking FinTechers.
At the Economic Forum attended by the Chinese President Xi Jinping and the Russian President Vladimir Putin, it was announced that Alibaba Group Holding Ltd would be setting up a joint venture with the internet firm Mail.ru Group LTD, the Russian Direct investment Fund (RDIF), Russia’s sovereign wealth fund, and MegaFon. This strategic partnership will be the largest social commerce joint venture in Russia and CIS aiming at integration of key consumer Internet and e-commerce platforms in Russia.
This partnership is seen by some as highly influenced by the Belt and Road policy, encouraging the expansion of Beijing’s influence across Asia, the Middle East and Europe. Indeed, not only will it greatly develop Russia’s digital economy, but also mark an important expansion of the foothold that the Chinese Giant has in Russia. While both countries are members of the Shanghai Cooperation Organisation it is a central plank of the Chinese Communist Part's Vision 2025 to be at the forefront of all things digital. Russia has serious technological talent as well as a deep, price sensitive consumer base. With both countries looking to improve trade significantly away from the U.S. given the latter' tariff tantrum this looks like a win-win deal.
Indeed Alibaba’s expansion to other new markets in fast rising Central Asia will be enhanced by its access to Mail.ru’s large audience through two of the country’s most popular social networks. The deal, if approved, would divide the shares of Ali-Express Russia, so as to ultimately give Alibaba 48% of the shares, Mail.Ru 16%, MegaFon 34% and Russia’s sovereign wealth fund 13%. Alibaba will sell 24% of their shares to MegaFon PJSC in exchange for their 10% stakes in Mail.ru. This deal values the new outfit at roughly 2 billion USD. The JV will operate in all sectors of e-commerce, including cross-border and local market places as well as own direct sales. The stakeholders are significant:
“We hope that best technologies, experience and possibilities will make JV the incontestable leader on the Russian e-commerce market offering reasonably priced goods to Russian consumers and opportunities for the Russian business to compete on the international market. Our investment is an example of RDIF leadership in the digital transformation of Russia.” Michael Evans, President, Alibaba Group.
Clearly the shape of FinTech from Beijing and Vladivostok in the East, to Turkey's borders and the E.U. on the West, and everything in between, is being remodeled.....way beyond Washington's control.