Alibaba bets on $4 billion investment to conquer Southeast Asia
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Alibaba bets on $4 billion investment to conquer Southeast Asia

Chinese Ecommerce titan Alibaba is doubling down on investments into Lazada Group SA and installing one of its own senior executives to lead the business. Alibaba is preparing for a heavily contested battle in Southeast Asia’s online retail space. Amazon has made an entrance in Singapore; Shopee is expanding in the region. Lazada is the company’s strategic gambit, a German Ecommerce group dedicated to serving Southeast Asia specifically.

Alibaba’s share price has risen by 15% so far this year

graph 2103 alibaba

SOURCE: Yahoo Finance

Alibaba invested $1 billion in Lazada in 2016, and doubled that amount last year to increase its stake to 83%. This further $2 billion will be ploughed into technology development and customer acquisition. It’s a strong show of confidence from the Chinese Ecommerce group, which is counting on Lazada’s maturity in the market to give it an edge.

Senior Alibaba executive Lucy Peng – who was already chairman of Lazada – will now take over from Max Bittner as CEO. Bittner will remain on-hand as a senior advisor to the group. In an emailed statement, Peng highlighted Alibaba’s confidence in Lazada as a business, and Southeast Asia as a market. She said:

“We feel very confident to double down on Southeast Asia. We are excited about the incredible opportunities for super-charged growth.”

Steven Zhu, an analyst from Pacific Epoch, argues that the Lazada investment is part of a wider strategy on Alibaba’s part: “This is part of its overseas expansion strategy, where it’s using a specific platform as a testing ground. Now it’s going to run operations itself.”

Disclosure

Dominion holds Alibaba in its Global Trends Ecommerce Fund.


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