• The huge populace of online shoppers in China is a good base for industry 4.0, says an Alibaba executive.

The huge populace of online shoppers in China is a good base for industry 4.0, says an Alibaba executive. (Photo : www.observerintelligence.com)

China’s e-commerce giant Alibaba has announced plans to form a 6 billion yuan ($970 million) joint venture company that will focus on Web-connected services, the company said in a statement.

Alibaba called its joint venture Koubei, which it formed with its affiliate Ant Financial, the company that manages the Alipay e-payment system that is integral to Alibaba's e-commerce sites. Each firm will hold a 50-percent stake as each put in half of the capital.

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The statement said that the joint venture is "aimed at capturing opportunities within China's local services market, with an initial focus on the food and beverage segment."

The joint venture is part of Alibaba's plan to ensure its position as the leader in e-commerce in China and to broaden its e-commerce influence in the service sector as online-to-offline (O2O) business, such as Ele.me for food, or Didi Dache and Kuaidi Dache for taxis, have flourished in the past few years in China.

Alibaba had reportedly taken a stake in Kuaidi Dache to get involved in the taxi-hailing app service, but other O2O companies such as on-demand beauticians, manicurists, cleaners, or car repair mechanics developed more quickly than Kuaidi.

The report said that Alibaba's big investment in Koubei was aimed to fix the issue.

According to the report, the Koubei site has been running as an independent startup since 2004. It has served as a search engine for local services in cities across China, before Yahoo China, which is actually operated by Alibaba, snapped it up. In 2009, Koubei was merged into Alibaba's Taobao marketplace and remains a part of it until today.

"The Koubei brand will be revitalized under this JV as a platform for local services," Melanie Lee, a spokesperson for Alibaba, told the media.

"Alibaba's food ordering and delivery business operating under the Taodiandian brand [the on-demand section of Taoabao] will be injected into Koubei, while Ant Financial's merchant services in the areas of offline retail, healthcare, and vending machines will be gradually consolidated into the joint venture."

Lee said that Koubei can be accessed from the Mobile Taobao and the Alipay Wallet apps.