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Alibaba Expansion: Online Store Daraz Seen as Next Choice for Jack Ma’s Acquisition

| Mar 04, 2017 07:14 AM EST

Alibaba's Jack Ma

Daraz, an online store that operates in Pakistan, Bangladesh, Myanmar and Sri Lanka, is seen as a likely target for Jack Ma's expansion, following the $1 billion deal to acquire Lazada  last year.

The Express Tribune said that after the Lazada deal, Jack Ma wants to provide "e-commerce training" for small businesses in six countries where Lazada operates. He also wants to teach Lazada on how to sell directly to consumers without the need for middlemen.

But before Alibaba can trade across Asia, it must first find a solution to logistics issues before it dominates consumer purchases in the region.

The e-commerce giant has already made headway into its expansion as Ant Financial had made investments in India, South Korea, Thailand and the Philippines. It also bought Moneygram, a U.S. remittance company, for $880 million.

Alibaba's bigger aim is to dislodge Amazon in the region, even without physically entering the market, which it will do by acquiring assets or making investments to reach its goal.

According to the report, Daraz fits into Alibaba's vision and the Chinese government's goal to become the hub of global trade, through the "One Belt, One Road" initiative.

China considers Pakistan, Bangladesh, Myanmar, and Sri Lanka as important parts of the Silk Road. In fact, the Chinese government has pledged to spend about $50 billion to help improve logistics, communication, power generation and build schools and hospitals in Pakistan.

In addition, China also helped build Hambantota port in Sri Lanka to integrate logistics and secure sea lanes.

Alibaba wants to sell goods to the world and the Silk Road initiative provides the opportunity for the company to realize it.

Having Daraz would give Alibaba access to the frontier markets of Pakistan, Myanmar, Bangladesh and Sri Lanka, although AliExpress is already present in these countries.

Bjarke Mikkelsen, CEO of Daraz Group, is reportedly spending more time in China to study products they could sell to its markets. Although he denied rumors that Alibaba is interested in buying the company, he said that they are "constantly in touch with friends in Lazada".

Another reason that fuels speculation on Alibaba's acquisition is the report that Daraz has hired Zain Suharwardy, a former senior Lazada VP based out of Malaysia, to manage its operations in Pakistan.

Another hint is the January meeting between Jack Ma and Pakistan's Prime Minister Nawaz Sharif on the sidelines of the World Economic Forum in Davos, where Ma expressed interest in helping small business in developing countries and that they are monitoring e-commerce development in Pakistan.

The report said that Daraz would be worth about $100 million to $150 million, in case Jack Ma decides to buy the company.

If that happens, Alibaba will not only have access to about 450 million people in the four countries but will help China improved its ties as well.

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