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NetEase will sell Kaola unit for $2 billion

FILE PHOTO: The sign-on of the business of the Alibaba Group Holding Ltd. is seen outside its headquarters in Beijing, China for the 29th of June, 2019 at the latest. REUTERS/Stringer

(Reuters) – the Nasdaq-listed gaming giant NetEase Inc. said on Thursday agreed to sell its China’s e-commerce business, Kaola, to Alibaba Group Holding Ltd. for $2 billion.

The long-rumored acquisition comes as China’s e-commerce players are increasingly looking at niche segments for growth, with the growth of China’s online shopping sector is slowing down.

“With the Kaola, we will continue to raise the import of service and experience for Chinese consumers, through the synergy in the Alibaba ecosystem,” Alibaba’s Chief Executive Officer, Daniel Zhang said in a statement.

Kaola is a specialist in the supply of foreign goods to Chinese consumers. First and foremost, it is the buying of goods directly from the supplier, and before sell it to the consumer.

This model stands in contrast to that of Alibaba’s Tmall, which is required for the foreign brands to launch and manage the virtual stores on the platform.

Alibaba plans to Kaola continue to operate independently under its current brand, while Tmall, import and export, general manager at Alvin and She will be the Kaola’s the new CEO of NetEase, said in a statement.

Alibaba and NetEase, also have agreed that Alibaba, along with private equity firm Yunfeng to invest approximately $700 million in NetEase Cloud Music.

NetEase, is the most well-known as a creator and publisher of games, has been launched Kaola at the end of 2015.

Reporting by Ismail Shakil in Bengaluru), Josh Horwitz, in Shanghai; Editing by Peter Cooney and Matthew Lewis)

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