Alibaba is exploring a joint venture with India’s Reliance Retail, it was reported this week, as the company looks to challenge Flipkart and Amazon in the fast-growing market.
The Chinese e-commerce giant is in talks with the Indian firm about an investment of at least US$5 billion, Livemint reported.
A deal for Alibaba to take a huge stake in Reliance would create an online retail giant, and also help expand the Chinese company’s brick-and-mortar presence.
“Alibaba is willing to pick up a significant stake in Reliance Retail, preferably 50%, which will require Alibaba to invest US$5-6 billion,” one person with knowledge of the talks told Livemint. “It could also result in a strategic JV between Alibaba and Reliance Retail, with a smaller stake held by Alibaba.”
Another source said: “The deal is crucial for Alibaba, especially after RBI [Reserve Bank of India] directed Paytm [in which Alibaba holds 49%] to stop on-boarding new customers because of the shareholding pattern of Paytm.
“Alibaba had picked up the stake in Paytm with the objective of benefiting from Paytm’s successful e-commerce and digital-wallet business in India. Reliance Retail is planning a similar model like Paytm, and once that happens, Alibaba will benefit the same way it was gaining from its association with Paytm,” he added.
Alibaba’s online marketplaces achieved a total transaction volume of more than $478 billion in 2016, and the company has designs on doubling that figure by 2020. As part of those efforts, the firm is expanding aggressively overseas and plans to spend 100 billion yuan ($14.5 billion) over the next five years on global logistics.