Alibaba, Ant to invest 3 billion Yuan each in a new venture
Alibaba Group Holding Ltd. and its finance affiliate will invest 3 billion Yuan ($483 million) each. This will be done in a new venture focusing on neighborhood services in China.
According to a statement, in the beginning, the Koubei venture with Zhejiang Ant Small & Micro Financial Services Group Co. will target the food and beverage sector. And both companies will offer capital and resources in order to drive the business.
The investment could be very helpful for Koubei, which earlier operated through Alibaba's retail marketplace, Taobao. It indicates the Chinese companies' latest efforts to develop local services, where customers pay for services like laundry pickups and make restaurant bookings in addition to hospital appointments in their neighborhood using smart devices.
According to Li Yujie, an analyst at RHB Research Institute Sdn in Hong Kong, "Location-based services is a really big market. Establishing it as an independent business shows that Alibaba is putting a lot of emphasis on it".
According to Li, structure of the venture may help Koubei to look for partnerships and acquisitions.
Alibaba executives have emphasized on the importance of setting up a grip beyond e-commerce in an 'online to offline' market that indicates the increasing use of mobile devices to purchase physical goods and services.
Ant Financial's Alipay will form the payment method for Koubei's services. It processes some 80% of Chinese online payments. The two companies didn't tell about future products from Koubei other than its initial concentration on food and beverages.