Capital Contribution Ratio 5 to 5... Gmarket's In-Kind Contribution Method
Gmarket Products Listed on Alibaba Platform
Synergy of Global Network and Quality Control Competitiveness
Shinsegae Group is establishing a joint venture with Chinese e-commerce company Alibaba International to build a strategic partnership. By collaborating with AliExpress, which has a global network, they aim to cause a significant shift in the domestic e-commerce industry, which has been dominated by Coupang.
Shinsegae Group and Alibaba... 50-50 Investment Ratio
According to the Financial Supervisory Service's electronic disclosure system on the 26th, Apollo Korea, a subsidiary of E-Mart, announced that it will contribute 100% of its Gmarket shares as an in-kind contribution to participate in the paid-in capital increase of 'Grandfood Holdings.' Grandfood Holdings is a joint venture (JV) between AliExpress International and Shinsegae Group, with Shinsegae Group participating through an in-kind contribution. The investment ratio is equally split at 50-50.
Alibaba International is proceeding with both an in-kind contribution of AliExpress Korea shares and a cash investment. Since the corporate valuation of Gmarket is still underway, it has not yet been decided how much additional cash Alibaba will invest to balance the investment ratio.
The joint venture is scheduled to be established in March next year, with Gmarket and AliExpress Korea, contributed as in-kind assets, becoming subsidiaries. Gmarket and AliExpress Korea plan to operate their platforms independently.
Shinsegae Group partnered with the global platform Alibaba International to enhance competitiveness in the domestic e-commerce market. Previously, Shinsegae Group invested 3.44 trillion KRW in 2021 to acquire Gmarket. However, Gmarket has posted consecutive operating losses in 2022 and 2023 due to Coupang's aggressive expansion, resulting in poor market performance.
Gmarket Sellers to Access Alibaba Platforms in Over 200 Countries
Gmarket is expected to strengthen its business competitiveness through this agreement. First, it is anticipated to serve as a foothold for the global expansion of its 600,000 sellers. The greatest strength of Alibaba International is its network across more than 200 countries and regions worldwide. Domestic sellers are expected to expand their sales networks centered on China, the United States, Europe, South America, and Southeast Asia. These regions have a strong interest in Korean products and culture.
To this end, Gmarket plans to improve its system so that sellers can more easily enter the Alibaba International platform. Gmarket sellers will be able to have their products registered on Gmarket automatically connected to the global platforms operated by Alibaba International that the sellers require, without any additional procedures. Additionally, discussions will be held on ways to provide extra benefits beyond the existing global selling programs operated by Alibaba International, including payment settlements.
Gmarket stated, "This opens a new path for direct entry into global platforms through Gmarket," adding, "If we secure more competitive sellers and increase transaction volume, it will lead to strengthened product and price competitiveness, creating a virtuous cycle for consumers."
Mutual 'Win-Win' Expected... Investment Expansion Anticipated
Alibaba International can expand new business opportunities through the global expansion of domestic small and medium enterprises. Full-scale product operations are expected in the first half of next year after the joint venture is established and related IT system development is completed.
It is also positive that Alibaba International's accumulated IT technology can be applied to Gmarket. Since Alibaba International has secured global-level IT technology, it is expected to enhance consumers' shopping experiences and sellers' convenience. Alibaba International is predicted to benefit from Gmarket's accumulated quality control know-how and customer service to innovate customer experience.
Furthermore, investment in the domestic e-commerce market is expected to increase. Alibaba Group is listed on the New York Stock Exchange. Among its divisions, Alibaba International has been the fastest-growing business group within Alibaba over the past year. This suggests stable investment attraction is likely, which is expected to improve consumer convenience through expanded product assortment, increased price competitiveness, and personalized shopping enhancements.
A Shinsegae Group official emphasized, "By establishing a strategic partnership with Alibaba, a foothold for domestic sellers to enter the global market will be created, significantly contributing to the expansion and development of K-products' sales channels." They added, "We will actively work to create a new distribution ecosystem and innovate differentiated customer experiences for Gmarket."
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