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E-commerce giant Alibaba Group ( BABA ) is investing $1.9 billion in two deals confirmed in the past two days, holding firm to its strategy of growth through acquisition and boosting local services in China. On Wednesday, Alibaba said it will invest $900 million into Shanghai-based Ele.me, while an affiliate, Ant Financial, will kick in another $350 million. Ele.me is a leading online food-delivery company. As part of its global expansion, Alibaba announced Tuesday it will acquire a controlling stake in Singapore-based Lazada, a leading e-commerce platform in Southeast Asia, for an investment valued at $1 billion. The deals upped the ante in an ongoing war among China’s four largest Internet giants — Alibaba, JD.com ( JD ), Baidu ( BIDU ) and Tencent Holdings ( TCEHY ). Alibaba’s investment and acquisition strategy focuses on increasing user acquisition and engagement, improving customer experience and expanding products and services, a company spokesman said. In some cases it may begin with an initial minority investment and followed by business cooperation, he said. Related to its investment in Ele.me, Alibaba and Ant agreed last June to invest nearly $1 billion in Koubei.com, a joint venture initially targeting the market for ordering meals online in China, but which is now focused on local delivery services. Ele.me will assume Koubei’s online food delivery service, a fiercely competitive market that includes Baidu. Alibaba has invested aggressively to expand China’s fast-growing local services market, also known as online-to-offline, or O2O retailing, which brings brick-and-mortar retailers into the digital economy. O2O is expected to figure heavily in the future of retailing and consumption in China. It’s seen as a better way for Chinese consumers to research and buy goods and receive them quickly, with smartphones playing a key role. Alibaba’s Southeast Asia Play While growing its home market, the investment in Lazada expands Alibaba outside China. Lazada operates e-commerce platforms in Indonesia, Malaysia, the Philippines, Singapore Thailand and Vietnam. “Globalization is a critical strategy for the growth of Alibaba Group today and well into the future,” said Michael Evans, Alibaba’s president, in a statement announcing the deal. Of the four largest Internet companies in China, Alibaba has been investing the most money in growth. The No. 1 provider of e-commerce services in China, Alibaba last year invested heavily in acquisitions. That included $4.63 billion for about a 20% stake in Suning, one of the largest consumer-electronics retail chains in China. The investment in Suning is part of a Alibaba’s O2O efforts. Tencent and Baidu have teamed with Dalian Wanda, one of China’s largest property and entertainment conglomerates, to create O2O platforms. JD greatly expanded one of its O2O operations last August when it invested $700 million in Yonghui Superstores, a supermarket chain with more than 350 stores. While expanding its dominance in e-commerce for both consumers and businesses, Alibaba is also engaged in financial services, cloud computing, Big Data analytics and Hollywood-style entertainment, in addition to O2O, ride hailing and food delivery services. Alibaba has reportedly invested about $400 million in Lyft, the U.S.-based ride sharing company that competes with Uber. Last week, Alibaba completed its acquisition of online video provider Youku Tudou for about $3.7 billion. Alibaba had already owned about a one-fifth stake. Speculation has also surfaced that Alibaba might boost its stake in Weibo ( WB ), the rising social media service similar to Twitter ( TWTR ). Weibo was spun off in 2014 by Shanghai-based Web portal Sina ( SINA ), which still owns the majority of Weibo’s stock. Alibaba has a 20% stake. Scalper1 News
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