China’s e-commerce giant Alibaba is partnering with two Russian companies on a joint venture as it looks to form its “digital silk road” across Eurasia, The Financial Times reported. Sources told the newspaper that Alibaba was close to finalizing a partnership with Russian internet company Mail.ru and the country’s sovereign wealth fund, the Russian Direct Investment Fund (RDIF).
“This is an important investment and it is very much part of the digital silk road,” said one Russian participant in the deal.
The partnership has been in the works for a while. Last year, Kirill Dmitriev, RDIF’s head, told Russian President Vladimir Putin that it would soon announce “investment in a number of our internet platforms with the aim of expanding their operations abroad, as well as investment with Alibaba in internet logistics infrastructure in Russia.”
Alibaba’s owner Jack Ma has made Russia a priority for his company, even sharing a stage with Putin last year.
“We think Alibaba should join forces in developing Russia,” Ma said at the time.
Alibaba opened its first office in Russia in 2015 and has focused on the country as a key growth market. Though eCommerce in Russia is behind the rest of Europe, more than half of its 140 million citizens use the internet every day. AliExpress, Alibaba’s cross-border eCommerce business, is the most visited site in Russia.
In addition, last year, Alibaba launched Tmall, a trading platform for Russian customers. The partnership with RDIF and Mail.ru, which controls popular Russian social networking sites, is expected to deliver a large database of potential customers, as well as the support of the state.
The deal would be a major step forward in China’s goal to roll out a “digital silk road”. As part of Beijing’s Belt and Road Initiative, the program is working toward building telecoms infrastructure for the entry of Chinese companies into eCommerce, mobile phone and mobile payment markets globally.