Brakes on: Jack Ma, chairman of Alibaba, centre
Chinas Alibaba has slowed its previously aggressive Indian expansion drive, putting a mooted deal with smartphone group Micromax on ice and delaying other investment plans in the face of problems in its home market, according to people familiar with the situation.
Founder Jack Ma has put Indias rapidly expanding ecommerce market at the heart of Alibabas plans for global growth over the past year, snapping up stakes in local start-ups PayTM and Snapdeal.
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On this topicIN TechnologyBut as Chinas largest internet company grapples with the countrys slowing economy and regulatory probes over fake merchandise sold on its sites, Alibaba has reined in plans for a rapid series of further Indian deals, the people say.
In particular, it has mothballed plans to take a minority stake in Micromax, Indias largest smartphone maker by revenue, ending talks that began this year.
Discussions involved the purchase of a stake of up to 20 per cent in the Indian group, at a valuation of more than $3bn. Alibaba and Micromax declined to comment.
They have become much less aggressive, said one person familiar with Alibabas thinking. As well as Micromax, they had plans to invest in entertainment and services businesses in India but they are fine without it for now.
On his first visit to the country in November 2014, Mr Ma said he planned to invest more in India.Alibaba hoped the countrys small but rapidly-expanding online economy would go on to match the explosive growth that powered its own rise in China.
Mr Ma has since returned for further visits to explore Indias ecommerce market, which is set to be worth $300bn by 2030, according to Goldman Sachs estimates.
Over the past year Alibaba and its affiliate companies spent $680m for a 40 per cent stake in PayTM, a payments start-up, and picked up a smaller holding in Snapdeal, an online marketplace.
Although the Chinese group still plans to expand in India, it is now taking a gradual approach, according to another person familiar with its strategy. They are still open to discussions for the right deals, they just arent pushing it, the person said.
Alibaba has faced pressure recently from Chinese regulators worried that faulty or counterfeit goods are sold on its platforms. The issue was in particular focus in the run-up to Singles Day, Wednesdays annual shopping bonanza that netted Alibaba a record $11.2bn of sales.
The slowing economy and more regulatory pressure certainly have Alibaba pulling its focus back to the domestic market, said Mark Natkin, founder of Beijing-based Marbridge Consulting. In the medium term they still want to be a global player, along the lines of Google or Apple, but they may now be taking it slowly.
Alibabas shares have lost a fifth of their value this year as Chinas economy has weakened. However, better than expected results for the quarter to September calmed some fears.
Alibaba wants to signal their global ambitions by talking about going to places like India and America, said Muzhi Li, an analyst at Mizuho Securities in Hong Kong. [But] Alibaba probably can benefit more from efforts to defend their existing market in China, rather than investing overseas.
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