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Alibaba in deal with parent to buy software division
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E-commerce giant Alibaba.com said yesterday that it would buy a business management software division of Alisoft, a wholly-owned subsidiary of Alibaba Group, for 208 million yuan in an effort to increase its appeal among customers during the ongoing downturn.

Alibaba.com in deal with parent to buy software division

China's largest business-to-business (B2B) platform said it reached an agreement with its holding company Alibaba Group to purchase the unit's assets.

The assets, whose combined book value was about 43.79 million yuan as of last month according to Alibaba.com, include major application software product lines for small businesses. All of the related customer contracts and employees of the division will be transferred to Alibaba.com, the company said.

"The addition of these software offerings and related services continues Alibaba.com's drive to transform ourselves from 'Meet at Alibaba' to 'Work at Alibaba' by offering small businesses the tools to manage key aspects of their business operations via the Internet," said David Wei, chief executive officer of Alibaba.com, in a statement.

The company said the acquisition was likely to be completed next month.

As the global economic slowdown has severely impacted China's export-reliant economy, many of Alibaba's users have been suffering from dramatic drops in overseas orders. That has forced Alibaba.com to largely increase marketing spend and reduce membership fee to attract users.

Last week, Alibaba.com said its second quarter revenue increased 24 percent to 908.3 million yuan but net profit fell by 34 percent. The company said its sales and marketing expenses jumped 57 percent to 378.1 million yuan. The number of paid members increased by 50,000 in the quarter, it said.

"I think it is natural for Alibaba.com to acquire Alisoft's business software division as both companies have an identical customer base," said Liu Ning, an analyst at research firm BDA China.

He said Alibaba.com's latest move would help it to attract more users under the current economic situation while creating new revenue generators for the company.

(China Daily August 18, 2009)

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