Alibaba Group Holding Ltd. (BABA) shares rose 1.2% on Thursday, Dec. 7, after Asia's second-largest company inked a deal with Ford Motor Co. (F) that could see it sell cars through its online retail platform in the world's fastest-growing market.
Tmall, an Alibaba subsidiary and one of its two main online divisions, could be used to market Ford cars under terms of the deal, which aims to explore tech-related opportunities between the two companies.
"Alibaba is excited to redefine the consumer journey and user experience for automobiles together with Ford Motor Group," said Alibaba Group Chief Executive Officer Daniel Zhang. "Our data-driven technology and platform will expand the definition of car ownership beyond just having a mode of transportation and into a new medium for a smart lifestyle."
Ford shares gained 1.1%.
TheStreet's Tom Terrarosa wrote Wednesday that the move cements CEO Jim Hackett's vow when he took the helm of America's most recognizable car brand that Ford would not be left in the dust when it comes to technology.
"In China, Ford has done well to increase its market share over the past decade or so, having grown its sales from less than 5,000 vehicles in 2003 to 950,000 in 2016," Terrarosa wrote. "Company continues to lag behind its largest competitor, General Motors Co. (GM) , which sold nearly 3.9 million vehicles in China in 2016."
"Since Hackett took over in May, Ford has been vocal about forming partnerships to fill gaps in its portfolio. The company in September announced a partnership with Indian automaker Mahindra & Mahindra Ltd., through which the two may team up to tackle developing stronger connected, electric and autonomous driving capabilities," Terrarosa said.
From Alibaba's perspective, the move extends the group's drives into U.S. corporate territory after it took a page from the Amazon Inc. (AMZN) playbook earlier this month when it grabbed a major stake in China's biggest food hypermarket chain and setting up what could be a fascinating clash with both the world's biggest online group and the world's biggest brick-and-mortar retailer, WalMart (WMT) .
Alibaba will pay just under $2 billion for a 36% stake in Sun Art Retail Group, which runs China's biggest chain of supermarkets, alongside a similar stake owned by France's Groupe Auchan Retail SA and a much smaller holding for Taiwan's Ruentex. The move, however, looks incredibly similar to Amazon's $13.7 billion acquisition of Whole Foods Markets (WFM) earlier this year and positions Alibaba at the forefront of a $500 billion food market in the world's second-largest economy and a global market worth more than $4 trillion.
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