As YouTube becomes a de facto method for the masses to gain access to independent programming, Chinese ecommerce giant Alibaba Group announced today it is investing $1.2 billion with a in video website Youku Tudou.  The investment will give Alibaba a 16.5% stake in the company and its partner Yunfeng Capital will receive a 2 percent stake.

Alibaba

Investment comes amid investing spree from Chinese firms

The investment comes as China’s major Internet firms are making multibillion-dollar investments in entertainment, consumer finance and other services as the Chinese firms retool their strategy amidst a shift in accessing the Internet through smartphones and other mobile devices.

Alibaba’s investment will strengthen Youku Tudou’s position as “China’s YouTube,” as Youku Tudou is currently China’s largest online video platform.

Alibaba Group is a Chinese-based group of Internet-based e-commerce businesses including business-to-business online web portals, online retail and payment services, a shopping search engine and data-centric cloud computing services. The firm claims to be a privately controlled, but observers note that few companies emerge to such a position of prominence without the blessing of the Chinese central government.

Chinese ecommerce rivaling US firms

Alibaba is a significant force in ecommerce.  In 2012, for instance, just two of Alibaba’s web portals did $170 billion in sales, more than competitors eBay Inc (NASDAQ:EBAY) and Amazon.com, Inc. (NASDAQ:AMZN) combined.

In 2012, two of Alibaba’s portals together handled 1.1 trillion yuan ($170 billion) in sales, more than competitors eBay Inc (NASDAQ:EBAY) and Amazon.com, Inc. (NASDAQ:AMZN) combined.

The company started as a business to business in 1999 connecting Chinese manufactures with overseas buyers.  Alibaba Group’s sites account for over 60% of the parcels delivered in China. Alipay, one of the Alibaba companies that competes with PayPal, is an online payment escrow service that accounts for roughly half of all online payment transactions within China. The majority of these payments occur using Alibaba services. As of September 25, 2013, the company is seeking an initial public offering in the US after a deal could not be reached with Hong Kong regulators.