China’s Alibaba is in advanced talks with the South Korean city of Incheon to jointly invest one trillion won ($920 million) on a new business complex, reports Korean daily Dong-A Ilbo. The complex, dubbed Alibaba Town, will come up in the city’s free economic zone in Yeongjongdo Island. The city of Incheon is just 25 miles west of Seoul.
Alibaba Town to help Incheon overcome financial problems
The complex is expected to be spread over one million square meters. It will include a hotel, a logistics center, a shopping mall, restaurants and facilities for cultural events. The Chinese e-commerce giant will reportedly invest $460 million while another $460 million will come from the Incheon city government. Incheon government has a history of collaborating with foreign business.
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The South Korean city hopes that Alibaba Town will help it attract more Chinese tourists. On per capita basis, Chinese tourists tend to spend more when traveling abroad, compared to tourists from other countries. So, influx of Chinese tourists could mean a windfall for the city’s economy. Incheon City spokesman Woo Seung-bong told Korea Herald that the city was indeed in talks with Alibaba for investments to overcome its financial problems.
Alibaba promised Korea to make investments in many sectors
Incheon city has been under financial stress following big-budget projects such as the Asian Games last year. The city ended 2014 with a debt pile of 3.2 trillion won ($2.9 billion). Industry watchers believe that Alibaba’s entry into South Korea is certain. Last August, Alibaba founder Jack Ma visited South Korea with Chinese president Xi Jinping. During his visit, Ma promised to pursue business deals in multiple sectors including online retail, gaming and medical devices.
Separately, Alibaba is planning to invest $550 million in India’s One97 Communications, which owns the rapidly growing mobile commerce platform called Paytm. Under the terms of the deal, Alibaba will own at least 30% stake in One97, valuing the Indian company at $1.9 billion. The Chinese e-commerce giant is expected to officially announce the deal later this month.
Alibaba shares inched up 0.95% to $102.59 in pre-market trading Tuesday.