Chinese online retail giant Alibaba Group has picked up a stake in Israeli start-up Visualead. It is Alibaba’s first investment in the booming Israeli start-up sector. Visualead creates a patented form of Quick Response (QR) codes that consumers can scan using their smartphones. Alibaba did not disclose the size of the deal or the stake it picked up in the Israeli company. But sources familiar with the transaction told The Wall Street Journal that the e-commerce giant invested less than $10 million.

Alibaba Group Holding Ltd Buys Stake In Israeli Startup Visualead

QR codes are wildly popular in China

Visualead already has a presence in China, where QR codes are immensely popular. Chinese users frequently scan QR codes with their smartphones to redeem coupons, download apps, or sign up for promotions. Visualead’s QR codes use animation and colors to visually engage consumers. The company says typical black-and-white QR codes are unattractive and boring when used in advertising.

Visualead’s technology allows businesses to insert graphics or their logos in QR codes for branding purposes. Visualead CEO Nevo Alva said consumers are four times more likely to scan one of its QR codes than the traditional and boring ones. Launched in 2013, the company claims to have 500,0000 businesses as its clients in 200 countries. Its codes can be used even in videos.

Visualead to work with Alibaba’s Mashangtao service

The Israeli company had previously raised $2.4 million in two rounds: $750,000 in seed funding and $1.6 million in Series A funding. The strategic agreement between Alibaba and Visualead will allow the Chinese company to use Visualead’s technology on its platforms, including shopping sites, apps and cloud computing. The Israeli company said it would use the funding from Alibaba to develop its offline-to-online technology.

The Israeli start-up will be working with Alibaba’s Mashangtao service, which provides sellers on Taobao and Tmall with QR codes that consumers can scan for promotions. Merchants on Alibaba’s platforms also use the service to generate codes to let users read product information and track packages.

Alibaba shares inched up 1.80% to $98.63 at 10:57 AM EST on Tuesday.