Page 129 - RusRPTNov22

Before the war, Aliexpress Russia — the biggest Russo-Chinese joint enterprise — was poised to become the “Russian Amazon.” But it appears that the conflict has persuaded China’s Alibaba that its international reputation is worth more than the Russian market. As The Bell reported, the Chinese company has decided to curtail its investments in Russia.
● In the early days of the war, Alibaba told its partners that it would no longer put money into developing the Aliexpress Russia project, said three sources in the Russian e-commerce sector. Prior to the war there was no hint of a problem, according to them — on the contrary, the shareholders (Alibaba with 47.85%,bnaire Alisher Ushmanov’s USM with 24%, tech company VK with 15% and Russia’s state investment fund with 12.8%) — had ambitious plans.
● “Alibaba is a publicly listed company trading on the New York Stock Exchange, it has many ties to American markets and institutions,” one source told The Bell. “Nobody is going to kill that for a Russian project. Especially given the uncertain prospects for growth in this market due to the war and sanctions.” The source added that Alibaba’s refusal to invest was a trigger for the other shareholders.
● Since Russia’s invasion of Ukraine, Aliexpress Russia has shed 700 employees, more than half its pre-war staff, another source told The Bell. The joint venture also curtailed its biggest logistics projects, and almost completely stopped its advertising and marketing work. Notably, the faceof that advertising campaign, comedian Maxim Galkin, is also in disgrace. In September, Russia’s Ministry of Justice added Galkin to its list of individuals designated as “foreign agents.”
AliExpress will complete building a warehouse in the Urals city of Yekaterinburg despite reports about curbing down its business in Russia, Deputy Industry and Trade Minister Viktor Yevtukhov said on October 11 at a forum.
“We are aware of AliExpress’s plans. Regardless of the information that circulates that Alibaba is going to cut its presence and development of the platform in Russia, we know that there are plans to end construction of a fulfilment center in Yekaterinburg with a large investment of over RUB6bn and 70,000 square metres of area,” Yevtukhov said.
The facility will handle about 200,000 parcels per 24 hours. Yevtukhov said that other large companies continue to evolve on the country’s market. “Yandex Lavka has plans to build local storages. Ozon has plans to promote projects in the industry of IT, logistics, consumer services. And Wildberries is not stopping, logistics infrastructure evolves actively,” the deputy minister said.
129 RUSSIA Country Report November 2022 www.intellinews.com