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Russian Free Press

The Bell: Chinese Alibaba abandoned AliExpress because of the war with Ukraine

October 7, 2022
in Daily News
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The Chinese group Alibaba abandoned its Russian subsidiary AliExpress because of the war between Russia and Ukraine. The company stopped investing in the project, followed by other project shareholders: Russian VK, Alisher Usmanov's USM holding and the Russian Direct Investment Fund (RDIF). The Bell writes about this, citing sources.

“Alibaba is a public company, it is listed on the New York Stock Exchange, it has many relationships with the American market and institutions. No one will be killed for the Russian project. Especially given the unclear prospects for market growth in the context of war and sanctions, ”explains one of The Bell’s interlocutors.

According to the publication, due to the reduction in investment, the company was on the verge of a large-scale crisis. Over the past year and a half, AliExpress has been changing its strategy, relying on working with local manufacturers, this would significantly speed up delivery and give a chance to compete with Wildberries, Ozon and Yandex. The strategy involved the creation of large logistics hubs that required investments, now the company simply does not have investments in development, and it is forced to get rid of non-core assets, returning to its primary strategy - the supply of Chinese goods to the Russian market.

Employees have been hardest hit by the paradigm shift. One source talks about laying off more than 50% of the state, another about 700 out of about a thousand employees. AliExpress is even forced to cut costs for its head office - the company is looking for a subtenant of the workspace in Moscow City, and is forced to refuse storage facilities, putting them up for sale. The company also reduced advertising and promotion costs to a minimum, in addition, the company's ambassador, Maxim Galkin, found himself in disgrace because of his pronounced anti-war position.

The prospects for the company in the new conditions remain vague, the new strategy will not work without funding, and the previous one will allow, at best, to work “to zero” for some time, the interlocutors of the publication note. Unlike other large online retailers, AliExpress did not expand the supply of "parallel imports", the company simply cannot afford it, since Alibaba is a large international company, including in the United States.

"Gray schemes" could cost the company too much, especially against the backdrop of aggravated relations with the United States, in addition, the Russian market in the current situation is not of such interest to risk the company for it. Sources of the publication directly said that due to too high risks, Alibaba is no longer interested in the development of the asset, and the rest of the partners of the service are not yet up to AliExpress - they all fell under sanctions and deal with their problems.

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