Alibaba Appoints Tsai to Lead Board at New Services Unit Koubei

Alibaba Group Holding Ltd. Vice Chairman Joseph Tsai will head up the board at Koubei, underscoring the strategic importance of a new business unit that will spearhead the e-commerce company’s drive into the local services market.

Tsai’s new responsibilities as Koubei’s chairman come on top of his current role as the number two executive at Alibaba, the company said in an email confirming his appointment on Monday.

Alibaba executives have stressed the importance of establishing a foothold beyond e-commerce in what they call an “online to offline” market, which refers to the increasing use of mobile devices to buy physical goods and services. Tsai joined Alibaba in 1999 after working as a lawyer at Sullivan & Cromwell LLP. He helped transform Alibaba into a global powerhouse, leading negotiations on dozens of acquisitions and early financing rounds, including with SoftBank Corp.

Koubei, a joint venture set up by Alibaba and its financial services affiliate, is competing with Baidu Corp. and Tencent Holdings Ltd. in a market for local services that’s expected to reach 7.28 trillion yuan ($1.17 trillion) by 2017.

Alibaba and Zhejiang Ant Small & Micro Financial Services Group Co. agreed in June to each invest 3 billion yuan to help the company expand into neighborhood services. The company has not spelled out its plans apart from an initial focus on food and beverage.

Ant Financial’s Samuel Fan will become Koubei’s chief executive officer, overseeing its daily operations, according to a June 23 statement distributed on Businesswire.

Local services is a key area of contention for Chinese Internet companies as people turn to the web to order take-out, beauty treatments and domestic helpers. Chinese users of location-based services could rise 29 percent to 400 million people in 2017 compared with this year, according to a research report by Shanghai-based Internet consultant IResearch.

Baidu said in June it would invest 20 billion yuan in three years to expand its own location-based services platform, called Nuomi. And group discount website, which is also competing in the same field, raised $700 million in January this year to fund expansion.

Alibaba and Ant Financial each hold 50 percent of Koubei.