(Yicai Global) Sept. 6 -- Chinese tech firm NetEase has confirmed speculation that Alibaba Group Holding, the country's biggest name in digital commerce, plans to spend USD2 billion to purchase its import-focused online retail platform Kaola.

Alibaba plans to keep operating Kaola as an independent brand, NetEase said in a statement yesterday after months of rumors surrounding a possible deal. Alvin Liu, import and export general manager at Alibaba's Tmall, will step in as chief executive of Kaola.

"Alibaba is confident about the future of China's import e-commerce market, which we believe remains in its infancy with great growth potential," said Alibaba CEO Daniel Zhang, adding that the acquisition will help bolster his firm's import-based services.

The buyer, alongside founder Jack Ma's investment fund Yunfeng Capital, will also pay USD700 million for a share in NetEase Cloud music as part of the streaming service provider's latest financing round, the statement added. NetEase will remain the controlling shareholder of the entertainment subsidiary.

Kaola snatched a 25.5 percent share of China's cross-border import and retail market in the fourth quarter of last year, second only to Tmall's almost 32 percent, but revenue growth has been slowing and fell to 20.2 percent in the second quarter of 2019, down from 67.2 percent three quarters earlier.

NetEase Cloud Music had 800 million users as of the end of August, up 50 percent on the year, but has been struggling to convert those into moneymakers. Its gross profit margin in the music business is just 1.4 percent.

Editor: James Boynton