Alibaba mulls logistics center in Korea

By Kim Yoo-chul

Incheon Metropolitan City said Monday that it is in talks with China's Alibaba Group to build a logistics center in the Incheon Free Economic Zone (IEFZ).

"The city is in discussions with Alibaba to attract a sizable investment in the city. This project will help us cut our snowballing deficit," a spokesman at the metropolitan city said.

He said most of the investment will come from the Chinese company, with the city offering a huge tax benefit, administrative support and the rights to use needed properties almost free for the building.

Incheon city contracted a consultancy to develop the talks.

"We will be very strategic, flexible and active to realize the project. The city hopes to sign a memorandum of understanding soon. But it's too early to talk about the investment scale," according to the official.

Alibaba was established in 1999 and is the world's top online commerce operator with its share in China reaching over 80 percent. In 2013, the group generated 250 trillion won in revenue, while employing 23,000 people.

The moves come a few months after group Chairman Jack Ma visited South Korea in July and August. Ma held a face-to-face meeting with President Park Geun-hye during his second visit to the country.

Reports said the Chinese group will invest up to 1 trillion won in the city to create "Alibaba Town," with an expected 1 million square meters in total size.

Industry sources said the town will house large shopping malls, luxurious hotels, logistics centers, facilities for cultural events amid the increasing number of Chinese tourists in Korea thanks to the rising popularity of “hallyu,” or the Korean Wave.

Incheon, about 25 miles west of Seoul, recently suffered a financial crisis amid high-cost projects, such as hosting the Incheon Asian Games last year. Last year, the city's debt reached 3.2 trillion won, city officials said.

In a statement to The Korea Times, Alibaba headquarters said; "Alibaba sees great potential in the South Korean market. Alibaba Group hasn't held discussions with the Incheon city on this reported project. Any disclosures regarding our investments will be announced through the proper channels."

Such a project will encourage other Chinese technology firms to invest more in Korea, officials said.

Chinese telecom equipment maker Huawei Technologies also has a plan to establish its first South Korean research center in Pangyo, the Korean version of Silicon Valley.

The center will handle projects for the development of telecom equipment for the fifth-generation (5G) networks, and benchmark tests for the networks.