Alibaba establishes metaverse unit despite state media's risk alert

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Chinese internet company Alibaba has reportedly set up a subsidiary dedicated to the metaverse, offering platform-as-a-service capabilities and being the builder and technology promoter of the new infrastructure needed for the metaverse.

According to Yicai Global, Alibaba’s investment arm has set up Yuanjing Shengsheng Beijing Technology with a registered capital of ¥10 million (US$1.6 million) on 6 December. Other media reports said that Yuanjing Shengsheng Beijing Technology offers a wide range of services, including software development, computer system services, performance brokerage and Internet information services.

Meanwhile, Alibaba’s cloud gaming division launched the Yuanjing brand in September. This sub-brand offers cloud games with platform-as-a-service capabilities and a developer platform.

Chinese tech companies have been developing and building the metaverse. In November, Tencent said it had plenty of technologies to develop the metaverse. The South China Morning Post quoted president of Tencent Martin Lau that the company could approach the metaverse through a range of businesses, as the company's strength includes video game development and social networking.

However, the Chinese government has been cracking down on the tech companies, and the country's state media has issued a warning about the metaverse, targeting speculators engaging in virtual property sales, according to another report from the South China Morning Post. The People’s Daily said selling properties in the metaverse is similar to “product financialisation”, which carried risks of money laundering, volatility, fraud and illegal fundraising.

The article also mentioned that China has not offered clarity on regulations applicable to NTFs, or their legal nature. Additionally, transactions made with other types of digital assets are not supported by Chinese laws. The article also added that the metaverse is still in early stages, reminding the public that they should wait for it to develop further to avoid getting “burnt”.

Earlier this month, Alibaba reorganised its international and domestic commerce platforms into two units to better drive synergies - international digital commerce and China digital commerce. International digital commerce will bring together Alibaba’s overseas consumer-facing and wholesale businesses under the leadership of Fan Jiang, president of Taobao and Tmall. It will include AliExpress, Alibaba.com, and Lazada.

According to Alibaba, these businesses propel its globalisation strategy and the newly-created unit is in line with Alibaba's goal of serving two billion consumers globally. In its last quarterly earnings, the company said it had reached 285 million annual active consumers overseas. Fan joined Alibaba in 2013 and in his previous role, Alibaba said Taobao and Tmall have transformed into a mobile-first commerce ecosystem with an innovative user experience, such as personalisation and content-driven engagement. Before joining Alibaba, Jiang founded and served as CEO for leading mobile analytics solutions company Umeng.

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