（Photo/VCG)

China's e-commerce giant Alibaba Group Holding Ltd. acquired NetEase Inc.'s Kaola for two billion U.S. dollars on Friday, and will integrate it into Tmall so as to create the largest cross-border e-commerce platform in China. 

Alibaba's T-mall is a Chinese-language website for business-to-consumer (B2C) online retail. It already allows overseas brands to operate online stores in China but Kaola offers a more curated collection to wealthy clients. Meanwhile, Alibaba will also invest about 700 million U.S. dollars in Netease's music streaming service, NetEase Cloud Music. 

Both of the U.S.-listed Chinese internet giants are rooted in Hangzhou, capital of east China's Zhejiang Province. The two companies said the integration helps them work more closely together to explore the future of the digital economy era. Daniel Zhang, chief executive officer of Alibaba, said Alibaba plans for Kaola to continue to operate independently under its current brand. Alibaba's General Manager of Tmall Import and Export Alvin Liu will serve as Kaola's new CEO. William Ding, chief executive officer of NetEase, said NetEase expects Koala to continue to provide quality cross-border e-commerce services to its users within the Alibaba ecosystem. NetEase will remain the controlling shareholder of NetEase Cloud Music following the closing of Alibaba's financing.