China’s Alibaba makes first foray into Israeli tech

The world’s biggest online commerce company, Alibaba, announced Tuesday that it was making its first-ever investment in an Israeli company. The Chinese giant has invested an unspecified amount in Tel Aviv-based Visualead, which develops “designer” QR (Quick Response) codes.

Visualead will use the money “to develop next-generation O2O (offline to online) technology,” the companies said in a statement.

Besides being the biggest company in China, Alibaba is also the biggest company on Wall Street. Last September, Alibaba proffered a $25 billion IPO, the biggest ever anywhere.

The announcement did not specify how much Alibaba would invest in the Israeli firm, but a source close to the deal said it was under $10 million, the Wall Street Journal reported.

The Alibaba announcement comes barely a month after another Chinese giant, Baidu, announced that it was making its first direct investment, in Israeli video capture firm Pixellot, which allows users to capture live footage from different angles and create a single, 360-degree view of events like concerts, sporting events, etc. Pixellot announced that it had received $3 million from Baidu.

If there is any Israeli company that Alibaba would have been expected to invest in, it would be Visualead. The Israeli firm has been working with Alibaba for over a year to replace boring black and white QR codes with snazzily designed, colorful, and aesthetically pleasing codes that integrate much better with product packaging, advertisements, newspapers and magazines, and anywhere else the codes are used.

QR codes are the indecipherable images for mobile devices that are used as “shortcuts” to reach websites. Using special scanner software, mobile users aim their device’s camera at the QR code, which, when it is interpreted by the scanner, opens up an Internet browser leading to an associated web page with more information about the product, or a vendor page where a user can buy the product online.

In the West, QR codes are generally used for commercial purposes, but in China, users have taken them to a whole new level, said Visualead’s VP of Marketing, Oded Israeli.

“Use of QR codes in China is not like anything in the Western world,” said Israeli. “Everyone in China has their own personal QR code, and everyone wants to stand out, to differentiate himself or herself from the crowd.”

A Visualead QR code for Red Ribbon Week (Photo credit: Courtesy)

Visualead’s QR codes do just that, utilizing aesthetic shapes and and color to create “designer” QR codes that can be made to order for products and companies. For example, in a previous deal, Visualead enabled users of China’s Facebook-like social network Renren to create their own QR codes using photos, with the Visualead system converting a JPEG image into a QR code with elements of the photo intact. Users were able to deploy it on the web, on stationery and letterheads, etc. Visualead has also perfected animated QR codes, even more useful for online or electronic advertising because they stand out, the company said.

The design, of course, must incorporate the proper elements of QR codes, following the programming rules and ensuring that cameras and software can read the codes without a problem. It’s not just technology – it’s an art, said the company, but well worth the effort; according to Visualead’s research, consumers are four times more likely to scan an aesthetically-pleasing Visualead code as they would a “regular” one.

Visualead, established in 2012 by co-founders Nevo Alva and Uriel Peled, had previously raised $2.4 million in investments from Kaedan and Entrée Capital, and the technology is in use in over 200 countries around the world, and over half a million businesses have generated their own QR codes. But the demand in China for its technology was so great that the company opened up a headquarters in Shanghai in 2013, with Alibaba becoming one of its biggest customers, using Visualead QR codes in its Alipay online payment system.

In addition, Alibaba teamed up with Chinese media to publish QR codes in newspapers, which readers scanned to purchase items via Alibaba’s Taobao shopping site, Visualead said.

In 2013, Visualead won the start-up competition at Beijing’s biggest tech event, the Global Mobile Internet Conference (GMIC), further highlighting the popularity of the technology in China.

QR code for National Education Week (Photo credit: Courtesy)

“We have already seen O2O as a major area of growth in China. Working with Visualead, a dynamic startup and first-mover in this field is the next logical step as we seek to enhance customer engagement on mobile platforms. We believe that Visualead’s leading Visual QR Code technology will complement our mobile marketing initiatives and enhance our ability to take advantage of the booming O2O opportunities in China,” said Zhang Kuo, director of Alibaba Group’s Mashangtao technology service.

According to Visualead CEO Alva, “Alibaba is the ideal strategic partner for distributing our technology in China and the leading O2O company worldwide. We are humbled to have Alibaba as a shareholder and on our Board of Directors, committed to making our Visual QR Code the new worldwide standard for Offline to Online engagement.”