UPDATE 2-South Korea's Shinsegae to set up joint venture with Alibaba International

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By Joyce Lee and Hyunjoo Jin

SEOUL, Dec 26 (Reuters) - South Korean retailer Shinsegae 004170.KS plans to set up a joint venture with Alibaba International, Shinsegae affiliate E-Mart 139480.KS said on Thursday.

The joint venture will be formed partly by Shinsegae investing its 100% stake in South Korean e-commerce platform Gmarket, it said in a regulatory filing.

AliExpress Korea and Gmarket will be incorporated into the joint venture, which will be set up in 2025. But the two platforms will continue to be operated independently, Shinsegae said in a separate statement.

In November, Alibaba Group Holding 9988.HK missed analysts' estimates for quarterly sales as Chinese consumers cut back on spending with the world's second-largest economy struggling amid a property sector crisis and increased youth job insecurity.

Meanwhile, in South Korea's e-commerce market which is the world's fourth-largest according to Euromonitor data, Gmarket has been struggling against local e-commerce giants Coupang CPNG.N and Naver 035420.KS while facing increasing challenges from Chinese rivals like AliExpress and Temu.

(Reporting by Joyce Lee and Hyunjoo Jin; Editing by Christian Schmollinger, Shri Navaratnam and Kate Mayberry)

((joyce.lee@tr.com;))