Both Alibaba and Incheon will make a joint investment of equal share to establish the "Alibaba Town" worth of $912 million. Reuters

China’s Alibaba Group Holding and the South Korean city of Incheon are in talks for a joint investment worth 1 trillion won ($912 million) in a new business area in the city, local media reported Monday.

The new area, dubbed “Alibaba Town,” is expected be 1 million square meters in size, and is expected to include a shopping mall, a hotel, facilities for cultural events, and a logistics center, South Korean daily Dong-A Ilbo reported, adding that both Alibaba and Incheon would invest equally in the project.

“It is true that we are in talks with Alibaba for investments in line with our efforts to overcome our financial problems,” a city government official told Yonhap, according to Korea Bizwire. “While we are taking an aggressive and strategic approach for the investment, we have not yet made any decisions at present.”

According to Yonhap, “Alibaba Town” will be located in Yeongjongdo, an economic zone near Incheon International Airport. Incheon, which is located about 25 miles west of Seoul, has recently suffered a financial crisis amid high-cost projects, such as hosting the Incheon Asian Games last year. At the end of 2014, the city’s debt reportedly touched 3.2 trillion won.

In August, South Korean President Park Geun-hye had asked Alibaba’s Jack Ma to help the country’s small- and medium-size enterprises to enter China’s e-commerce market, Yonhap reported.

Alibaba, which dominates China's Information and Communication Technology (ICT) sector, accounts for about 80 percent of the country’s online shopping market. Listed on the New York Stock Exchange in September, Alibaba has led the way for companies aspiring to go public on U.S. stock exchanges, and helped the U.S. initial public offers market in 2014 to its best year since 2000.

"Alibaba Town has positive aspects in that it could contribute to attracting more Chinese tourists and lay the foundation for Korean companies to make inroads into Chinese market," Dong-A Ilbo quoted industry sources as saying. "On the other hand, there are also concerns that the ‘ICT giant’ could take up large portion of Korean market."