Alibaba Group Holding Ltd said on Wednesday that it was setting up a new company to tap into China's multi-trillion-yuan sports market.

The newly founded company with a name that can be directly translated into Ali Sports is expected to use digital technology to transform the entire industrial chain of China's traditional sports industry, said a statement from Alibaba.

According to the statement, Alibaba Group is the controlling shareholder of Ali Sports, and other two investors are China's online media company Sina Corp and private equity firm Yunfeng Capital, which is co-founded by Alibaba chairman Jack Ma.

Zhang Yong, chief executive officer of Alibaba, said that sports is a business that can bring happiness and health to people. "Ali Sports does not want to serve purely as an online access to sports industry. We want to leverage the resources of Alibaba's digital ecosystem to help upgrade the entire sports industry, bringing better services to consumers, athletes as well as sports fans," he said.

Zhang Yong will serve as the chairman of Ali Sports and Zhang Dazhong, the former vice-president of Shanghai Media Group, will head the new sports unit as CEO, said the statement.

Zhang Dazhong is known in the sports industry as the person who brought National Basketball Association programs from the United States to Chinese television sets.

The State Council set a goal in October 2014 to involve 500 million people in sports-related activities and create a sports industry that would be worth 5 trillion yuan ($784 billion) by 2025.

Analysts said the sports industry in China has immense growth potential. "If Alibaba did it right, it can be a new powerhouse for the company's future growth," said Jiang Qian, an analyst with Analysys International, a market research firm.

As a dominant player in China's online shopping industry, Alibaba has gained 367 million active users every year and thousands of sports brands have set up virtual stores on its online shopping platforms.

"Apart from e-commerce, Alibaba's business ecosystem also has advantages in media, cloud computing and smart devices, which can be integrated perfectly with the sports industry," said Jiang.

For example, online video site Youku Tudou, in which Alibaba has stakes, can broadcast sports events, she said.