(Reuters) - Barbie maker Mattel Inc became the latest U.S. company to sell products on Chinese e-commerce giant Alibaba Group Holding Ltd's online marketplace Tmall to expand its reach in China.


Mattel also said it would work with Alibaba's A.I. Lab to develop new products.


"The multi-billion dollar toy category in China is highly fragmented, with tremendous potential for growth. Working with Alibaba, we see a terrific opportunity to develop and lead the category," Mattel's Chief Executive Margo Georgiadis said in a statement on Tuesday.


Mattel and Alibaba will begin product development immediately, with products set to be available from mid-2017.


No. 1 U.S. toymaker Mattel reported holiday-quarter sales and profit far short of analysts' estimates last month, hurt by increased competition from rivals such as Hasbro Inc and weak demand in North America.


Mattel's shares were up 1.5 percent at $26.30 in premarket trading.

A host of U.S. companies, including Oreo maker Mondelez International Inc, wearable fitness device maker Fitbit Inc, and retailers Costco Wholesale Corp and Macy's Inc have started selling on Tmall in recent years.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Martina D'Couto)