Alibaba, Sun­ing to set up e-com­merce firm

China Daily (USA) - - BUSINESS - By FANFEIFEI andMENGJING Con­tact the writers at fanfeifei@chi­nadaily.com.cn and mengjing@ chi­nadaily.com.cn

Chi­nese e-com­merce gi­ant Alibaba Group Hold­ing Ltd and re­tail gi­ant Sun­ing Com­merceGroupCo­plan to in­vest 1 bil­lion yuan ($148 mil­lion) to set up an e-com­merce firm in Chongqing, amovethat is likely to in­ten­sify their com­pe­ti­tion with JD.com Inc, China’s sec­ond-largest e-com­merce player.

Sun­ing will in­vest 510 mil­lion yuan, gain­ing a 51 per­cent stake in the new joint ven­ture, while Alibaba will pay 490 mil­lion yuan, own­ing a 49 per­cent stake, ac­cord­ing to a state­ment is­sued by Sun­ing on Tues­day evening.

The busi­ness scope of the new e-com­merce firm cov­ers ser­vices, whole­sale and re­tail, and tech­no­log­i­cal de­vel­op­ment and con­sult­ing.

The joint ven­ture will op­er­ate and man­age the stores opened by Sun­ing on Alibaba’s on­line plat­form, ex­pand busi­ness based on the cus­tomer-to­busi­ness model to im­prove the brand’s ser­vices and their quick re­sponse to con­sumers’ re­quests, as well as in­no­vate the on­line-to-off­line op­er­at­ing model to im­prove the ser­vice qual­ity for small-and medi­um­re­tail­ers and con­sumers, state­ment said.

Sun­ing said the two sideshad deep­ened­strate­gic co­op­er­a­tion, and syn­er­gized their re­sources in users, plat­form, goods, ser­vices and tech­nol­ogy on the ba­sis of keep­ing the in­de­pen­dence of their busi­nesses.

Alibaba’s on­line plat­form Taobao has ac­quired 1.861 bil­lion the shares from Sun­ing for 28.2 bil­lion yuan in June, mak­ing it the sec­ond-big­gest share­holder of the coun­try’s largest home­ap­pli­ances re­tailer with a stake of just un­der 20 per­cent.

The new joint ven­ture is ex­pected to bring bet­ter syn­ergy be­tween two com­pa­nies, com­bin­ing Alibaba’s on­line re­tail­ing as­sets with Sun­ing’s phys­i­cal stores and dis­tri­bu­tion fa­cil­i­ties to make buy­ing con­sumer elec­tron­ics and home ap­pli­ances eas­ier for con­sumers, an­a­lysts said.

Mo Daiqing, a re­searcher with the China E-Com­merce Re­search Cen­ter in­Hangzhou, said that Alibaba had al­ready car­ried out some busi­ness co­op­er­a­tion after form­ing their al­liance in 2015, with Sun­ing open­ing a store on Alibaba’s on­line plat­form.

Lu Zhen­wang, chief ex­ec­u­tive of­fi­cer of Shang­hai-based Wan­qing Con­sul­tancy, the joint ven­ture is also ex­pected to serve as a pi­lot project for Alibaba to ex­plore newways to help tra­di­tional brands trans­form in the dig­i­tal era.

in­vest­ment by Alibaba and Sun­ing to set up the e-com­merce firm in Chongqing

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