Alibaba to take US$4.6 bil. stake in re­tailer Sun­ing

The China Post - - WORLD BUSINESS -

Chi­nese In­ter­net gi­ant Alibaba is to pay 28.3 bil­lion yuan (US$4.6 bil­lion) for a near-20 per­cent stake in con­sumer elec­tron­ics re­tailer Sun­ing, the two com­pa­nies said in a state­ment Mon­day.

At the same time the Chi­nese shop­ping chain will in­vest up to 14 bil­lion yuan for just over one per­cent of Alibaba, the state­ment said, bring­ing the to­tal value of the deal to nearly US$7 bil­lion.

It will make Alibaba the sec­ond­largest share­holder in Sun­ing, the state­ment said, adding the two firms would em­bark on a “strate­gic col­lab­o­ra­tion” that would “bring ben­e­fits to hun­dreds of mil­lions of Chi­nese con­sumers” and marked “a mile­stone that sig­nals the fur­ther in­te­gra­tion of dig­i­tal and off­line re­tail.”

Sun­ing is one of China’s big­gest con­sumer elec­tron­ics re­tail­ers, while Alibaba’s Tmall.com site is be­lieved to com­mand more than half the Chi­nese mar­ket for busi­ness- to- con­sumer trans­ac­tions. Its Taobao plat­form holds more than 90 per­cent of the coun­try’s con­sumer-to-con­sumer mar­ket.

Alibaba made its name — and its for­tune — by en­abling trans­ac­tions online, chal­leng­ing tra­di­tional bricks-and-mor­tar re­tail­ers. But as the mar­ket ma­tures it is de­vel­op­ing its oper­a­tions in ar­eas such as pay­ments and lo­gis­tics, cre­at­ing po­ten­tial syn­er­gies with for­mer ri­vals.

Sun­ing, head­quar­tered in the eastern city of Nan­jing, op­er­ates 1,600 stores in more than 280 cities na­tion­wide, the state­ment said, and also has its own e-com­merce busi­ness.

Alibaba’s founder and ex­ec­u­tive chair­man Jack Ma said: “Over the past two decades, e-com­merce has be­come an in­ex­tri­ca­ble part of the lives of Chi­nese con­sumers, and this new al­liance brings forth a new com­merce model that fully in­te­grates online and off­line.”

The two com­pa­nies will also work to­gether on lo­gis­tics and sug­gested that “in the near fu­ture” cus­tomers could re­ceive or­ders as quickly as two hours af­ter they were placed.

Sun­ing chair­man Zhang Jin­dong said it would “help trans­form China’s man­u­fac­tur­ing in­dus­try and broaden the global hori­zons of Chi­nese brands.”

The deal is the latest in a string of ac­qui­si­tions by Alibaba as Ma tries to di­ver­sify. The New York­listed com­pany faces do­mes­tic com­pe­ti­tion from In­ter­net giants Baidu and Ten­cent, and re­mains rel­a­tively China.

Two weeks ago Alibaba an­nounced it would in­vest US$1.0 bil­lion in its cloud com­put­ing arm to ex­pand its in­ter­na­tional pres­ence.

In June it launched an In­ter­net bank aimed at serv­ing small busi­nesses which of­ten strug­gle to ob­tain credit from large banks.

lit­tle known

out­side

AFP

Chi­nese en­tre­pre­neur and founder of In­ter­net re­tail group Alibaba, Jack Ma, waves to jour­nal­ists as he ar­rives for a meet­ing with French Pres­i­dent Fran­cois Hol­lande at the El­y­see Palace in Paris on March 18.

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