Alibaba, Suning enter into 'marriage'

GMT 01:10 2015 Tuesday ,11 August

Arab Today, arab today Alibaba, Suning enter into 'marriage'

Alibaba, China's largest e-commerce company
Beijing - XINHUA

Alibaba, China's largest e-commerce company, and Chinese home appliance retailer Suning have inked a multi-billion dollar collaboration deal for online and high-street sales.

Alibaba will invest about 28.3 billion yuan (4.63 billion U.S. dollars) in Suning to become its second-largest shareholder, while Suning will buy no less than 27.8 million new shares in Alibaba for 14 billion yuan, Alibaba said on microblogging service on Monday.

Making the investment through its subsidiary Taobao (China) Software Co. Ltd., Alibaba will hold 19.99 percent of Suning after the non-public offering, slightly less than the more than 20 percent held by Suning chairman Zhang Jindong, according to a statement issued by Suning filed to the Shenzhen Stock Exchange.

The share price was set at 15.23 yuan, 5.76 percent more than the average price in the previous 20 trading days.

Suning was established in eastern China's Jiangsu Province in 1990 and was listed in Shenzhen in 2004.

Trading of Suning's shares was suspended a week ago as it planned this round of non-public offering. Trading will resume on Tuesday, the company said.

Suning said the deal was still "uncertain," as it still needs the approvals by its stockholders' meeting and regulatory authorities, without specifying a time scale.

Suning will hold about 1.09 percent of Alibaba, which is traded in the Unites States, at a price of 81.51 U.S. dollars per share, according to another statement of Suning.

"Both sides will increase efficiency and provide better services to Chinese and overseas customers by linking online and offline businesses," Alibaba said.

More than 1,600 stores, 3,000 aftersales service centers and other offline service stations of Suning will be "seamlessly connected with Alibaba's strong online network," Alibaba said.

Suning will open a flagship shop on Alibaba's brand-focused online retail platform The two sides will also cooperate on logistics, payment and aftersales services, as well as overseas business integration.

The cooperation will optimize consumer experience, and improve delivery services and aftersales, Alibaba said.

Alibaba chairman Ma Yun said at a press conference Monday that the deal reached after two months of negotiations was "like a wedding."

"If we do not integrate with offline, we will not have a future," Ma said.

Zhang Jindong said that combining online and offline businesses fulfilled not only the needs of the two companies, but also clients' demands.

"Customers do not care whether you are online or offline, they only care whether their needs are satisfied and whether it is convenient," according to Zhang.

If the cooperation model becomes a success in China, it can be rolled out to the global market and help promote the sales of Chinese products globally, Zhang said.

Suning has reaped great benefits from its transition from a traditional chain store to a more Internet-oriented entity.

In 2014, the company's profit jumped 555.28 percent year on year to 946 million yuan.

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