China's Alibaba to take $4.6bn stake in retailer Suning

GMT 11:39 2015 Monday ,10 August

Arab Today, arab today China's Alibaba to take $4.6bn stake in retailer Suning

China's Alibaba
Shanghai - AFP

Chinese Internet giant Alibaba is to pay 28.3 billion yuan ($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 $7 billion.

It will make Alibaba the second-largest 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 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 York-listed company faces domestic competition from Internet giants Baidu and Tencent, and remains relatively little known outside China.

Two weeks ago Alibaba announced it would invest $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.

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