Chinese e-commerce giant Alibaba has said it will invest $4.6 billion for a 20 percent stake in electronics chain Suning, one of the country’s largest bricks-and-mortar retailers which has more than 1,600 stores across 289 cities in China.
The deal will result in Alibaba becoming Suning’s second largest shareholder. In return, Suning is investing $2.25 billion in Alibaba for a 1.1 percent stake in the business. The companies said in a joint statement that the strengths of both firms complement each other and that the move will benefit hundreds of millions of consumers.
As part of the deal, Suning will open a flagship store on Alibaba’s Tmall.com platform, focusing on consumer electronics, home appliances and baby products. In addition, the physical retailer will partner with Cainiao, Alibaba’s logistics affiliate.
Suning’s distribution network currently covers 90 percent of China via eight national distribution centers, 57 regional distribution centers, 353 city forwarding centers and over 1,700 last-mile delivery stations. Alibaba claims that pairing Suning's well-developed logistics service with Cainiao's intelligent delivery solutions will allow customers to receive their goods within two hours of ordering them.
Zhang Jindong, Suning's chairman, said: "The collaboration between Alibaba and Suning is a milestone in China's retail industry and its influence on e-commerce and offline retailing will be enormous. [The deal] signals a new trend in the internet age: strengthening China's traditional industries by leveraging the power of [the] internet."
Alibaba’s shares have climbed 2.1 percent since the move was announced, while the company’s main Chinese rival, second largest online retailer JD.com, saw its shares plunge to a four-month low.
Regarding the deal, Eric Brock, a Boston-based money manager at Clough Capital Partners, told Bloomberg: “It seems like a good move for Alibaba, but the integration with Suning will take some work.”
https://www.techspot.com/news/61715-alibaba-shares-rise-after-45-billion-investment-electronics.html
