Alibaba said on Monday that it will invest US$3.6 billion (approximately 264,24 crore) to increase its stake in the large supermarket operator Sun Art, thereby gaining further development in the Chinese retail market.
The e-commerce giant hopes to further support Sun Art’s 481 hypermarkets and three medium-sized supermarkets in China through its digital business. This move is due to the slowdown of traditional e-commerce growth, Alibaba has steadily expanded its business in offline retail in China.
Alibaba already owns 21% of Sun Art through a division and will increase its share to around 72% by acquiring similar shares in A-RT Retail Holdings, which owns 51% of Sun Art.
The company is acquiring shares from the French multinational company Auchan Retail International SA, which has established two of China’s largest supermarket chains.
“As the COVID-19 pandemic is accelerating the digitization of consumer lifestyles and business operations, the commitment to Sun Art will strengthen our new retail vision and provide services to more consumers through fully integrated experiences,” Ali Said Daniel Zhang, Chairman and CEO of Baba. In a statement.
Alibaba added that Peter Huang will serve as chairman of Sun Art, and he will currently serve as CEO.
After Alibaba announced the news, Sun Art’s stock price soared by more than 20% at the opening Monday.
Alibaba has opened Freightpo supermarkets across China, which is a supermarket chain with online delivery services. As of its latest financial report, Alibaba has 214 Fleshippo retail stores.
It also cooperates with popular convenience store owners to provide technical and data analysis services.
Alibaba’s e-commerce competitors in China have also made similar attempts at physical retail.
Online retailer JD.Com runs a physical grocery store called 7Fresh.
Pinduoduo, a fast-growing e-commerce site known for cheap deals on bulk purchases, purchased shares in home appliance retailer Gome for US$200 million (approximately Rs 1,468 crore) in August.
This transaction also marked the withdrawal of a major overseas retailer from China’s hyper-competitive market.
In 2019, Carrefour, a large French supermarket chain, sold 80% of its shares in the Chinese unit to electronics retailer Suning Appliance.
© Thomson Reuters 2020
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