Alibaba agrees £4.4bn tie-up with Chinese electronics giant Suning

Internet shopping giant buys 20 per cent stake in bricks and mortar retailer in latest acquisition as Alibaba attempts to diversify

Chinese Internet giant Alibaba is to pay 28.3 billion yuan (£3bn) for a near-20 percent stake in consumer electronics retailer Suning, the two companies have announced.

At the same time the Chinese shopping chain will invest up to 14bn yuan for just over 1pc of Alibaba, the companies said, bringing the total value of the deal to nearly £4.4bn.

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.

Jack Ma, founder and CEO of AlibabaJack Ma is attempting to diversify his company  Photo: AP

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.

Tagged , , ,

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: