Alibaba Group and Suning Commerce Group have struck a deal that will see Alibaba investing approximately RMB28.3 billion for a 19.99% stake in Suning.
With the investment, Alibaba will be the second-largest shareholder in the consumer electronics retail chain.
Concurrent with Alibaba’s investment in Suning, Suning will invest up to RMB14 billion (US$2.28 billion) to subscribe for up to 27.8 million newly issued ordinary shares of Alibaba.
After the investment, Suning will hold approximately a 1.1% interest in Alibaba’s enlarged issued and outstanding share capital.
The strategic collaboration between Alibaba and Suning marks a milestone that signals the further integration of digital and offline retail.
By cooperating, Alibaba and Suning will be able to provide holistic and more convenient shopping experiences, as well as superior customer service to users looking to purchase online and through mobile devices.
As part of the transaction, Alibaba and Suning have entered into a strategic collaboration agreement to build on synergies in e-commerce, logistics and incremental business through joint omni-channel initiatives.
Under the collaboration, Suning will open a flagship store on Alibaba’s Tmall.com platform, focusing on consumer electronics, home appliances and baby products.
The store will offer high-quality product offerings at attractive prices and an unparalleled superior shopping experience. Suning’s flagship store will be a major win for Tmall.com, and reflects Tmall’s status as the premiere platform for brands and retailers who wish to establish their online presence and direct engagement with customers.
In the area of logistics, Suning will become a partner of Cainiao, Alibaba’s logistics affiliate and Suning’s logistics services cover almost all of the 2,800 counties and districts in China.
Capitalizing on Suning’s extensive network of offline stores and leveraging Alibaba’s edge in data technology, both parties can explore online-to-offline and offline-to-online commerce opportunities that better serve customer needs and preferences.
Jack Ma, executive chairman of Alibaba Group, 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.
“This alliance will benefit consumers and merchants by cultivating an open and transparent integrated ecosystem that will be the backbone of the future economy.”
Suning chairman Zhang Jindong commented: “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. This collaboration signals a new trend in the Internet age: Strengthening China’s traditional industries by leveraging the power of Internet. It will also help transform China’s manufacturing industry and broaden the global horizons of Chinese brands.”
Consummation of Alibaba’s investment in Suning and the investment by Suning in Alibaba are subject to customary closing conditions, including regulatory approvals and, in the case of the investment by Alibaba in Suning, the approval of the shareholders of Suning.