Alibaba Goes Offline with $2.9 Billion Stake in China's Top Grocer
Internet giant Alibaba Group Holding Ltd said on Monday it would invest HK.4 billion (.87 billion) for a major stake in China’s top hypermart operator, Sun Art Retail Group Ltd , part of a wider push into offline retail, reported Reuters.
As part of an alliance with Auchan Retail S.A. [AUCH.UL] and Ruentex Group, Alibaba would buy the stake from Ruentex while Auchan Retail would boost its stake, the three companies said in a joint statement.
“Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalized services in the digital economy,” Alibaba Chief Executive Officer Daniel Zhang said in the statement.
The deal would give French retailer Groupe Auchan SA, China’s Alibaba Group and Taiwanese conglomerate Ruentex 36.18 percent, 36.16 percent and 4.67 percent stakes respectively in Sun Art. Alibaba would replace Ruentex as the second-largest shareholder.
The 4 billion firm is taking more risks to secure offline, rural and overseas buyers as China’s urban e-commerce market shows signs of saturating, including purchasing extensive infrastructure which it had previously avoided.
“They’re getting into a territory that’s not their core strength ... for example securing a property, the licenses to sell certain products, paying tax, more labor and so on,” said Weiwen Han, managing partner for Greater China at Bain & Company.
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