Alibaba invests $4.6 bn in electronics retailer Suning

Chinese e-commerce giant Alibaba Group will acquire nearly 20-per cent stake in one of the China's biggest electronics retail chains Suning Commerce Group for approximately $4.6 billion.

The investment demonstrates Alibaba's appetite for brick-and-mortar selling space despite its dominant position in online shopping. Upon closing, Alibaba will become the second-largest shareholder of the retail chain.

Under the strategic alliance, Suning will also buy a 1.1-per cent stake in Alibaba for about $2.3 billion, which will be achieved through the issue of new Alibaba shares.

The collaboration between the two retail giants marks a milestone that signals the further integration of digital and offline retail, which is expected to benefit hundreds of millions of Chinese consumers who use Alibaba's online platforms and Suning's offline channels.

Both the companies will collaborate to build on synergies in e-commerce, logistics and incremental business through joint omni-channel initiatives.

Jack Ma, executive chairman of Alibaba said in a statement, ''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 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.'' Suning chairman Zhang Jindong stated.

Hangzhou-based Alibaba is the biggest online and mobile commerce company in the world in terms of gross merchandise volume. In addition to global online marketplace Alibaba.com, its businesses include Taobao Marketplace, Tmall, Juhuasuan, AliExpress, 1688.com, as well as online travel booking platform Alitrip and cloud services provider Aliyun.

Nanjing-based Suning, established in 1990, is one of the largest consumer electronic retail chains in China. Suning is primarily in the retail business of home appliances, consumer electronics, supermarket categories, baby products, books and virtual products.

Suning will open a flagship store on Alibaba's Tmall.com platform, focusing on consumer electronics, home appliances and baby products which will offer high-quality products at attractive prices.

Through the flagship store, Tmall will become a premiere platform for brands and retailers who wish to establish their online presence and direct engagement with customers.

In the area of logistics, Suning, which has a nationwide network will become a partner of Cainiao, Alibaba's logistics affiliate. 

Suning's network covers over 90 per cent of China which includes eight national and 57 regional distribution centers, 353 city forwarding centers, and over 1,700 last-mile delivery stations.  The partnership is expected to facilitate order deliveries as fast as two hours in the near future.

Customers will get after-sale services in person in Suning's over 1,600 physical retail stores in 289 cities across China and also from its affiliate partners across the nation.

It is believed that the strengths of Alibaba and Suning are complementary and the combination will bring in real benefits in the online to offline commerce sector.

Daniel Zhang, CEO of Alibaba Group, said, ''Customers will be able to enjoy the vast online offerings while having convenient access to physical stores. By maximising Suning's bricks-and-mortar assets with Alibaba's vibrant ecosystem, we are in the best position to provide ultimate shopping experience for all our customers."

The transaction is subject to customary closing conditions including regulatory approvals.