Alibaba and Suning Commerce enter into strategic alliance

The Chinese e-commerce company Alibaba and Suning Commerce Group Limited, a consumer electronics retail chains in China, announced that Alibaba will invest approximately RMB28.3bn ($4.63bn) for a 19.99% stake in Suning. After the closing of the investment in Suning, Alibaba will be the second largest shareholder in the company.

The strategic collaboration between Alibaba and Suning will involve the further integration of their respective digital and offline retail. As part of the collaboration Suning plans to open a flagship store on Alibaba’s platform, focusing on consumer electronics, home appliances and baby products.

Suning’s existing logistics network covers more than 90% of China’s counties and comprises of eight national distribution centres, 57 regional distribution centres, 353 city forwarding centres and over 1,700 last mile delivery stations. Suning will become a partner of Alibaba’s logistics affiliate, Cainiao

Concurrent with Alibaba’s investment in Suning, Suning will invest up to RMB14bn ($2.28bn) to subscribe for up to 27.8m 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.

Daniel Zhang, CEO of Alibaba Group, said, “We are seeing the integration of e-commerce with traditional commerce where consumers are able to enjoy a more engaged, omni-channel and seamless shopping experience. Customers will be able to enjoy the vast online offerings while having convenient access to physical stores. By maximizing Suning’s bricks-and-mortar assets with Alibaba’s vibrant ecosystem, we are in the best position to provide the ultimate shopping experience for all our customers.”

Zhang Jindong, Suning’s Chairman said, “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.