Alibaba buys 20% stake in Suning Chairman of Alibaba Jack Ma (left) and Zhang Jindong, founder of retailer Suning, at the press conference in Nanjing, capital of Jiangsu province, after the two companies reached a deal on Monday. (Photo/China Daily)
E-commerce giants and brick-and-mortar stores create a new ecosystem in China's retail industry
In the business world, there are no everlasting friends or everlasting enemies. There are only friends with the same interests. The proverb was exemplified by a recent teaming up between China's largest e-commerce giant Alibaba and leading electronics retailer Suning, which also owns the country's third largest online marketplace.
According to the deal reached on August 10, NYSE-listed Alibaba Group Holding Ltd. will pay 28.3 billion yuan ($4.4 billion) for a 20-percent stake in Suning Commerce Group Co. Ltd., and in turn, Suning will agree to invest 14 billion yuan ($2.2 billion) to acquire a 1.1-percent stake in Alibaba. With this strategic combination, the two heavyweights will establish an all-round online-to-offline system encompassing e-commerce, logistics, aftersales services, marketing and big data.
"Both Alibaba and Suning are now at the crossroads. Integration is a better option than confrontation," said Chairman of Suning Zhang Jindong at the First Internet Plus Retail Summit held in Nanjing, capital of east China's Jiangsu Province, on August 10. Zhang believes that Internet companies aligning with traditional retailers will become an inevitable trend.
"The future development of Alibaba lies in brick-and-mortar stores. If we fail to explore offline resources, Alibaba will be phased out," said Jack Ma, founder and Chairman of Alibaba at the summit, laying an emphasis on the development of a new business ecosystem and noting that cooperation rather than monopoly will help them seize the opportunities singular to this generation.
However, Alibaba is not the first e-business giant to attempt to access traditional retailers. On August 7, NASDAQ-listed JD.com Inc., the second largest e-business company in China, declared its intention to purchase a 10-percent stake in domestic supermarket Yonghui Superstores, a supermarket chain headquartered in southeast China's Fujian Province, for 4.31 billion yuan ($670 million), with the right to nominate two directors to the board.
"In five years' time, there will be no pure Internet companies, because online and offline integration is the direction of future development," said Wang Jianlin, Chairman of Wanda Group at the summit.
