Bloomberg reported on Wednesday that Alibaba Group, China’s e-commerce giant, plans to divest its stake in Sun Art Retail Group, a supermarket chain often referred to as China’s Walmart.
The report states that Alibaba has agreed to sell its 78.7% stake in Sun Art to private equity firm DCP Capital for approximately $1.6 billion. This price represents a significant markdown from the $3.6 billion Alibaba paid to double its stake in Sun Art in 2020.
Alibaba described this divestment as a “good opportunity” for Alibaba Group to liquidate non-core assets, concentrate more on developing primary businesses, and enhance shareholder value.
Just a few years ago, Alibaba began aggressively targeting the online supermarket sector and expanding its offline stores, aiming to capitalize on the surge in demand for online grocery shopping after the COVID-19 pandemic. However, the stake sale accelerates Alibaba’s retreat from this strategy. Bloomberg highlighted that as competition intensified with Chinese companies like Pinduoduo (the parent company of Temu) and ByteDance (the parent company of TikTok), Alibaba was compelled to focus primarily on its core business as an e-commerce platform.
Last December, Alibaba sold its Intime department store, which has been in deficit, to Chinese clothing manufacturer Youngor for approximately $1 billion. It is estimated that this sale would have resulted in a loss of around 9.3 billion yuan (about $1.3 billion) compared to Alibaba’s initial investment.
Alibaba is also ramping up its international expansion efforts based on its main business. Last week, the company entered the South Korean market through a joint venture with Shinsegae Group. The partnership structure gives both companies an equal 50% stake, with Alibaba contributing its AliExpress Korea shares and additional cash investment.
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