The sale accelerates Alibaba’s retreat from physical retail, a major investment initiative spearheaded years ago by previous CEO Daniel Zhang.
The company is now integrating its domestic and international ecommerce operations under the leadership of fast-rising executive Jiang Fan, while steadily selling off holdings it doesn’t consider essential. That last is considered critical enough that Alibaba is willing to swallow significant losses on its past bets, even as it raises capital to invest in areas such as AI and the cloud.
What Bloomberg Intelligence Says
Once a dominant player across Chinese commerce, intensifying competition from PDD Holdings Inc. and ByteDance Ltd. has forced Alibaba back to its roots as an online commerce platform.
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Under new chief Eddie Wu, Alibaba is focusing investment on areas it considers more promising, from the cloud to online marketplaces. It’s also ramping up abroad, for instance by creating a joint venture to speed up a Korean expansion.
Just last month, Alibaba agreed to sell its Intime department store business to Youngor Fashion Co. for around US$1 billion, incurring a loss of about 9.3 billion yuan (US$1.3 billion or $1.73 billion) on its initial investment. Alibaba faces a loss of about US$3 billion overall on its physical retail deals so far, Bloomberg Intelligence estimates.
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The sale “is considered to be a good opportunity for Alibaba Group to monetize its non-core assets and to utilize such proceeds to better focus on the development of its core businesses and enhance its shareholder return,” the company said in a statement Wednesday.
Sun Art had attracted suitors such as DCP Capital and Hillhouse Investment, Bloomberg News reported in September.
The company runs hundreds of hypermarkets across China under brands including RT-Mart. It also operates a distribution and storage network that supplements Alibaba’s own efforts in fresh produce.
Alibaba still retains lesser holdings in other traditional Chinese retailers. The electronics chain Suning.com Co. was one of several major brick-and-mortar acquisitions that former CEO Zhang orchestrated.
