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Alibaba To Own Majority Stake In Hypermarket Chain Sun Art For $3.6 Billion

Alibaba To Own Majority Stake In Hypermarket Chain Sun Art For $3.6 Billion
An additional investment of $3.6 billion to increase its stake in hypermarket operator Sun Art Retail Group Ltd was announced on Monday by Alibaba Group Holdings. Analysts say that this investment will help to further strengthen the company’s position in the retail market in China. 
Sun Art’s 481 hypermarkets and three mid-size supermarkets in China is also being planned to be supported by further levering its digital presence in the retail market, said the e-commerce giant of China. 
With slowing growth in traditional e-commerce in the Chinese market, Alibaba has been trying to steadily expand its presence in the  offline retail sector in the country and this latest investment move is believed to be a step by the company in that direction.
A unit of Alibaba already owned 21 per cent of Sun Art and with this new investment, which is to be made through a similar manner, the stake of Alibaba will rise to about 72 per cent by the acquisition of a similar stake in A-RT Retail Holdings – which is the owner of 51 per cent stake in Sun Art.
“As the COVID-19 pandemic is accelerating the digitalisation of consumer lifestyles and enterprise operations, this commitment to Sun Art serves to strengthen our New Retail vision and serve more consumers with a fully integrated experience,” Alibaba Chairman and Chief Executive Officer Daniel Zhang said in a statement.
In addition to his current role as chief executive officer of Alibaba, Peter Huang would be appointed chairman of Sun Art after the investment and majority stake owning by Alibaba.
With Alibaba making the announcement, the stocks of Sun Art rose by more than 20 per cent on Monday.
For Freshippo, a supermarket chain that also functions as an online delivery service, Alibaba has expanded outlets of the company all across China. According to the most recent earnings report of Alibaba, the copany revealed that 214 Freshippo outlets is operated by the e-commerce giant.
Further, technology and data analytics services have also been offered to a large number of mom-and-pop convenience store owners and the company is also closely working with such stores.
Similar forays into brick-and-mortar retail have also been made by Alibaba’s e-commerce rivals in China. For example, a brick-and-mortar grocery store called 7Fresh is run by the online retailer JD.Com Inc in China. And a stake in home-appliance retailer Gome Retail Holdings Inc in August for $200 million was purchased by the fast-growing Chinese e-commerce site known for budget deals on bulk purchases - Pinduoduo Inc.

Christopher J. Mitchell

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