23 Nov Alibaba, Ruentex and Auchan Retail team up on the Chinese market
Alibaba Group Holding Limited (“Alibaba”) – one of the top 10 most valuable and biggest companies in the world, Auchan Retail S.A. (”Auchan Retail”) – the 12th world’s distributor (and 2nd in France), and Ruentex Group (“Ruentex”) – one of the biggest Taiwanese conglomerate have announced a strategic alliance to explore together new retail opportunities in the Chinese food retail sector.
INVESTING IN SUN ART, LEADING FOOD RETAILER IN CHINA
Sun Art is a leading multi-format offline food retailer in China. They operate in 446 supermarkets (approx. of 17k square meters) across 29 provinces under the retail brands of “RT-Mart” and “Auchan”. As part of their strategic alliance, Alibaba will invest a total of £ 2.17 billion (obtaining then a 36.16% economic interest) in Sun Art Retail Group Limited by acquiring shares from Ruentex. Auchan Retail will increase its shares in Sun Art as well to get a participation of 36.18%. Ruentex will have a 4.67% economic interest in Sun Art.
Peter Huang, vice chairman of Ruentex Industries Ltd., from left, Daniel Zhang, chief executive officer of Alibaba Group Holding Ltd., Wilhelm Hubner, chief executive officer of Auchan Retail SA, and Ludovic Holinier, chief executive officer of Sun Art Retail Group Ltd., attend a news conference in Hong Kong, China, on Monday, Nov. 20, 2017. Photographer: Vivek Prakash/Bloomberg
THE ALLIANCE’S OBJECTIVE
Alibaba, China’s largest Ecommerce platform has invested heavily in recent years taking stakes in several Chinese grocers, malls and department stores. Sun Art is also ones of Auchan’s long shot on the Chinese market. “Bringing together the leaders of in-store retail and of online retail will allow us to serve hundreds of millions of Chinese consumers a fully integrated, world-class shopping experience” said Wilhelm Hubner, chief executive of Auchan Retail.
The alliance aims to introduce a new shopping experience to 1.3 billion of Chinese consumers aligning Alibaba’s “New Retail” vision (highly competitive online and tech approach) and Auchan Retail’s Vision 2025 “Auchan changes lives” (innovative ans seamless in-store experience). It will bring best practices from both retail giants online and offline. Not surprisingly, Amazon is not the only digital giant investing heavily on the grocery offline space.
“In recent years, consumer’ demands have changed tremendously with the rapid growth of the mobile internet, and Sun Art is also endeavoring to move from offline to online,” said Peter Huang, Vice Chairman of Ruentex Group. “Ruentex is delighted to see the win-win collaboration with high synergies in online and offline that will meet the needs of consumers for a better life with better products and services and higher efficiency.”
As a result, Auchan’s partnership with Alibaba risks further relegating Carrefour to the sidelines in China, analysts says… As a reminder, in 2013, Tesco gave up on cracking China alone, folding its unprofitable business there into a state run company as a minority partner while in 2016, Wal-Mart sold its Chinese online grocery store in return for a stake in JD.com, China’s No. 2 e-commerce firm. From now, let’s see what will be the next move from Carrefour’s CEO to try to answer to that strategic move…