N509FZ, CC BY-SA 4.0, via Wikimedia Commons

Alibaba continues to grow its presence in the Chinese retail market after announcing an investment of HKD28.0 billion ($3.6 billion) to acquire a majority stake in one of the largest retail businesses in China, Sun Art Retail Group Limited. Alibaba Group Holding Limited, an existing investor in Sun Art, will now have an approximately total stake of 72% directly and indirectly in the retail giant.

The transaction involves the acquisition of 70.94% of equity interest in A-RT Retail Holdings Limited (“A-RT”), which currently owns 51% of the equity interest in Sun Art, from Auchan Retail International S.A and Auchan Retail. Once the transaction is complete, Sun Art would be taken under Alibaba’s wings.

Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group, said “Alibaba’s strategic investment in Sun Art in 2017 was an important step in our New Retail strategy. The alliance we formed with Auchan Retail and Ruentex was instrumental in building a robust infrastructure to create opportunities and value in China’s retail sector. Led by Chief Executive Officer Peter Huang, Sun Art has achieved impressive results in its digitalization and pursued promising synergies with businesses across the Alibaba digital economy. As the COVID-19 pandemic is accelerating the digitalization 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.”

Moreover, Peter Huang, who is the CEO of Sun Art, has been additionally appointed as the Chairman of the Chinese retail giant.

Sun Art is one of the largest offline retail chains in China. It operates its hypermarket and supermarket business under the names of “Auchan”  and “RT-Mart”. As of today, it has 481 outlets spread across 232 cities in 29 provinces, autonomous regions and municipalities. In 2017, Alibaba Group Holding Limited, Auchan Retail International S.A., and Ruentex Group had come together to form an alliance for bringing both online and offline expertise into China’s food retail sector. Auchan Retail currently owns an indirect stake of approximately 51% in Sun Art Retail Group Limited, whereas, Alibaba owns an aggregate direct and indirect stake of approximately 21%.

Alibaba Group would look to bring together its e-commerce business and the hypermarket business of Sun Art to further help the latter in its digitization. The pandemic has brought a major shift towards the digitization of businesses, and Alibaba would help Sun Art’s hypermarket and supermarket business in doing so. Already all Sun Art stores across the country have been integrated into Alibaba’s Taoxianda and Tmall Supermarket platforms.