Suning Teams Up With Evergrande To Build Commercial Complexes
Home appliance and electronics retailer Suning.com Co. and leading real estate developer Evergrande Group have agreed to set up a $20 billion yuan ($3 billion) joint venture to develop commercial complexes for entertainment and retail.
Suning will invest 9.8 billion yuan for a 49% stake in the new Shenzhen-based venture, while Evergrande will pay 10.2 billion yuan for a 51% stake, Suning said in a statement (link in Chinese) on Friday.
Relying on Evergrande’s expertise in land acquisition, project planning and design, the new entity will be able to build commercial complexes at a lower cost and so operate with a higher financial return, the statement said.
The move comes at a time when online retailers, including the big internet companies such as Alibaba Holdings Group Ltd. and JD.com Inc., have increasingly eyed off-line expansion, reflecting their faith in China’s bricks-and-mortar business opportunities.
In addition to building new retail spaces in bigger cities, Suning – which already has a large retail store network as well as significant online sales – is relentlessly expanding sales in smaller cities and rural areas.
In December, Suning said that it aimed to add 15,000 more locations to its current 4,000 physical stores in three years. To reach the goal, the company said at the time it would team up with about 30 Chinese property companies, including Evergrande, Dalian Wanda Group Co. Ltd., Sunac China Holdings Ltd. and Country Garden Group.
The Shenzhen-listed company’s sales revenue rose 46.33% to 69.3 billion yuan in the three months ended March 31, according to its latest quarterly report.
Contact reporter Mo Yelin (firstname.lastname@example.org)
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