Jack Ma poses for the media at the Alibaba booth during the opening day of the CeBIT technology fair... [+] in Hanover, Germany, on March 16. (TOBIAS SCHWARZ/AFP/Getty Images) In a milestone China transaction that signals the accelerating integration of digital and offline retailers in the world’s No. 2 economy, Alibaba Group Holding, China’s largest e-commerce company, said today it would pay $4.6 billion for a 20% stake in Suning Commerce Group, one of the country's largest traditional appliance and electronics retailers. Suning at the same time will pay up to $2.28 billion to subscribe for up to 27.8 million newly issued shares of Alibaba. After the investment, Suning will hold approximately a 1.1% interest in Alibaba’s enlarged issued and outstanding share capital. After the closing of the investment in Suning, Alibaba will become the second-largest shareholder in Nanjing-based retailer. “Over the past two decades, e-commerce has become an inextricable part of the lives of Chinese consumers, and this new alliance brings forth a new commerce model that fully integrates online and offline,” Alibaba’s billionaire chairman Jack Ma said in a statement. “The collaboration between Alibaba and Suning is a milestone in China’s retail industry and its influence on e-commerce and offline retailing will be enormous,” Suning’s chairman Zhang Jindong said. “This collaboration signals a new trend in the Internet age: Strengthening China’s traditional industries by leveraging the power of Internet. It will also help transform China’s manufacturing industry and broaden the global horizons of Chinese brands,” said Zhang. As part of the Alibaba-Suning transaction -- one of the largest involving a China Internet company, Alibaba and Suning entered into a strategic collaboration agreement that will cover e-commerce, logistics and incremental business through joint channel initiatives. Suning will open a flagship store on Alibaba’s Tmall.com, focusing on consumer electronics, home appliances and baby products in a move that could boost Alibaba in its competition with rival JD.com. In the area of logistics, Suning will become a partner of Cainiao, Alibaba’s logistics affiliate. Suning boasts a nationwide logistics network covering over 90% of China’s counties including eight national distribution centers, 57 regional distribution centers, 353 city forwarding centers and over 1,700 last-mile delivery stations. Customers can expect to receive their orders in as fast as two hours in the near future, Alibaba said. The announcement by Alibaba follows by three days word that JD.com had agreed to purchase a 10% stake in traditional retailer Yonghui Superstores based in Fujian Province for $700 million to boost its O2O cooperation. Just last month, U.S.-listed Chinese online book retailer Dangdang said it would open bookstores in retail outfits run by Better Life Commercial Chain, one of China’s supermarket and everyday item retailers, Better Life. Better Life is headquartered in inland Hunan Province; Dangdang is located in Beijing. China is the world’s e-commerce market. Through the agreement, Dangdang will gain access to Better Life’s more than 452 stores (end of 2014 figure). Better Life will provide logistics services for Dangdang and the two will share online resources. The pair will also look into expanding together in the fast-moving consumer goods market. Among numerous other signs of deepening online-to-offline integration in the country, Wal-Mart also last month acquired the shares in China e-commerce site Yihaodian that it didn’t previously own. Hong Kong-listed Sun Art Retail, the operator of the RT-Mart hypermarket chain in China, also recently bought 54% of Fields, an online food supplier in China. Sun Art’s investors include Auchan of France and Taiwan billionaire Samuel Yin. Whether investors will support some of the combinations isn’t clear. U.S.-traded shares in Baidu, China’s No. 1 search engine, has fallen recently on word of its O2O initiatives. --Follow me on Twitter @rflannerychina
Alibaba has purchased a 1.1% stake in Suning Commerce Group, an appliance and electronics retailer, for $4.6bn. The two companies will enter into a strategic collaboration agreement that will cover e-commerce, logistics and incremental business through joint channel initiatives, and Suning will open a flagship store on Alibaba's Tmall.com.