Alibaba Group Holding is selling its controlling stake in Chinese hypermarket operator Sun Art for up to HK$12.3 billion ($1.6 billion) amid declining sales and a shift towards core business focus.
The e-commerce giant agreed to sell over 70% of its stake to private equity firm DCP Capital, led by former KKR Greater China CEO David Liu. The deal is expected to generate billions of dollars in losses for Alibaba shareholders.
Alibaba invested heavily in Sun Art in 2017 and again in 2020 as part of a “new retail” strategy aimed at enhancing the shopping experience through omnichannel deliveries and customer analysis software. However, the Chinese economy’s struggles after Covid measures and a protracted property crisis led to declining sales, forcing Sun Art to shut underperforming stores, lay off employees, and see its shares lose almost 80% of value over the past five years.
Alibaba faces heightened market competition from rivals like PDD Holdings, which has been attracting frugal shoppers with deep discounts. The company is trying to reclaim lost ground by promoting more value-for-money products and using AI for targeted marketing.
The asset disposal aligns with Alibaba’s strategy to focus on core business and return value to shareholders, as noted by analyst Thomas Chong at Jefferies.
Source: https://www.forbes.com/sites/ywang/2025/01/02/alibaba-to-sell-chinese-hypermarket-operator-as-it-focuses-on-core-business