Alibaba Group announced it is selling its brick-and-mortar retail company Sun Art Retail Group shares to private equity firm DCP Capital for up to HK$12.3 billion ($1.6 billion). Alibaba held over a 70% stake in Sun Art and paid about $3.6 billion for the stake in 2020.
The divestiture is part of a plan to focus on the company’s core online business. Under the leadership of CEO Eddie Wu, Alibaba is integrating domestic and international e-commerce operations and divesting ownership in assets that are not part of the core focus. For example, Alibaba recently sold its Intime department store operations to Youngor Fashion Co. for about $1 billion while seeing a loss of about $1.3 billion.
Over the last few years, Alibaba has invested aggressively in AI. In the first half of last year, it is estimated that Alibaba invested over $3 billion in AI.
Through Taobao and Tmall, Alibaba still holds a significant market share of China’s e-commerce market. But the share has been dropping due to increased competition. Reports have shown that Alibaba’s gross merchandise volume (GMV) is estimated to be over 40%, but it was over 50% as of 2020. There has been strong competition from companies like JD.com and Pinduoduo, along with the rise of social commerce and livestreaming companies.
Sun Art runs several large retail stores under several brands like RT-Mart. And it also has a distribution and storage network for groceries and produce.
