James Kosur
Alibaba is the world’s largest online marketplace and Suning is a large-scale China-based chain of electronics stores. When the two companies came together on Monday, investors noticed.
Alibaba shares rose by more than 2% in after-hours trading, while the Shenzhen-listed Suning surged to the maximum 10% limit on Tuesday.
The companies plan to link their online and offline models so customers can find items inside Suning stores and then purchase those items online.
Suning will also open an online store on one of Alibaba’s shopping websites.
Alibaba announced on Monday that it would invest 28.3bn Chinese yuan (£2.9bn; $ 4.6 billion) in Suning, making it the second largest shareholder with almost 20%.
Suning will in turn invest 14bn yuan to acquire a 1.1% stake in Alibaba.
In a statement Alibaba CEO Jack Ma said:
“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.”
Using Suning’s logistics networks, the companies believe they could deliver many consumer goods in as little as two hours.
The move is largely seen as a way for Alibaba to diversify its holdings at a time when there is increased competition from the likes of Baidu and Tencent.
You may recall that it was just two weeks ago when Alibaba said it would invest $ 1 billion to increase its cloud-based computing holdings throughout the world.
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