Italy, Japan in Suning’s expanding footprint that will bring 5,000 brands to domestic consumers.
Suning Holdings Group, China’s largest omnichannel retailer by sales revenue, plans to continue consolidating its global presence via mergers and acquisitions (M&A) and cross-border partnerships.
French hypermarket chain Carrefour Group agreed to sell 80-per cent equity interest in its China business to the Nanjing-headquartered Suning in June.
In addition to raising 4.8 billion yuan ($673 million) for the Carrefour stake, Suning will prioritize establishing or expanding its presence in countries in Europe and North America, and in Japan and Australia.
Suning’s plan is to not only import food and beverages, daily necessities and electronic products but buy services with intellectual property rights, with a view to bringing up to 5,000 global brands into China. The execution of this plan will enable the company to build a smart global supply chain.
Zhang Jindong, Suning’s chairman, said growing consumption in China is a reflection of economic success. The types of food people eat and the varieties of goods they use are diversifying. Their tastes have become more sophisticated. So, foods need to be tastier and exquisite. This new dynamic has dramatically transformed the whole retail industry in China.
In March, the group signed a cooperation agreement with the Rome-based Italian Trade Agency to boost exports of “made in Italy” products to China.
Under the deal, Suning will open 150 smart retail offline stores dedicated to overseas products and consumption experience across major Chinese cities over the next three years. It will also open an Italian pavilion on online channels, offering Italian lifestyle and cultural experiences that support brand penetration in the domestic market.
The ITA is a governmental agency that supports the business development of Italian companies abroad and promotes foreign investment in Italy
Keen to boost the sourcing of brands made in Italy, Suning opened a new branch in Milan in 2018, aiming to achieve purchases of 100 million euros ($113.12 million) during the 2019-2023 period from European markets and introduce 200 Italian brands to China annually over the next five years.
Zhang believes that the tangible development of the Belt & Road Initiative will offer Suning more opportunities to expand its international markets and maintain robust growth, thanks to the massive population base, growing demand for infrastructure and economic movement in the BRI footprint.
“From a long-term perspective, population determines economic growth. Even though it will take some time, the number of consumers determines the potential of economic development in both developed and developing economies,” he said.
Besides Italy, Suning has seen fast growth of its retail business in Japan, where it uses various new business models, having acquired a majority stake in the 1930-established Laox Co, a Japanese home appliance chain, in 2009.
On the back of Suning’s new strategies such as promoting duty-free sales for foreign consumers, smart retail and commercial property sales, the number of Laox stores soared to 38 in 2018 from five in 2009, with employee number surging from less than 200 to more than 2,000 across Japan. Its sales revenue was 120 billion Japanese yen ($1.1 billion) in 2018.
“Backed by Laox’s moves to further strengthen online-to-offline, or O2O, integration of its physical stores, we can conduct direct overseas purchases and bring more popular Japanese products to both China and other foreign countries, such as home appliances and cosmeceuticals through Laox’s overseas networks,” said Zhang, adding Suning has also introduced Laox stores in Xi’an and Shanghai to bring more Japanese products and services to China.
He said these moves indicate that Chinese firms’ participation in the BRI has not limited them to areas like infrastructure and energy development but gave them opportunities to bring foreign products to China in a comprehensive way, expanding the power of New Retail and reaching a win-win outcome in foreign markets, to better share the benefit of globalization.
“When we think about the future, we have to first realize we are already living in the digital age. We have found that consumers in China and many other countries are fairly focused on digital technologies and related products, not just e-commerce but everything in the virtual world,” he said.
To fare better in fiercely competitive markets, Suning has partnered with German software company SAP SE.
The latter will develop digital technologies to be applied in, or upgrade, e-commerce, logistics, retail and sports, to further integrate artificial intelligence, big data and cloud computing, thereby enhancing Suning’s competitiveness
China’s digital economy, which uses internet technologies to reshape industries and enrich people’s lives, will be helpful to restructure the economy and enhance development quality amid external uncertainties, especially in the fields of retail, trade and manufacturing, said Guo Xin, a marketing professor at Beijing Technology and Business University.
Modern retail is also being redefined to enlarge sales by digitalizing offline services, empowering consumers via memberships, fashion elements and new consumer finance solutions, as well as gaining new customers through the launch of new online platforms and the addition of new stores, she said.
Suning currently has 250,000 employees. The company is riding China’s ongoing consumption upgrade and the e-commerce boom to diversify into the services sector. Government policies to stimulate new growth points in the retail sector are proving to be very helpful, it said.