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Suning embarks on reinvention

Mainland appliance chain aims to expand product range and services to other retailers

PUBLISHED : Friday, 22 February, 2013, 12:00am
UPDATED : Friday, 22 February, 2013, 5:00am

Suning Appliance, the mainland's largest retailer of electronic appliances, is moving fast towards its goal of becoming China's "Wal-Mart plus Amazon".

The Nanjing-based company announced yesterday it had changed its name to "Suning Commerce", reflecting its ambition to transform from a home appliance chain into an operator of both online and offline businesses and a service provider to other retailers.

As part of its plan, Suning said it was going to invest billions of dollars in logistics and hire 38,000 more employees over the next three years.

The company will also expand its product categories to mother-and-baby products, books, cosmetics and groceries; overhaul its internal management structure; and start to offer services such as financing, business travel, logistics and after-sales services to other retailers.

"Suning will get on the fast track of growth from this year," said company chairman Zhang Jindong.

Zhang said a year ago that Suning would learn from the business models of American retail behemoth Wal-Mart Stores and the e-commerce giant Amazon.com

"At the core of our new business model is consolidating Suning's front line and back office as well as its online and offline businesses," Zhang said.

Suning, which operates about 1,700 shops across the country, launched its online shopping portal in 2010. It is the third-biggest B2C (business-to-customer) retailer in the country, after Alibaba's Tmall and 360buy.com according to data from Beijing-based research firm Analysts International.

Yet the company has come under mounting financial pressure since last year because of tougher market competition, its huge investment in its online business and weak consumer demand.

For the first three quarters of last year, Suning's net profit was 2.35 billion yuan (HK$2.92 billion), down 31 per cent year on year. Its rival Gome posted a net loss of 687 million yuan for the same period.

"Suning must take bigger risks than many other B2C players when it's betting on the online business," Analysts International researcher Chen Shousong said.

"It's hard for the Shenzhen-listed company to expand as aggressively as 360buy.com since it has to treat shareholders' interests as a priority over the pace of expansion.

"I believe Suning is unlikely to surpass 360buy.com in sales revenue within three years."

Beijing-based 360buy.com said last week that it had completed its latest round of major fundraising.

Mainland media reported that the company raised US$400 million from a group of investors led by Saudi Arabia-based Kingdom Holding.

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